Employment Law

A recent ruling has cleared the path to uncapped financial compensation following a forced resignation. A longstanding social worker had complaints raised over her work by an interim service manager. The ensuing investigation, however, failed to inform her of the specific allegations, their source, or their scope. This covert enquiry had a profound and detrimental effect on the mental health of the individual, leading to anxiety, depression and sleep disturbances. As a result, she submitted formal grievances that were not satisfactorily resolved before her eventual dismissal.

The social worker successfully pursued a complaint of indirect disability discrimination and constructive unfair dismissal at Tribunal, although she subsequently appealed the assessment of compensation. While the original Tribunal had initially upheld her claims and awarded a total of £153,906, including past loss of earnings, injury to feelings, expenses, a basic award, and £20,000 for pension loss, it made no award for any future loss of earnings.

The Appeal Tribunal forcefully dismissed the Council’s cross-appeal, ruling that any act of workplace discrimination which inflicts an ongoing psychiatric injury that is sufficient in severity to drive an employee to lose their career is fully recoverable under discrimination law. The Appeal Tribunal confirmed that compensation, under Section 124 of the Equality Act 2010, must be assessed based on the principles of tort law, which seek to place the injured party back into the exact financial position they would have enjoyed had the wrong never occurred, ruling that any financial losses resulting from a ‘career crash’ need only stem from the unlawful act itself. Thus, from a legal standpoint, a single act of discrimination inflicted during employment can cause the ultimate loss of a job and career, albeit in this case an indivisible psychiatric injury caused by a surreptitious investigation.

The flawed grievance procedures did not break the chain of causation or remedy the deep psychological damage already inflicted by the discrimination. Moreover, the Judge ruled that the original Tribunal had erred in arbitrarily diminishing the future loss of earnings and failing to properly apply the official Principles for Compensating Pension Loss when calculating her defined benefit pension scheme.

This austere ruling is a clear warning to executives concerning clandestine workplace investigations, as employers can no longer hide behind the pretext that an internal investigation was kept quiet to protect the employee. If a workplace process isolates vulnerable employees, fuels toxic office rumour-mongering, and prevents employees from defending themselves, then it can be legally classified as a traumatising act of discrimination.

The volatile boundary between workplace speech, belief, and discrimination was recently ignited in a case that tested the sanctity of protected beliefs.

The dispute began when a British emergency ambulance crew member was subjected to internal disciplinary proceedings after using an inappropriate word during a heated confrontation with a colleague, mimicking his accent during an investigative interview. Later, at a particularly sensitive moment in race relations, he rejected the concept of systemic racism, asserting that individual choices dictate outcomes.

The employer conducted an investigation and disciplinary hearing after receiving complaints. The disciplinary manager determined that, while the employee was permitted to hold his views, the offensive and disrespectful manner of his delivery in the mess room and his vocal mimicry of a colleague constituted gross misconduct. This led to a final written warning and mandated unconscious bias training alongside reflective practice on workplace language and systemic racism. The individual successfully brought claims of direct race and belief discrimination to an Employment Tribunal under Section 13 of the Equality Act 2010, on the premise that all humans belong to a single race and are entitled to respect. The Tribunal concluded, by majority verdict, that his rejection of systemic racism was a direct manifestation of this protected belief, and that the employer's sanctions were thus unlawful.

However, the Appeal Tribunal found grave errors in both logic and law, drawing a clear line between how society ought to operate and the rejection of systemic racism as a descriptive viewpoint in relation to actual societal structures. The Judge viewed that the Lower Tribunal had misconstrued critical race theory, contending that a rejection of systemic racism does not logically flow from a belief in human equality, as an individual can passionately believe in equal treatment while still observing that systemic racism exists. The Appeal Tribunal concluded that the employer had objected to the disrespectful and insensitive manner of the conversation, as well as the mimicking of a colleague, dismissing the race discrimination claim based on unverified Internet research as legally perverse.

