Disagree.fact is she illegally overstayed.she misled her employer
But she didn't mislead her employer. She had it in writing from UKBA that she was a legal immigrant, which she naturally accepted as they are the arm of government which administers the UK immigration system and should know what they are talking about.
They turned around years later and said 'nah, we got it wrong you were actually overstaying so can't now get discretionary ILR as you failed to regularise your status in 2008, even though we said you didn't need to'.
It's Kafkaesque for the government to punish someone for relying on the written advice of the government on the legality of their immigration status!