Monthly Highlights — UK Employment Law — February 2026

In this month’s highlights, our team summarises the latest developments in UK employment law and their implications for employers. Catch up on January’s highlights here.

Unfair Dismissal: A Defective Internal Appeal Process Can Render a Fair Dismissal Unfair

In Milrine v DHL Services Limited, the Employment Appeal Tribunal (EAT) held that significant procedural defects in an employer's internal appeal process can render a fair dismissal unfair. 

What led to the dispute, and why is the outcome significant for employers?

The appellant Mr Milrine was dismissed with notice for medical incapability on 3 June 2022 by the respondent DHL Services Limited.

Mr Milrine exercised his right to appeal the decision to dismiss him in accordance with DHL's internal appeals procedure. However, Mr Milrine abandoned the internal appeal process due to confusion arising from several procedural failings:

• The nominated appeal manager declined to hear the appeal and did not acknowledge or reply to Mr Milrine’s letter of appeal. He did not inform Mr Milrine of this decision, leaving him “in limbo”.
• A replacement manager was nominated to handle Mr Milrine’s appeal but did not attend the rescheduled hearing. Mr Milrine and his trade union representative attended DHL’s premises, only to find that the hearing was aborted.
• Afterwards, DHL’s HR business partner told Mr Milrine to choose which manager would hear the appeal and to propose dates. However, none of this was confirmed to Mr Milrine in writing.
• Mr Milrine subsequently chose to commence Acas early conciliation. He thereafter abandoned the internal appeal process as he believed that commencing the Acas process precluded him from continuing with the internal appeal process. In spite of this, DHL made no effort to write to Mr Milrine to check his intentions or clarify the position.

Initially, the Employment Tribunal (ET) dismissed Mr Milrine's complaint of unfair dismissal. It criticised the procedural failings of DHL’s internal appeal process but ultimately concluded that the dismissal was fair as Mr Milrine had been offered a right of appeal but elected not to pursue it. The ET’s criticisms of DHL’s appeal process were merely observations that the conduct failed to accord with good industrial practice. The ET did not account for the procedural failings in assessing the fairness of the dismissal.

The EAT allowed the appeal and held that Mr Milrine was unfairly dismissed. The EAT set out the following key principles in determining fairness:

• The statutory test under section 98 of the Employment Rights Act 1996 requires an examination of the dismissal process as a whole, including the internal appeal stage.
• Referencing the Acas Code of Practice, the EAT noted that an appeal is an important and normal component in determining fairness.
• A failure to offer an appeal – or offering a procedurally defective appeals process – can render an otherwise substantively fair dismissal unfair. In order to be relevant to determining fairness, the appeal does not need to have been capable of curing an earlier defect or making a difference to the outcome.
• A defective appeal on its own does not necessitate an unfair dismissal finding. It is one of many factors that the tribunal must consider.
• Even where a tribunal accepts that a dismissal is inevitable (for example, where there is no issue with the underlying reason for dismissal), the employer will still be liable for unfair dismissal if the appeal process was procedurally defective. However, the remedy in a scenario like this will likely be minimal to reflect the fact that a fair procedure would have likely not changed the outcome anyway.

Takeaways

This decision serves as a stark reminder to employers that a functioning internal appeals process is crucial in ensuring a fair dismissal. A defective process can undo what might otherwise be a substantively defensible dismissal decision. This is particularly important in light of the incoming reduction of the unfair dismissal qualifying period to six months and the removal of the compensatory cap from 1 January 2027.

EAT Confirms that Discrimination for Held Belief is Unjustifiable

In Ngole v Touchstone Leeds, the EAT considered whether an employer was unlawfully and directly discriminatory in withdrawing a conditional job offer after discovering a job applicant’s past social media posts expressing traditional Christian beliefs that homosexuality is a sin.

What led to the dispute, and why is the outcome significant for employers?

The appellant Mr Ngole applied for a role with the respondent Touchstone Leeds. He was successful and received a conditional job offer.

While reviewing Mr Ngole’s references, Touchstone discovered that Mr Ngole had made Facebook posts in the past expressing traditional Christian beliefs that "homosexuality is a sin". Touchstone then withdrew the job offer, stating that Mr Ngole’s views did not align with Touchstone’s ethos and values as an LGBTQ+ community ally.

Mr Ngole challenged the withdrawal decision, and in response, Touchstone offered a further meeting to allow Mr Ngole to provide assurances that his beliefs would not affect his ability to perform the role. Following the meeting, Touchstone confirmed the offer withdrawal, stating that Mr Ngole failed to provide assurances that he was suitable for the role.

Mr Ngole brought a claim on the grounds of direct discrimination under the Equality Act 2010. The ET held that the initial job offer withdrawal was disproportionate as it did not give Mr Ngole a chance to respond. However, the ET held that Touchstone’s subsequent actions of providing a second interview and thereafter confirming the offer withdrawal were proportionate responses as Touchstone needed to ensure that the role was taken on by an individual suitable to servicing the needs of vulnerable service users and Mr Ngole had not given the necessary assurances proving that he was suitable to the role.

On appeal, the EAT agreed that the initial job offer withdrawal was unlawful and that requiring a second meeting to review Mr Ngole’s suitability was lawful. However, the EAT found errors of law in the ET’s analysis regarding whether Touchstone’s decision to not reinstate the job offer was lawful.