This ruling provides essential clarity on the scope and limits of free speech and associated protections of philosophical belief, drawing a sharp and uncompromising line between the quiet possession of a deeply held faith and the outward manner of its expression. If employees express their views insensitively or aggressively in the workplace, then an employer is legally permitted to discipline them without violating anti-discrimination laws. Moreover, if workplace statements are classified as personal viewpoints rather than protected philosophical beliefs, then your employer possesses significantly broader discretion to manage and restrict such speech, drawing a clear demarcation between behaviour and belief.

Equal pay claims can grind on for years before resolution. However, the ground has shifted since the Court of Appeal (CoA) took Tesco’s own operating and training manual as the definitive source on employee roles rather than any granular analysis of their activity.

This claim began in 2018 when almost 60,000 Tesco store workers, primarily women, argued that their roles held equal value to those of their male counterparts in higher-paid distribution centre jobs. This pay dispute pivoted unexpectedly when the Tribunal issued its Judgement 1 in July 2023. Instead of parsing thousands of individual instances, it ruled that Tesco’s own weighty corporate manuals were the definitive evidence of role requirements. Tesco fought this argument vigorously, appealing for a rehearing that would have delayed the outcome by a further three years. However, the Tribunal held its ground, issuing a 619-page Judgement 2 in July 2024, appending a further 750 training documents.

The CoA delivered a resounding vindication for the claimants on four of five grounds in relation to Sections 64 and 65 of the Equality Act 2010, which define "relevant types of work" and establish that such work is deemed to be of "equal value" if it demands similar levels of effort, skill, and decision-making. Ultimately, this ruling effectively defines a ‘role’ as what the employer requires the employee to do – roles that are exhaustively detailed within Tesco’s voluminous training manuals.

This ruling is clear and constitutes a significant strategic advantage for litigants in equal pay claims, in effect shifting the body of evidence from invasive, second-by-second monitoring of employees’ daily activities to the blueprints of the company’s own operational handbooks and mandatory training manuals. The devil, it appears, lies in the detail, and these weighty tomes form the very rope by which employers effectively hang themselves. Indeed, such exhaustive detail can be leveraged to demonstrate the true complexity, effort, and skill a prescribed role actually requires.

By validating the use of extant corporate manuals to establish the baseline requirements of a position, the CoA has effectively streamlined the fact-gathering phase of equal pay litigation, and employers can no longer easily escape liability under a ‘Section 69 material factor defence’ by simply downplaying the everyday realities of female-dominated roles if their own written guidance suggests otherwise. So, if an employer demands exhaustive operational perfection on paper, then the law will hold them accountable when structuring employee pay. Employers should take care not to be caught in flagrant self-contradiction by their own documentation.

In the world of HR, the ubiquitous disclaimer "subject to references" is often viewed by employers as an escape clause, one which allows them to withdraw an offer at any time before “Day One”. However, a recent ruling has clarified that a conditional offer can become a binding legal contract long before an employee even steps into the role.

Mr. Swamy applied for the post of project manager and was formally offered the role "subject to receipt of satisfactory references, a right-to-work (RTW) check, and a successful six-month probation period". Mr. Swamy formally accepted the offer via email, provided the contact details of his references, and submitted his RTW documents. Loesche Energy Systems Ltd. (Loesche) then advised Mr. Swamy to seek a 12-month rental, as he was initially to be based in the UK. However, only weeks before he was due to start, Loesche informed him that their own client contract had been delayed and that they were "no longer able to offer" the position as specified. Mr. Swamy brought a claim for breach of contract, arguing that a binding agreement had existed, one which entitled him to notice pay.

The Appeal Tribunal sided with Mr. Swamy, finding that the offer letter had contained all the essential terms in terms of salary, hours, start date, and probation period. Crucially, as a probation period can only be initiated after employment begins, it was logical to view the entire package as a concluded contract, and thus Loesche did not have the unrestricted right to withdraw. By failing to provide sufficient notice, they had effectively breached the contract.

As the written contract was silent as to how much notice was required, the Tribunal had to infer a term of "reasonable notice". Despite Loesche’s attempt to argue for a "zero-day" notice period (or a statutory minimum of a week), the Tribunal determined that three months was the only reasonable term given the request that Mr. Swamy secure a 12-month rental property.

