Unfair dismissal and unpaid wages claims struck out due to short service and illegal pay arrangement
A former employee with less than two years' service had her unfair dismissal and unpaid wages claims dismissed after the tribunal found the pay arrangement was tainted by illegality.
2 min read · Last updated 19 May 2026
Case details
- #unfair-dismissal
- #unlawful-deduction-from-wages
- #illegality
- #less-than-2-years-service
- #no-jurisdiction
Key facts
- Ms Easton worked for the Respondent from 1 December 2021 to 2 May 2023.
- She was paid £2,000 per month but received only £800 for April 2023.
- Her employment was terminated by text message on 2 May 2023.
- She had less than 2 years' continuous service at the date of dismissal.
- The tribunal found the wage arrangement was tainted by illegality as no tax or NI was deducted.
Timeline
-
Employment started
Ms Easton began working for Goldman and Fine Group Ltd.
-
April wages partially paid
Ms Easton was paid £500 then £300, leaving £1,200 outstanding.
-
Employment terminated
Mr Zaman ended Ms Easton's employment by text message.
-
Tribunal hearing
The claim was heard at East London Hearing Centre before Employment Judge Housego.
The legal issue
The tribunal had to decide whether it had jurisdiction to hear an unfair dismissal claim from an employee with less than two years' service, and whether a claim for unpaid wages could succeed when the payment arrangement involved no deductions for tax or national insurance.
The outcome
The tribunal dismissed both claims.
- The unfair dismissal claim was struck out because the employee had less than two years' continuous service, so the tribunal had no jurisdiction to hear it.
- The unpaid wages claim was struck out on grounds of illegality: the arrangement to pay the full contractual sum without deducting tax or national insurance was found to be a deliberate evasion of tax and NI obligations.
- No compensation was awarded.
Lessons & takeaways
- Employees with less than two years' service generally cannot bring an unfair dismissal claim, unless the dismissal is for an automatically unfair reason.
- If you are paid without tax or NI deductions, the arrangement may be illegal, and you may lose the right to claim unpaid wages.
- Keep copies of payslips and contracts; the tribunal may draw adverse inferences if you cannot produce them.
- If you suspect your employer is not handling tax correctly, seek advice before pursuing a claim for unpaid wages.
This case shows how two common legal hurdles—short service and illegality—can combine to defeat employment claims, even where the underlying facts seem sympathetic.
The employee worked for Goldman and Fine Group Ltd for 17 months, earning £2,000 a month. She was dismissed by text message after complaining that she had not been paid in full for April 2023. She brought claims for unfair dismissal and unpaid wages.
Why the claims failed
The unfair dismissal claim fell at the first hurdle: the law requires two years' continuous service to bring a standard unfair dismissal claim (unless the dismissal is for an automatically unfair reason, such as whistleblowing or asserting a statutory right). The employee had only 17 months' service, so the tribunal had no jurisdiction.
The unpaid wages claim faced a different problem. The employee admitted she received her full salary without any deductions for tax or national insurance. When asked about payslips, she said they showed variable amounts lower than £2,000. The tribunal concluded that the arrangement was a deliberate evasion of tax and NI obligations, making it illegal. An illegal contract cannot be enforced, so the claim for £1,200 was struck out.
What could have been done differently
For the employee, understanding the two-year service requirement is crucial—she might have waited to bring a claim until she had longer service, or checked if her dismissal was for an automatically unfair reason. On the illegality point, she should have queried the lack of deductions and sought advice earlier. Keeping payslips would have helped her case.
For employers, this case is a reminder that illegal payment arrangements can backfire: while the employer avoided paying tax and NI, it also avoided liability for unpaid wages. However, the reputational and legal risks of such arrangements are significant.
Why this matters
This decision highlights the strict application of the two-year qualifying period for unfair dismissal and the principle that courts will not enforce contracts tainted by illegality. Employees who accept cash-in-hand payments without tax deductions may find themselves unable to recover unpaid wages, even where the employer has clearly failed to pay what was promised.
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