Whistleblowing claim fails after tribunal finds contract illegal due to unpaid tax
A personal assistant who worked for 10 years without paying tax lost her unfair dismissal claim after the tribunal ruled her contract was performed illegally. No compensation was awarded.
1 min read · Last updated 18 May 2026
Case details
Key facts
- The claimant worked as a personal assistant for the respondent from 30 March 2007 to 19 May 2017.
- The contract stated she was self-employed and responsible for her own tax, but she did not pay any tax for seven years.
- The claimant made several disclosures about the respondent's failure to operate PAYE and alleged manipulation of employment status.
- The respondent dismissed the claimant because she wanted him to pay her tax bill, not because of protected disclosures.
- The tribunal found the contract was illegal in performance due to the claimant's failure to pay tax from 2007 to 2014.
- The claims for unfair dismissal, wrongful dismissal, and unlawful deductions failed due to illegality.
Timeline
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Start of employment
Claimant began working as a personal assistant for the respondent, signing a contract stating she was self-employed and responsible for her own tax.
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Meeting with Peter Cathcart
Claimant met with the respondent's solicitor; she admitted she had not paid any tax on her earnings since 2007.
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First protected disclosure
Claimant sent a letter from her tax adviser alleging the respondent was avoiding PAYE obligations.
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Respondent begins withholding tax
Respondent started deducting an amount equivalent to tax from the claimant's pay and holding it in a separate account.
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Grievance letter
Claimant sent a grievance letter asserting she was an employee and demanding PAYE and itemised pay statements.
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Dismissal
Respondent dismissed the claimant, citing her failure to account for tax and diminished duties.
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Interim relief hearing
Employment Judge Stewart granted interim relief, ordering continuation of the contract pending final hearing.
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Final hearing begins
Five-day hearing before Employment Judge Goodman and panel to determine all claims.
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Judgment issued
Tribunal found the contract illegal in performance due to claimant's failure to pay tax; all claims dismissed.
The legal issue
The tribunal had to decide whether the claimant was an employee or self-employed, whether her contract was illegal in performance due to non-payment of tax, and whether she was dismissed because of protected disclosures.
The outcome
The tribunal found that the claimant's contract was performed illegally because she failed to pay tax on her earnings from 2007 to 2014. As a result, all her claims for unfair dismissal, wrongful dismissal, and unlawful deductions failed.
The key reasons were:
- The claimant admitted she had not paid any tax on her earnings for seven years.
- The tribunal held that the illegality tainted the entire employment relationship, so she could not rely on employment rights.
- The dismissal was not because of protected disclosures but because the claimant wanted the respondent to pay her tax bill.
No compensation was awarded.
Lessons & takeaways
- If you have not paid tax on your earnings, this can make your employment contract illegal and prevent you from bringing employment claims.
- Employment status is not just about what your contract says – how the relationship actually works in practice matters.
- Making protected disclosures does not automatically protect you if there is illegality in your employment contract.
- If you believe you are an employee but are treated as self-employed, seek legal advice early and ensure tax obligations are met.
What this case shows in practice
This case highlights a harsh reality: even if you have strong evidence of unfair dismissal or whistleblowing, the tribunal may refuse to hear your claim if your contract was performed illegally. The personal assistant worked for 10 years without paying any tax, despite signing a contract stating she was self-employed and responsible for her own tax. When she later argued she was actually an employee and made disclosures about the respondent's failure to operate PAYE, the tribunal found that her own failure to pay tax from 2007 to 2014 made the contract illegal in performance.
What the losing side could have done differently
The claimant could have avoided this outcome by ensuring she paid tax on her earnings from the start. Even after she became aware of the issue in 2014, she did not pay the outstanding tax. The tribunal noted that the respondent began withholding an amount equivalent to tax from her pay in 2014, but the claimant still did not account for the earlier years. Seeking professional tax advice and regularising her tax position before bringing a claim might have preserved her employment rights.
Why the result matters for similar claims
This decision serves as a warning for anyone working under a self-employed arrangement who believes they are actually an employee. The tribunal will not enforce rights under an illegal contract, even if the employer also acted improperly. The public interest in upholding tax laws outweighs individual employment protections. For those considering whistleblowing claims, it is crucial to ensure your own tax affairs are in order first, or you may find your claim barred entirely.
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