This ruling carries significant weight for anyone involved in recruitment, given that employees are now protected from “Day One” after they accept a clear offer, even if "onboarding" checks are in progress. If an employer withdraws an offer for reasons unrelated to background checks, such as a change in business fortunes, then significant damages can be awarded based on an implied notice period. Thus, employers should rigorously review offer letters and pre-employment correspondence and cannot rely on "standard terms" that the candidate has not seen. To avoid any unexpected liability, employers must be explicit about notice periods during the pre-start phase and understand that, once an offer is accepted, a legal "point of no return" has been crossed.

Employment disputes can drag on for years, which inevitably raises the question of how long is too long for a hearing to be deemed fair. Mr. Boateng was originally employed in January 2017 by a gentlemen’s outfitters at their branch in the Strand before being relocated and promoted to hiring manager. After an incident involving the claimant and several colleagues at the Stratford branch on 23 July 2019, he was ultimately dismissed on grounds of ‘misconduct’ on 28 October 2019 after an unsuccessful internal appeal.

In early 2020, Mr. Boateng initiated legal proceedings concerning over thirty allegations of racial and religious discrimination dating back to 2017, in parallel with a claim for unfair dismissal. However, the hearing was postponed for over a year due to the pandemic and a formal insolvency process. By the time the case reached a preliminary assessment in 2023, the evidentiary landscape had shifted dramatically, as 21 of the 22 individuals concerned had since left the company. Moreover, the outfitter reported that 17 of those former employees were either impossible to locate or else explicitly refused to participate in the tribunal. As the earliest allegations were by then historical, the employer argued that they could no longer mount a meaningful defence, as the collective "memory of the firm" had essentially dissipated.

Both tribunals concurred that the discrimination claims should be struck out under Rule 37(1)(e) of the Employment Tribunal Rules, which allows for the termination of a case if a "fair hearing" is no longer possible. As almost every key witness had been lost, this was deemed to have created a "substantial disadvantage" to the employer, one transcending mere inconvenience. As discrimination claims require an employer to be able to call the specific person accused of discrimination to explain their mental processes, per Section 136 of the Equality Act 2010, the narrative was fragmented. Thus, no balanced picture could emerge, as only the “dismissing officer” was still available to testify.

This case reiterates that both sides have the right to a fair trial under Article 6 of the ECHR, thereby highlighting the importance of pursuing claims promptly and of keeping detailed contemporaneous records, as witnesses cannot later be relied upon to remain available or indeed helpful so many years after the fact. For employers, this case demonstrates the value of conducting timely and thorough internal investigations and of obtaining and preserving witness statements. Thus, even if a staff member leaves the company, a robust written record created at the time of the grievance can serve as a "documentary bridge" to ensure a fair hearing.

A pivotal ruling has raised a protective umbrella over those impacted by a toxic workplace environment, potentially extending employers' legal liability by months or even years.

An Employment Tribunal had to decide whether the employers of a harassed employee, who was actively considering a change of employment, could use this intention to leave as a pretext to slash their compensation. An employee of the British Council was posted to Morocco in October 2018, where she was subjected to a campaign of sustained harassment by a colleague, culminating in her filing a grievance. However, the report blamed her for “sending mixed messages,” romanticising the offender’s behaviour as that of a "spurned lover". Thus, the British Council refused to uphold her sexual harassment claims, despite actual evidence of physical assault. She resigned and presented her claims to an Employment Tribunal for constructive unfair dismissal, direct sex discrimination, sexual harassment, and victimisation.

The first Tribunal upheld all the claims, save that of victimisation, finding multiple repudiatory breaches of the implied term of trust and confidence, plus discriminatory conduct for which the British Council was vicariously liable. However, the first Tribunal applied a 35% Polkey reduction to the unfair dismissal compensation and a 35% Chagger reduction to discrimination compensation (based on the possibility that the appellant might have left her employment with a reduced benefits package, plus evidence that she was contemplating a move to other roles). She appealed the deductions, leading the British Council to cross-appeal, contending that the sexual harassment claim was ‘out of time’.

