Head priest's unfair dismissal claim fails due to tax evasion
A head priest who was paid £390 per month without tax or NI deductions saw his unfair dismissal claim thrown out after the tribunal found the employment contract was illegally performed.
1 min read · Last updated 18 May 2026
Case details
- #head-priest
- #tax-evasion
- #illegality
- #gross-misconduct
- #polkey
- #contribution
Key facts
- The claimant worked as head priest at the temple from 2 July 2018 to 4 July 2022.
- The claimant was paid a basic wage of £390 per month, plus fees and cash donations from the community.
- Neither the claimant nor the respondent paid tax or national insurance on the claimant's income from the temple.
- The claimant was dismissed after a dispute over a scuffle between another priest and a caretaker.
- The tribunal found the claimant was an employee, but dismissed all claims due to illegality (tax evasion).
Timeline
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Claimant appointed as head priest
The claimant began working as head Granthi at Singh Sabha London East Gurdwara, with an agreement to be treated as self-employed and paid £390 per month.
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Scuffle between priest and caretaker
An argument escalated into a scuffle between a priest and a caretaker. The claimant was not present but later demanded the caretaker be sacked.
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Claimant continues demands
The claimant continued to demand the caretaker's dismissal over the next two days, warning he would cause trouble if not done.
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Claimant refused entry to temple
The claimant arrived at the temple but was refused entry by Mr Bassi's son. He left and went home.
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Dismissal letter sent
The respondent sent an undated letter instructing the claimant not to return to the temple, which the tribunal found constituted a dismissal.
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Claim form presented
The claimant presented his claim to the employment tribunal after ACAS early conciliation.
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Final hearing begins
The final hearing commenced at East London Hearing Centre, with case management issues and evidence from Mr Bassi.
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Resumed hearing
The hearing resumed with evidence from other witnesses. The tribunal raised the issue of illegality regarding unpaid tax.
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Judgment issued
Employment Judge Massarella issued a reserved judgment dismissing all claims due to illegality (tax evasion).
The legal issue
The tribunal had to decide whether the claimant was an employee, whether he was unfairly dismissed, and whether his claims for holiday pay and national minimum wage were barred by illegality due to the failure to pay tax and national insurance.
The outcome
The tribunal found that the head priest was an employee of Singh Sabha London East, but his contract was illegally performed because both parties agreed to treat him as self-employed and did not pay tax or national insurance. As a result, all claims—including unfair dismissal, holiday pay, and national minimum wage—were dismissed in their entirety.
No compensation was awarded because the claims were dismissed on the grounds of illegality.
Lessons & takeaways
- Employment tribunals will not enforce contracts that are tainted by illegality, such as deliberate non-payment of tax.
- Agreeing to be treated as self-employed when you are actually an employee can backfire if the arrangement involves tax evasion.
- If you are paid without tax or NI deductions, you may still be an employee, but you risk losing employment rights if the arrangement is illegal.
- Employers should ensure they comply with tax and national insurance obligations to avoid successful claims being barred by illegality.
This case shows how a failure to comply with tax laws can completely derail an otherwise valid employment claim. The head priest worked for four years at the temple, receiving a basic wage of £390 per month plus fees and donations, with no tax or national insurance paid by either side. When he was dismissed after a dispute, he brought claims for unfair dismissal, holiday pay, and national minimum wage.
The illegality trap
The tribunal first had to decide whether the head priest was an employee. It found that he was, despite the self-employed label. However, the critical issue was illegality. Both the priest and the temple had knowingly failed to pay tax and NI, making the contract illegally performed. Under established legal principles, the tribunal cannot assist a party who seeks to benefit from an illegal contract. This meant all claims had to be dismissed, regardless of the merits of the dismissal itself.
What could have been done differently
For the temple, ensuring proper tax and NI arrangements from the start would have avoided the illegality issue entirely. Even if the dismissal was procedurally flawed, the claims could have been defended on their merits rather than being struck out on a technicality. For the head priest, while he may have believed the arrangement was beneficial, it ultimately cost him any chance of compensation for what might have been an unfair dismissal.
Why this matters
This case is a stark reminder that employment rights are not available when the underlying contract is tainted by illegality. Tribunals will not enforce claims arising from arrangements that involve deliberate tax evasion, even if the employee was genuinely mistreated. Anyone in a similar situation should seek advice about their employment status and tax obligations before bringing a claim, as the consequences of illegality can be fatal to their case.
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