• Aaron Flynn

Employment contract in contravention of the Employment Permits Act not automatically invalid

Updated: Feb 20, 2021

The High Court has confirmed in Sobhy v The Chief Appeals Officer & Ors [2021] IEHC 93 that an employment contract entered into where the holder does not have an immigration permission and employment permit is not always invalid and unenforceable.

The Minister for Social Protection (the respondent in this case) took the view that the applicant’s employment was not “insurable” employment for the purposes of an entitlement to maternity benefit. In circumstance where the applicant was not the holder of a valid Garda National Immigration Card (GNIB) or work permit while working in Ireland during a certain period of years, during which she made PRSI contributions, the Minister took the view that such employment is not considered to be legally valid and any PRSI contributions made from this employment are also not considered to be valid.

Heslin J summarised the decision as follows:

68........'I take the view that it is not self-evident that a contract entered into in contravention of the Employment Permits Act 2003 - 2014 could not be a valid and enforceable contract. In my view, it is not self-evident that a contract of employment, where the employee lacked the requisite employment permit or permission, cannot constitute a “contract of service” for the

purposes of social welfare contributions and benefits, in this case Maternity Benefit, in the

context of the 2005 Social Welfare Consolidation Act. It is not the case that, as the

respondents submit, it is self – evident that a contract made in breach of the Employment

Permits Act 2003 is illegal, unenforceable, and void for the purposes of the Social Welfare

Consolidation Act 2005.

69. A quarter of a century ago, the Supreme Court, in the FAS decision, made clear inter alia

that if the Oireachtas has decided to prohibit a particular type of contract by statute, it

would be anomalous if reliance were to be placed on that contract for the purposes of

social welfare contributions and benefits. That remains an important principle but it is not,

however, the only principle at play. This is because, as the Supreme Court has made clear

far more recently, in Quinn, there are other principles to be considered, including the

fundamentally important but competing principle that the application of a strict rule of

unenforceability can give rise to potential injustice.

70. The correct legal position is not what the first named respondent understood it to be

when making the 05 March 2020 decision. The decision of the Supreme Court in Quinn

means that FAS v. Abbott is not a comprehensive and is, therefore, not an adequate

statement of the current law. For the respondent to have relied, exclusively, on a

principle derived from FAS as the basis for the decision taken on 05 March 2020, was to

fall into error.

71. Recognising the competing principles at play, the Supreme Court in Quinn has given very clear guidance as to the various factors which must be taken into account in order to

determine, in any given case, whether a particular type of contract is to be regarded as

unenforceable or void, rather the Supreme Court also having “left the door open” for

other factors to be defined. In error, the first named respondent did not apply the test

identified in Quinn and which can be found at para. 194 of the Supreme Court’s decision

and did not regard itself as obliged to do so. Instead, the respondents regarded and

continues to regard, those principles derived from FAS which were quoted in the 05 March

2020 decision, as the only relevant ones, as well as being the principles which determined

the matter, thereby falling into error.

72. Given the submissions which were made to the court with regard to whether huu

remained good law or not, it needs to be emphasised that the principle in the FAS

decision upon which the respondent placed reliance for the impugned decision is a

principle which the Supreme Court in Quinn explicitly acknowledged as being valid. This is

clear, including from the analysis by now – Chief Justice Clarke in paras. 72 and 143 of

the Quinn decision, both of which I have quoted verbatim earlier in this judgment. The

critical point, however, is that it is one, but not the only relevant principle and the

Supreme Court’s decision in FAS no longer represents a comprehensive setting out of the

current legal position. Rather, the Supreme Court’s decision in Quinn is in my view

fundamentally relevant to the present situation and details the correct approach to be

taken, but which was not taken, in respect of the 05 March 2020 decision.

73. In stark contrast to the way in which Hogan J. felt obliged to decide Hussein in the High

Court, there is no longer a “hands off” rule adopted by courts in this jurisdiction to the

effect that a contract tainted by illegality will necessarily result in unenforceability and

voidness in all circumstances. The position is far more nuanced and far more

sophisticated and involves a weighing up of competing principles and factors in the

manner the Supreme Court have explained in Quinn.

74. It is acknowledged by the applicant that, pursuant to s. 300 (2) (iv) of the 2005 Act, a

deciding officer is entitled to decide on a question as to whether an employment is or was

“insurable employment”. However, in light of the Supreme Court’s decision in Quinn, it

was not enough for the first named responded simply to identify illegality in respect of the

relevant contract of employment and to take the view that illegality necessarily resulted in

such a contract being void and not being recognised at law. By so doing, the first named

respondent erred in law in the decision of 05 March 2020.

75. Insofar as it falls to the first named respondent to reconsider the matter, the correct

approach is that which is detailed in the Quinn decision, not an approach which relies on a

single principle derived from FAS in the manner set out in the decision of 05 March 2020.

76. For the reasons set out in this judgment, I am satisfied that the first named respondent’s

Appeals Officer erred in law in their 05 March 2020 decision and, that being so, I am

satisfied that the applicant is entitled to an order of certiorari, quashing the decision of

the first named respondent of 05 March 2020 disallowing the applicant’s Maternity Benefit

appeal, satisfied also that it is an appropriate exercise of this Court’s discretion to grant

such an order.

* Quinn v. IBRC [2016] 1 IR 1

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