The Appeal Tribunal allowed the appeal on the Chagger deduction, as the victim’s urge to leave was influenced by the very harassment she had suffered, while the 35% Polkey deduction from discrimination compensation could not stand. The Appeal Tribunal also dismissed the British Council's cross-appeal, finding that the sexual harassment was part of a continuous pattern of discrimination.

This ruling upholds the notion that "career intentions" do not take place in an ivory tower. Thus, any compensation awarded should reflect a hypothetically successful career, given sufficient dignity and protection from harassment. Crucially, the "limitation period" for such a claim does not necessarily reset after every individual act of harassment. If a company handles a grievance poorly or tacitly permits a "climate" of harassment to persist, then it effectively creates a single, continuous legal event, one which allows a claimant to sue for historical misconduct. Thus, employers, especially in light of the recent advent of the

Employment Rights Act, must act swiftly to nip all such behaviours in the bud to prevent them from potentially escalating into a weighty compensation claim.

Annual leave & holiday pay (effective April 2026)

From 6 April, the Employment Rights Act (ERA) 2025 has introduced strict new record-keeping duties, requiring employers to maintain detailed records of annual leave, carried-over holiday, and holiday pay. Employers must keep these records for six years, with failure to do so potentially resulting in severe financial penalties under the newly created Fair Work Agency (FWA). These changes address previous gaps in law regarding record retention, placing a higher administrative burden on businesses to ensure compliance.

Redundancy provisions (April 2026)

The cost of procedural errors during collective redundancies has effectively doubled, as the maximum protective award for failing to properly inform and consult on redundancies involving 20 or more staff has increased from 90 days to 180 days of gross pay. This change places a significant premium on early and transparent consultation with staff and unions to minimise the risk of severe financial penalties.

National Living Wage to increase (April 2026)

As of 1 April 2026, all employers must ensure that their payroll reflects the new statutory rates, including an increase in the National Living Wage (NLW) to £12.71 per hour for those aged 21 and over, £10.85 for 18–20 year olds, and £8.00 per hour for 16–17 year olds and apprentices, while statutory maternity, paternity, and adoption pay have also risen to £194.32 pw.

Guaranteed hours (2027)

Zero-hours and low-hours workers will have the right to request guaranteed hours, compensation for cancelled shifts, and reasonable notice of working schedules. Employers must pay for shifts that are cancelled, moved, or reduced at short notice. Employers will be required to provide reasonable notice when scheduling or changing shifts, although the precise definition of "reasonable" is yet to be determined.

The FWA’s draconian new powers

To ensure these new rights are strictly followed, the government has established the FWA as a single, powerful enforcement body. The FWA has the authority to inspect workplaces (by forceful entry if necessary), audit payroll records for minimum wage and holiday pay compliance, and bring court proceedings against any organisations that fall short of statutory standards. This increased oversight coincides with major trade union reforms that make it significantly easier for unions to gain recognition. The membership threshold for recognition applications has dropped from 10% to just 2%, and the requirement for a 50% turnout in industrial action ballots has been removed. With the introduction of electronic and workplace balloting, the logistical barriers to organising industrial action have effectively been lowered, making it essential for employers to cultivate positive, proactive relations with their workforce.

Paternity Leave

As of Monday, 6 April 2026, the Employment Rights Act (ERA) 2025 will fundamentally transform the UK workplace by introducing several "Day One" entitlements. Now, paid paternity leave and unpaid parental leave are Day One Rights, granted immediately upon joining a firm. Fathers will also be permitted to take paternity leave, even after finishing a period of shared parental leave, a change that applies to all babies born or placed for adoption. Further, employers should take note of the recent introduction of Bereaved Partner’s Paternity Leave, which offers up to 52 weeks of protected leave for those whose partner dies before a child’s first birthday.

Statutory Sick Pay

The 3-day "waiting period" for Statutory Sick Pay (SSP) has also been removed, and SSP is now a Day One Right. Further, the Lower Earnings Limit (LEL), which previously required employees to earn at least £125 pw to qualify, has been scrapped, and all workers, regardless of their weekly pay, are now eligible for either the standard rate of £123.25 pw or 80% of their average weekly earnings, whichever figure is lower. This change obligates an immediate review of HR payroll systems and sickness policies to factor in a likely increase in both the number of eligible employees and total company expenditure on short-term absences.

