In this month’s highlights, our team summarises the latest developments in UK employment law and their implications for employers. Catch up on October’s highlights here.
Where Key Employment Law Reforms Currently Stand
The Government announced that it will abandon its pledge to introduce a day-one right to claim unfair dismissal in the latest draft of the Employment Rights Bill, instead opting for the introduction of a six-month qualifying threshold. Meanwhile, the Bill continues to be debated by both the House of Lords and House of Commons in parallel with ongoing consultations relating to several areas including pregnancy and maternity dismissal protections and trade unions.
Despite the ongoing consultations, the Government has stated that it intends to launch further consultations in respect of key issues. This, coupled with the continuous back and forth between the House of Commons and House of Lords, raises serious questions as to when the Employment Rights Bill will become law and the final form it will take.
1. Day-One Rights and Early-Stage Employment Claims
- A six-month threshold has been acknowledged as necessary by several trade unions and may reduce early-stage claims for employers. However, the Government announced that it would not be backing down on its pledges to introduce other day-one rights, including sick pay and paternity leave.
- Following the proposal that it be made unlawful for an employer to dismiss pregnant employees or new mothers within six months of their return to work (except in specific circumstances), the Government has launched a consultation. It seeks to define under what “specific circumstances” dismissal could be lawful, whether a stricter overall standard should be imposed on employers when defending a claim of unfair dismissal, and whether the existing potential fair reasons for dismissal should be narrowed.
2. Trade Union Rights
- In recent weeks, the House of Lords has also proposed several amendments to the draft Bill that would:
- Introduce a mechanism for workers to opt out of the right to a guaranteed hours contract
- Retain the existing requirement that at least 50% of all potential voters turn out for industrial action ballots.
- The House of Commons disagreed with these amendments and proposed further consultation and consideration of electronic voting before changing the industrial action ballot threshold. The Bill remains in Parliament.
- Separately, in connection with a proposed requirement for all employers to provide employees with a written statement informing them of their right to join a trade union, the Government is consulting on the content and frequency of such written statements.
3. UK ACAS: Early Conciliation Periods
- From 1 December 2025, the maximum early conciliation period will double from six to 12 weeks, potentially extending the period during which employees may bring claims against employers.
- Typically, an employee must bring an Employment Tribunal claim within three months of the event subject to the complaint. However, this time limit is paused during the early conciliation period.
- During early conciliation, the UK Advisory, Conciliation and Arbitration Service (ACAS) has a duty to try and promote settlement between the parties.
- Upon determining whether a settlement is possible, ACAS issues an early conciliation certificate to the prospective claimant which, apart from limited exceptions, is required for an individual to bring a claim before the Employment Tribunal.
- An increase to the maximum early conciliation period provides more time for prospective claimants and respondents to settle any potential claims. However, this extension also provides prospective claimants with more time to bring claims.
- The extended period, combined with a backlog of Employment Tribunal cases, may lead to further delays in the Employment Tribunal considering a claim, widening the gap between the initiation of the claim and the event concerned.
- Employers should assess whether their current retention policies for employment records are appropriate given the potential further delays in claims being issued and dealt with by the Employment Tribunal.
Significant Employment Law Cases for UK Employers
1. Employees can pair automatic unfair dismissal claims with whistleblowing detriment claims arising from the same dismissal, exposing employers to vicarious liability.
In Rice v Wicked Vision, the Court of Appeal held that an employee who brings a claim for automatic unfair dismissal may also bring a whistleblowing detriment claim where the alleged detriment is their dismissal, and employers can be found vicariously liable for such additional claims.
What led to the dispute, and why is the outcome significant for employers?
- Mr. Rice was employed by Wicked Vision until he was dismissed on grounds of redundancy.
- He claimed automatic unfair dismissal, on the basis that he had made protected disclosures.
- Mr. Rice sought to add a whistleblowing detriment claim alleging the detriment was his dismissal and that the employer was vicariously liable for a co-worker’s actions.
- The Employment Tribunal allowed the amendment, although this was later overturned by the EAT which found that such a claim was barred under s47B(2) of the Employment Rights Act. This decision was subsequently appealed to the Court of Appeal.
- Relying on Timis v Osipov, the Court of Appeal confirmed that an employee may bring a whistleblowing detriment claim where the alleged detriment is dismissal, including against co-workers, and employers can be vicariously liable.
- The Court of Appeal did however indicate that such an interpretation of the Employment Rights Act could and should be overturned in the future, although this power rests solely with the Supreme Court.
Takeaways
- Employees can bring an automatic unfair dismissal claim against their employer and, at the same time, bring a whistleblowing detriment claim against a co-worker based on the same dismissal.
- An employee who initially makes a claim for unfair dismissal may later amend that claim to include a detriment against a co-worker based on the dismissal. Subject to any discretionary factors, a tribunal will be bound to grant such an application.
- Despite these findings, in detriment claims where it is alleged that an employer should be found vicariously liable, an employer will have a defence if it can show that it took all reasonable steps to prevent the co-worker from behaving in the alleged manner.
2. Some of the usual Transfer of Undertakings (Protection of Employment) (TUPE) protections may be limited in circumstances where a business is sold after entering provisional liquidation.
In Secretary of State for Business and Trade v Sahonta, the EAT confirmed that, in insolvency proceedings, TUPE can begin when a provisional liquidator is appointed by the Court, not only when a winding-up order is made.
What led to the dispute, and why is the outcome significant for employers?
- Morton Rolls Limited entered into a conditional transfer agreement with Phoenix Volt Ltd for the sale and transfer of its bakery business, and then ceased trading immediately.
- A provisional liquidator was appointed and sent a letter to all of Morton’s employees informing them that their employment may have transferred to Phoenix, but if not then they should consider their employment terminated. All the employees were subsequently dismissed.
- Phoenix took over operational control of the business and reemployed many of Morton’s former employees. Meanwhile, Morton entered compulsory liquidation.
- Morton’s employees argued that a TUPE transfer had occurred prior to the winding up order and asserted that they were entitled to compensation from Phoenix for breach of TUPE regulations.
- The Employment Tribunal found that the relevant transfer had occurred on the date of the conditional transfer agreement, and therefore the employee liabilities did not transfer under TUPE.
- On appeal, the EAT agreed with the Employment Tribunal’s decision, confirming that the employee liabilities had not transferred to Phoenix under TUPE, as the provisional liquidation had begun before the deemed date of transfer of the business. This, combined with the EAT’s finding that none of the parties took actions to avoid a TUPE transfer, meant that the employees were not entitled to any compensation.
Takeaways
- For the purposes of TUPE, the relevant transfer date of a business will depend on when the new owner takes genuine control of that business, rather than when the transfer agreement is signed. Businesses should be mindful that TUPE protections may therefore be engaged sooner than expected.
- TUPE protections may be limited once an employer enters provisional liquidation. Employee claims for redundancy, arrears and notice pay may shift to the National Insurance Fund following the commencement of provisional liquidation. Despite this ruling, businesses should be wary of intentionally circumventing TUPE protections in this way, as the Employment Tribunal may make an alternative finding where this is the case.