EmpLaw Newsletter January 2025

Employment Rights Bill: What’s Changing?

An Amendment Paper on the Employment Rights Bill was published at the end of November. Key proposed changes include the following proposals from the Government:

• Extended time limits for tribunal claims: The addition of a new Schedule which will have the effect of extending the time limit for bringing all tribunal claims from 3 months to 6 months.
• More information on the ‘Initial Period of Employment’ (IPE): The draft Bill makes unfair dismissal a Day One right but leaves some wriggle room by allowing for different rules to apply during what is termed the ‘initial period of employment’ (IPE). There was nothing in the original draft Bill about how long the IPE might be although the accompanying Next Steps document indicated it might be 9 months. A provision is now included stating that the IPE will be not less than 3 months and not more than 9 months.
• Guaranteed hours: Various changes to the provisions relating to guaranteed hours which don’t appear to make any wholesale change to the complex way in which these provisions are currently structured.
• Shift cancellation payments: Changes to the rules on payments when shifts are cancelled, moved or curtailed at short notice, include giving the tribunal discretion on whether to make an award where an employer has failed to make a payment required in such circumstances, and further discretion as to what that payment should be, taking account of the ‘seriousness of the matter’.
• Menstrual health added to equality planning: Menstrual problems and disorders are set to become a defined aspect of “matters related to gender equality.” This means employers may need to include them in equality action plans under separate regulations.
• Trade union access clarified: Clarification that the right of trade unions to access workplaces will not extend to any workplace which is also a dwelling.

Additional changes have been proposed by MPs:

• No more gagging on harassment: A proposed clause would void any non-disclosure agreement (NDA) that tried to stop workers from reporting harassment, including sexual harassment.
• Banning substitution clauses: These clauses allow workers to send someone else to do their job. If this change passes, they’ll be off the table in employment, worker, or dependent contractor contracts.

It remains to be seen how many of these changes will ‘stick’ as the Bill continues its progress through the House of Commons. The provisions relating to extension of time limits are likely to be here to stay (given they occupy an entire Schedule and reflect one of the Government’s election pledges). The Amendment Paper can be accessed here.

Government announces new rates for family leave pay and statutory sick pay from 6th April 2025

The statutory rates of pay applicable to the various different types of family leave which can be taken, together with the amount payable as statutory sick pay, are updated on an annual basis. The new rates, which will apply from 6^th April 2025, have now been published by the Government. The new rates are as follows:

These figures will be superseded by any higher figures which an employer might offer either on a discretionary basis or as part of a contractual obligation.

The average gross weekly earnings required to qualify for the various forms of family leave pay will increase from £123.00 or more per week, to 125.00 or more per week from 6^th April 2025. The figures stated are the maximum payable (under statute) per week. If an employee earns less per week than the rate stated, then they should receive the lower amount equating to their actual earnings.

Compensation uplifts for failure to follow fire and rehire code of practice to apply to protective awards from January 2025.

When the Code of Practice on Dismissal and Re-engagement came into force in July last year, a notable omission from the list of claims to which uplifts could be applied for non-compliance was protective awards. Protective awards are awards of (currently) up to 90 days’ gross pay (uncapped) which can be made by tribunals where an employer has failed to comply with its collective consultation obligations in a redundancy situation involving 20 or more employees at any establishment.

The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024  has added failure to follow collective consultation requirements under s189 Trade Union and Labour Relations (Consolidation) Act 1992 to the list of claims where an adjustment to compensation of up to 25% can be made for failure to follow a relevant code of practice. The Order comes into force on 20 January 2025.

The upshot of this change for employers is that, from 20 January 2025, when assessing the financial risk associated with a failure to comply with collective consultation obligations in a redundancy situation, ‘90 days gross pay’ per employee will no longer be the worst-case scenario. The likelihood that the statutory code of practice on dismissal and re-engagement has also been breached will also need to be considered – potentially adding up to 25% to the previous worst-case scenario figures.

This change also needs to be placed in context of the other changes which the government are proposing in this area. The Employment Rights Bill proposes to bring more redundancy situations within the ambit of collective consultation by removing the concept of ‘establishment’ – so that the number of proposed redundancies needs to be calculated across the business and not just on a site-by-site basis when looking at whether 20 or more are proposed. The government has also recently completed a public consultation seeking views on increasing the level of protective awards, either to 180 days or by removing the cap on the protective award entirely.

The stakes on collective consultation are getting higher and are likely to get higher still in the coming months and years.

Compensation for discrimination: injury to feelings awards

In discrimination cases, employees can claim compensation for the emotional distress caused by their employer’s actions. This is called an injury to feelings award, which is separate from any financial loss.