Whistleblowing Protections

The whistleblowing laws, which have always been a de facto Day One Right, have been broadened to include complaints of sexual harassment as "protected disclosures explicitly". This means that any worker who reports harassment is shielded by law against detriment or unfair dismissal, requiring employers to update their internal whistleblowing and harassment policies to reflect this heightened level of legal protection.

The employment status of a former bricklayer was recently called into question in establishing liability for asbestos exposure. The widow of the late Mr. Eric Alger, who died from mesothelioma, sought access to historical Employer’s Liability

Insurance. Mr. Alger had been contracted to work on a major refurbishment project in 1988. However, because the company had long since been wound up, it had to be restored to the register for this case to be heard. Mr. Alger had worked alongside demolition gangs on the site, although he claimed that he had never been provided with a mask or warned about the risks of asbestos.

The widow’s case was that, while Mr. Alger was self-employed for tax purposes, he was directly engaged by the company to work on the project. The High Court determined that, on the balance of probabilities, Mr. Alger was directly employed by the company and thus fell under the definition of an “employee” for the purposes of Employer’s Liability Insurance, allowing the widow to proceed with the claim for damages. As Mr. Alger had been moved between different areas of the site and performed general labour rather than just specialist bricklaying, the Judge concluded that he was effectively being managed directly by the main contractor and was effectively an employee.

While Mr. Alger was “self-employed” in the eyes of HMRC, if workers provide “labour only,” use the company’s tools, and are moved between tasks at the manager’s discretion, then they are classified as employees, allowing them access to compensation otherwise denied to truly independent businesses. This case further demonstrates that a company’s legal liability may persist long after it has been wound up.

This case has profound implications for any sector that provides equipment or infrastructure, yet declares its workers to be independent subcontractors. Moreover, this landmark ruling may not be confined to liability insurance and could also be extended to other areas of accountability. Employers should thus ensure that the roles of subcontractors are clearly specified.

The National Minimum Wage (NMW) Act 1998 remains contentious, especially after the introduction of the NMW (Amendment) Regulations 2025, as it draws the legal line in the sand between employment and slavery, as highlighted by a recent case.  

The claimant was born in the Philippines in 1990 and travelled to the UAE in the employ of a diplomat and his family, after which she was relocated to London. Her three months of employment in the UK involved extreme exploitation, verbal abuse, threats and isolation, as she was effectively forced to work eighteen-hour days, with no breaks or rest days. Her movements were strictly controlled, as the family retained custody of her passport and frequently locked her inside the flat when they were away. She was further isolated by being denied access to a SIM card or the household Wi-Fi, while her compensation was almost non-existent, falling far below the statutory NMW.

It was concluded that, as she had been a victim of human trafficking and suffered from PTSD, she was granted leave to remain in the UK in 2015. The High Court awarded over £146,000 in ‘punitive’ damages in a “default” assessment, including £85,000 for false imprisonment and injury to feelings, £35,000 for psychiatric injury, and £15,000 in exemplary damages. Given the resurgence of modern slavery and human trafficking cases, this ruling renders “sub-clinical distress” a litigable tort in forced labour cases, potentially reaching the highest band of compensation.  

While the NMW Act allows for a “current rate” uplift in a standard Employment Tribunal, the Judge ruled that this does not automatically apply to a claim brought in tort. If a claimant sues for “servitude” or “negligence” rather than a straight breach of contract, they may only be entitled to the wage rates that existed at the time the work was done. This presents a claimant with a strategic choice between pursuing a statutory (i.e., for higher money) or a tort claim (for general damages, including PTSD).

Cases of severe harassment and abuse can result in a “loss of earnings” that can extend far beyond the period of employment, due to traumatic psychological damage or unwarranted references. Thus, HR departments should actively monitor ongoing workplace conflicts to safeguard against claims under the new Employment Rights Act and NMW (Amendment) Regulations.