The claimant is a Nigerian national and was an au pair in a private household. She alleged discriminatory dismissal and race discrimination short of dismissal during her 18 months' employment. However, she was not allowed to work in the UK and she was aware of that fact. Her contract was tainted with illegality to such an extent that the Court of Appeal found it to be fatal to her right to pursue her employment claims - it was knowingly illegal in its inception. In the lead judgement from May 2012, Rimer LJ commented, "...for a tribunal to accede to her discrimination claim would be to condone her own illegality, since that illegality formed a material part of her dismissal discrimination case."

The Supreme Court has now found for the former employee and has restored the decision of the original tribunal that the race relations claim should be upheld (the tribunal's finding that the unfair dismissal element should be dismissed was not appealed).

Lord Wilson (with whom Lady Hale and Lord Kerr agree) pointed out that "The defence of illegality rests upon the foundation of public policy." Public policy rules are capable of expansion and modification.

Lord Wilson went on to set out and answer a series of questions as to whether it is or is not in the public interest to allow those with illegal contracts like Ms Hounga to benefit from the right not to be discriminated against: "

(a) Did the tribunal’s award of compensation to Miss Hounga allow her to profit from her wrongful conduct in entering into the contract? No, it was an award of compensation for injury to feelings consequent upon her dismissal, in particular the abusive nature of it.

(b) Did the award permit evasion of a penalty prescribed by the criminal law? No, Miss Hounga has not been prosecuted for her entry into the contract and, even had a penalty been thus imposed upon her, it would not represent evasion of it.

(c) Did the award compromise the integrity of the legal system by appearing to encourage those in the situation of Miss Hounga to enter into illegal contracts of employment? No, the idea is fanciful.

(d) Conversely, would application of the defence of illegality so as to defeat the award compromise the integrity of the legal system by appearing to encourage those in the situation of Mrs Allen to enter into illegal contracts of employment? Yes, possibly: it might engender a belief that they could even discriminate against such employees with impunity."

As an aside, it is worth noting that an unlawful deduction from wages claim, defeated at the original tribunal, was not appealed but Lord Wilson gave a strong indication that it should fall into the same public policy arguments as the discrimination rights - see paragraph 24.

Full case decision: http://bit.ly/1pI9ARS