The amount awarded is guided by the Vento bands, which are updated yearly. The current ranges are:

• Lower band (less serious cases): £1,200 to £11,700
• Middle band: £11,700 to £35,200
• Upper band: £35,200 to £58,700

In the recent case of Shakil v Samsons Ltd, the Claimant was dismissed after facing pregnancy-related discrimination, including reduced hours, unfair complaints about her conduct and performance, and a sham redundancy. The tribunal awarded her £5,000 for injury to feelings but failed to explain how it applied the Vento bands. The Claimant appealed.

The Employment Appeal Tribunal (EAT) found the tribunal’s approach to the injury to feelings award was flawed. It had not:

• Reviewed the Claimant’s detailed evidence of distress.
• Made findings of fact about the emotional impact.
• Referenced the Vento bands or explained why £5,000 was awarded.
• Referred to any statutory provision or authority relevant to assessing injury to feeling.

The EAT did not set a new amount but sent the case to a new tribunal for reassessment, commenting that “this [was] not a case in which there was one-off treatment that would be likely to result only in limited injury to feelings”.

This case shows how tribunals must carefully follow guidelines when assessing injury to feelings. Employers can use this structured approach to better estimate potential financial risks in discrimination claims.

What can employers do if they find that an employee has lied on their CV?

Rachel Reeves, our current Chancellor, came in for some criticism recently when it was claimed that she had tweaked the details of a previous role at HBOS on her LinkedIn profile (referring to her job as one of ‘economist’ when, allegedly, the role had been a ‘retail banking’ one).

It’s no surprise that employees may want to embellish their previous experience in order to shine. In fact, a YouGov survey (in 2017) found that one in ten employees admit to lying on their CV. Although employers may tolerate little white lies, bigger ones should not be ignored. For example, in regulated professions (such as healthcare, finance or law), employers who engage staff without the correct qualifications can face penalty notices or criminal charges.

The action you take in respect of the lie depends on what it is and when you discover it. If it’s before the employee starts work, withdraw the offer. If they’ve already started, it’s a bit trickier. You have the following options:

Disciplinary action: Dishonesty is misconduct. Investigate and follow your disciplinary process (particularly if the employee has two years’ service and protection from unfair dismissal). If you decide they lied, the action you can take depends on the scale of the fib. Serious lies could amount to a fundamental breach of the implied duty of trust and confidence and justify summary dismissal. Otherwise give them a formal warning.

Misrepresentation: Deliberately lying on a CV is a misrepresentation of the facts. If the lie was a material factor in the employer’s decision to offer the employee the job (such as claiming false academic credentials), it is potentially entitled to treat the contract as void and at an end. It may also be entitled to compensation for costs like recruitment fees or training expenses.

Criminal consequences: Lying on a CV can amount to fraud (Fraud Act 2006) or obtaining pecuniary advantage by deception (Theft Act 1968). Although the police rarely get involved in workplace disputes, if the fraud or deception involves public funds or is sufficiently serious, it may prosecute.

When can an employer lawfully deduct from an employee’s wages?

If an employee carries out work, then they are generally entitled to receive wages from their employer in return. The amount of wages payable will generally be set out in the employment contract. Making deductions from the amount otherwise due can be tricky. But deductions can be lawful when made for the right reason and managed correctly.

Section 13 of the Employment Rights Act 1996 (ERA) says that employers can make deductions (up to 100%) from an employee (or worker’s) wage if:

• It’s required or authorised by statute. For example, tax, student loan repayments.
• It’s required or authorised by the employment contract. For example, pension contributions or repayment for uniform. Provided the employee has received a written copy of the term before the deduction is made.
• The employee gives their consent in writing to the deduction before it is made. For example, salary sacrifice schemes (such as childcare vouchers) or other voluntary deductions.

Section 14 ERA says you don’t need to comply with these restrictions if the deduction is due to, for example: 

• Overpayment of wages: Employers are allowed to recover overpaid wages or expenses without employee consent. 
• Industrial action: Employers can deduct wages for work not performed during lawful industrial action.
• Statutory authority: For example, court-ordered payments like Child Support Agency deductions or a direction from HMRC to account for tax owed.
• Payments to third parties: For example, to a pension scheme.
• Retail: Employers can deduct wages for stock damage, mistakes, or till shortages if there is a written agreement allowing for such deductions and they don’t exceed 10% of pre-tax pay, per payday, and take place within a year.

If none of the above conditions are met, the deduction is likely unlawful, and the employee could bring an employment tribunal claim for ‘unlawful deduction from wages’ (which is a ‘day one’ right).

