(1) Mr Geoff Shaw (2) Mrs Marie Shaw v Active Products (UK) Limited — 2022

The tribunal held that Mrs Shaw was an employee of the respondent from 1 January 2014 until the date her employment ended, which was to be determined at the full hearing. It found that she had carried out real administrative support work for the respondent, similar to work she had previously done under written terms of employment, and that the arrangement was not a sham. The tribunal also found that, during the relevant period, she was paid for her services and was treated in a way consistent with employment, including being placed on furlough in 2020.

On the illegality issue, the tribunal found that Mrs Shaw did not know how much she was being paid, did not check her payslips, and did not know that payments to her were being diverted from Mr Shaw's bonus or other remuneration. It held that she did not have knowledge of the tax evasion and did not participate in it. For that reason, her unfair dismissal and unlawful deduction from wages claims could proceed.

By contrast, the tribunal found that Mr Shaw knew about and actively participated in the arrangement by which part of his remuneration was diverted to Mrs Shaw so that his tax bill would be reduced. Applying the principles it identified from Patel v Mirza and Hall v Woolston Hall Leisure Limited, it held that his contract of employment was tainted by illegality. It concluded that claims seeking to enforce the illegal payment arrangements, including unfair dismissal, breach of contract, and unlawful deduction claims in relation to notice pay, unpaid bonus and profit-related pay, could not proceed and were struck out.

The tribunal nevertheless allowed two parts of Mr Shaw's wage claim to continue: a claim for basic salary from 1 November 2020 to the end of employment, and a claim for accrued holiday pay due and owing up to termination. The full merits hearing for the claims that remained was listed for 12 April 2023.