The EAT stated that dismissing an employee or treating them less favourably just because they expressed a religious or other protected belief, even if the belief is offensive to many, constitutes unlawful direct discrimination. Where a dismissal or less favourable treatment is motivated not by the expression of the belief itself but rather by something objectionable in the way it was expressed, the dismissal or treatment is lawful where the employer can show that it was a proportionate response to the objectionable feature. To decide whether the employer’s actions are justified, the employer must show:

1. That the reason for the employer’s treatment was a genuine objection to the manifestation of the belief, rather than just the holding of the belief itself.
2. That there was something objectionable or inappropriate in the manifestation of the belief.
3. That the employer’s treatment is proportionate. To determine this, the Bank Mellat proportionality test is used:
   
   a.)  Sufficiently important objective. Is the employer's objective sufficiently important to justify limiting a protected right?
   b.)  Rational connection. Is the measure rationally connected to that objective?
   c.)  Less intrusive means. Could a less intrusive measure have been used without unacceptably compromising the objective?
   d.)  Fair balance. Balancing the severity of the measure's effects on the individual's rights against the importance of the objective, does the latter outweigh the former?

The EAT held that the ET did not properly analyse whether Touchstone’s concern was an objection to the beliefs themselves rather than to the manifestation of the beliefs. The EAT stated that it was unlikely that a service user’s objection would be to the manifestation of Mr Ngole’s beliefs by way of past Facebook posts. Rather, the objection would likely be towards Mr Ngole’s holding of the belief that “homosexuality is a sin”. Treatment based on a concern about service users’ reactions to the mere holding of a religious belief is not justifiable.

The complaint about the decision not to reinstate the job offer was therefore remitted back to the ET to be considered against the framework set out above.

Takeaways

This decision is an important reminder for employers navigating protected belief discrimination in recruitment and employment. Indeed, employers should be careful not to treat employees or job applicants less favourably because they hold a protected belief, even if that belief is controversial or offensive to others.

TUPE Transfers: Risk of Indirect Discrimination Claims Where Post-Transfer Pay Differential Exists

In Anne & Ors v Great Ormond Street Hospital for Children NHS Foundation Trust, the appellants were a group of cleaners who had originally worked for the respondent Great Ormond Street Hospital for Children NHS Foundation Trust (GOSH) as contract workers. They were transferred in-house under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

Prior to the transfer, the cleaners were paid the London Living Wage rate of £10.75 per hour. In contrast, GOSH’s directly employed cleaning staff received the higher NHS Band 2 rate of £11.50 per hour. Following the transfer, the cleaners were kept on the London Living Wage.

The cleaners argued that the pay differential constituted indirect race discrimination because the post‑transfer pay policy, although applied neutrally, disproportionately disadvantaged them. 78% of the cleaners were from BAME backgrounds compared with 51% of GOSH’s directly employed cleaners, meaning the pay differential had a particular adverse impact on a protected group. The ET dismissed the claims at first instance, relying on the EAT's decision in Royal Parks Ltd v Boohene, which held that section 41 of the Equality Act 2010 does not allow a contract worker to bring a discrimination claim against a principal about pay that is due under the worker’s employment contract with their employer.

The EAT overturned the ET’s decision in relation to the post‑transfer period, holding that section 41 of the Equality Act 2010 (which applies only to contract workers) no longer applied once the cleaners had transferred to GOSH under TUPE and become direct employees. Because the cleaners were employees from the transfer date, the correct statutory provision was section 39 of the Equality Act 2010, which governs discrimination by employers towards their own staff, not contract workers.

The EAT also emphasised that TUPE regulation 4(1) meant that GOSH became fully responsible for the cleaners’ terms and conditions from day one, even though those terms had originally been set by the previous contracting company. This meant GOSH could not rely on the Royal Parks principle (which limits discrimination claims by contract workers) because the cleaners were no longer in that category. As a result, the ET should have assessed the pay disparity as a potential act of indirect discrimination by an employer, not a principal, and GOSH's liability had to be determined accordingly.

Takeaways

Employers bringing services in‑house should carefully assess whether maintaining post‑transfer pay differentials could create an indirect discrimination risk, particularly where the transferring group has a different demographic profile. This assessment should form part of the decision‑making process around whether to insource and should also inform how the employer structures onboarding under TUPE including the timing of any contractual changes and the consultation required where amendments to terms are necessary.

New Industrial Action Protections from 18 February 2026

Employees taking part in industrial action now benefit from unlimited protection from unfair dismissal. Previously, the law only safeguarded employees from dismissal for the first 12 weeks of protected industrial action. Once that 12‑week period elapsed, an employer could lawfully dismiss striking employees in certain circumstances, and the dismissal would not automatically be unfair. This time‑limited protection has now been removed entirely. The effect is that:

• Employees who participate in industrial action cannot be dismissed for doing so, regardless of how long the action lasts.
• Any dismissal where the principal reason is participation in industrial action will be treated as automatically unfair, without any temporal limitation.
• This significantly strengthens employee protections and increases legal risk for employers in long‑running disputes.

Employers will therefore need to manage prolonged industrial action more carefully, as dismissal as a tactic to end or deter participation is now effectively unavailable.