TUPE: a step-by-step guide to the rules around relevant transfers and dismissal

In De Marchi v London United, the Employment Appeal Tribunal shone a light on the complicated and fiddly provisions contained in the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) relating to relevant transfers and termination of employment. Here is our step-by-step guide to the rules as they are currently understood:

1. The automatic transfer principle: Wherever there is a ‘relevant transfer’ under TUPE (either a business transfer or a service provision change), the contracts of employment of all employees assigned to the business or service transferring, will automatically transfer to the new owner/new service provider.
2. Automatic unfair dismissal if dismissal is by reason of transfer: If an employee is dismissed by reason of a TUPE transfer, then their dismissal will be automatically unfair.
3. … unless it is a dismissal for an ‘ETO reason: If an employer can show that a dismissal is by reason of the transfer but is for an ‘economic, technical or organisational’ (ETO) reason entailing changes in the workforce, then it will not be automatically unfair. It will fall to be judged under normal unfair dismissal principles. ETO reasons include essential cost-saving requirements, using new processes or equipment and making changes to the structure of an organisation. There must be ‘changes in the workforce’ in terms of number, function or change in work location.
4. Resignation due to changes to working conditions: There can be a deemed dismissal where the employee resigns because the transfer involves, or would involve, a substantial change in working conditions to the material detriment of the employee.
5. Effect of objecting to the transfer: There is generally no dismissal (and therefore no right to claim unfair dismissal) if the employee objects to the transfer. The objection operates to terminate the contract of employment, but the situation is not treated as a dismissal. This usually leaves the objecting employee with no grounds for claim against anyone.
6. BUT – if the reason that the employee has objected to the transfer is because of a substantial change in working conditions to their material detriment, the contract will be regarded as having been terminated for that reason and the employee shall be treated as having been dismissed by the transferor. Any remedy would lie against the outgoing owner/service provider in such a case.

This last situation was illustrated in De Marchi itself. The employee in question was in scope to transfer following the re-tendering of a London Bus route. The transfer would have involved a substantial change in the employee’s ‘home’ depot to his substantial detriment (adding hours to his commute to work each day). He objected to the transfer in writing. He refused to accept that his objection would operate to end his employment (as would usually happen under Regulation 4(7) TUPE) – stating instead that he wanted to be made redundant. The EAT were left to sort the whole thing out and work out who, if anyone, the Claimant could claim against.

The EAT held that the Claimant had validly objected to the transfer under Regulation 4(7) which would, ordinarily, have left him with no claim against anyone. However, the EAT held that, as the reason for his objection was the substantial change in working conditions to his material detriment, his objection should be treated as a dismissal – a dismissal which, if it were found to be unfair, the outgoing service provider would be liable for.

The outcome of this case was that a bus operator who had lost a contract for a route found itself legally responsible for the dismissal of an employee who it did not actually dismiss; who would have transferred to the new route provider if it wasn’t for his objection to the transfer; and who was only objecting to the transfer because of the plans of the new route provider and not because of anything which the outgoing provider had done.

It places in stark relief the importance of well-drafted indemnities being negotiated in relevant transfer situations. Any standard indemnity dealing with who takes the risk of resignations where there are allegations of changes to working conditions to the material detriment of in-scope employees, should, in light of this case, be expanded to cover objections to transfer in the same circumstances.

Defining harassment in the workplace: Lessons from Carozzi and Forsbrook

‘Harassment’ doesn’t exist as a free-standing employment claim in the UK. To successfully claim harassment in an employment tribunal, an employee needs to be able to show that the harassment was ‘related to’ a protected characteristic. That is not to say that the employee is required to show that the harassment was ‘because of’ the protected characteristic. The causal bar is not set that high. But some linking factor is required. The relevant protected characteristics for harassment are: sex, sexual orientation, race, religion or belief, disability, age and gender reassignment.

There’s no need to show intent on the part of the harasser in order to demonstrate that conduct is ‘related to’ a protected characteristic. This was made clear by the Employment Appeal Tribunal in the recent case of Carozzi v University of Hertfordshire. The question of motive is dealt with in another part of the test for harassment when you look at whether the conduct had the ‘purpose’ (i.e. intent) or ‘effect’ (i.e. unintentional on the part of the alleged harasser) of harassing the victim.

This point was looked at again by the EAT very recently in the case of Forsbrook v Governing Body of Windsor Clive Primary School. In this case, the Claimant was disabled with asthma. She was absent from work due to asthma. She attended an attendance management meeting where it was agreed that, rather than being given a caution, she would be referred to occupational health. However, a clerical error meant that a caution was recorded against her file. When she commenced a second period of absence sometime later, she received a letter noting her previous caution and inviting her to a Stage 2 absence meeting. This was followed by further correspondence until the mistake was realised and rectified. The Claimant claimed disability-related harassment. Her claim was (at least partly) successful. The EAT, on appeal, held that the tribunal had provided insufficient reasoning for its conclusions that the Claimant was subjected to harassment. In particular, they had failed to spell out the relationship between the conduct and the disability in question.

The EAT took the opportunity to provide guidance that “Unwanted conduct should usually be approached based on the subjective view of the individual. Unless the purpose of conduct is to create the prohibited environment or to violate dignity, the reasonableness of “effect” within the statutory meaning will be the key to whether such conduct could amount to harassment”.

This case, like Carozzi, serves as a reminder that a step-by-step approach should be taken when analysing the risk of harassment in any given case. The constituent elements of the legal test are:

• Is there unwanted conduct (generally to be viewed from the perspective of the victim)?
• Is it related to a protected characteristic (some connection is required)?
• Did it have the purpose of violating the victim’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for them?
• If not, did it have the effect of violating the victim’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for them?
• If looking at the effect of the conduct, you must consider the perception of the victim; the other circumstances of the case; and whether it is reasonable for the conduct to have that effect.
•  If harassment is made out the claim will succeed unless the employer took all reasonable steps to prevent the harassment from taking place.

EAT gives guidance on dismissing employees fairly when the employment relationship has broken down

Employees with over two years’ service have the right not to be unfairly dismissed. This means that if an employer wants to end an employee’s employment fairly once they have two years’ service, then they need to be able to point to a ‘fair reason’ and show that they acted reasonably in relying on that reason to dismiss.

The law recognises five potentially fair reasons for dismissal. One of these is ‘some other substantial reason’, often referred to as ‘SOSR’. It can be applied to many different situations. One of these can be where the employment relationship has irretrievably broken down.

This happened in the recent case of Alexis v Westminster Drug Project. The Claimant’s role was the subject of a restructuring process whereby three posts would be replaced with two new posts. The Claimant applied for one of the two new posts and was unsuccessful at interview. She had dyslexia and raised a grievance about the interview process, saying that she should have been provided with the questions 24 hours in advance. She rejected the outcome of the grievance and appealed. She also rejected the outcome of the appeal and wrote numerous emails to the Respondent about it. She was called to a meeting to discuss whether her continued employment was tenable. The decision maker decided that the relationship had irretrievably broken down. He dismissed her with notice for SOSR. The Claimant brought a claim of unfair dismissal.

The employment tribunal dismissed her claim. The Claimant appealed, contending that the tribunal had not given sufficient consideration to her length of service or alternatives to dismissal.

The Employment Appeal Tribunal, dismissing the appeal, held:

• The Respondent had reasonable grounds for concluding that the relationship had irretrievably broken down.
• Once trust and confidence had irretrievably broken down, the only option was dismissal, and the Respondent was not required to consider alternatives.
• On the length of service point, the EAT held that an employer can only be obliged to consider length of service if it is relevant to the decision to dismiss. The decision to dismiss in this case was based on an irretrievable breakdown in the employment relationship. The Claimant’s length of service was therefore irrelevant.

This case is a good example of a situation where the employer carried out an internal review of the relationship between the parties and came to a clear evidenced decision that it had reached the point of no return. The EAT’s decision makes it clear that, where matters have reached this point, the employer is not required to artificially jump through hoops of looking at ways that dismissal might be avoided or taking account of length of service as they might be advised to do in, for example, a capability or conduct dismissal.

And finally,

AI applications such as ChatGPT have, over the last 12 months or so, become an important tool in improving business efficiency. However, a recent tribunal judgment indicates that it is not just employers who are taking advantage of AI. It was recently credited with encouraging a serial litigant in a disability discrimination claim against a prospective employer. In Mallon v West Midlands Growth Company, the Respondent failed in its attempt to get the Claimant’s disability discrimination case struck-out on the basis that the Claimant was a serial litigant. According to the Respondent, the Claimant would be “unrealistic in applying for roles for which he [had] no relevant experience”. Since 2019, the Claimant had applied for roughly 4,600 jobs and initiated over 60 legal claims.

The Claimant admitted he used an AI tool to analyse his email trails with prospective employers. He uploaded his correspondence to the technology, which, in the case against West Midlands Growth Company, allegedly revealed the company’s poor communication and that failure to accommodate his requests could amount to an Equality Act 2010 breach.

Hopefully, this serial job applicant story is an exceptional case. However, as AI technology continues to develop and becomes more accessible, more people will use AI tools to analyse the behaviour of their employers or prospective employers.