Employment Law Alert UK – December 2025

Employment contracts

Government publishes working paper on options for reform of non-compete clauses in employment contracts

On 26 November 2025 the government published a working paper on non-compete clauses. The government is seeking views on options to reform non-compete clauses in employment contracts, as part of its wider mission to boost economic growth, labour market dynamism, and innovation. The paper outlines several policy options, including statutory limits on non-compete duration, outright bans, salary threshold-based bans, and combinations of these options.

Specifically, the government welcomes views on the following options:

• an outright ban of non-compete clauses in contracts of employment;
• a ban on non-compete clauses, below a salary threshold (with the possibility of a statutory limit (eg 3 months) for those who earn above the threshold);
• Statutory restrictions on non-compete clauses:
  • a blanket statutory limit on duration (the paper acknowledges that the most common restriction lengths from previous research were 6 or 12 months, but the working paper proposals seem focused on 3-6 months); and
  • limited duration according to company size (eg 3 months for companies with more than 250 employees and 6 months for companies with 250 or fewer employees, or 3 months for companies with more than 50 employees and 6 months for companies with 50 or fewer employees).

The working paper also invites views on: whether these restrictions should be limited to non-competes, or apply to other restrictive covenants; whether these restrictions should be limited to employment contracts or apply to broader workplace contracts; and more general views on the ease of enforcement action in relation to restrictive covenants. Responses are welcomed by 18 February 2026.

Workers’ rights

Employment Rights Bill – agreement reached on unfair dismissal

On 27 November 2025, the UK Government announced they had reached an agreement with trade unions and business representatives on key elements of the Employment Rights Bill, allowing it to progress towards Royal Assent and remain in line with their implementation roadmap. The compromise includes reducing the qualifying period for unfair dismissal from 24 months to 6 months, while maintaining day-one protections against discrimination and automatically unfair dismissal. They also announced that the compensation cap will be lifted, and any future changes to the qualifying period will require primary legislation. The government had previously announced plans to establish a taskforce to address pressures on the employment tribunal system, although no timeline was provided. However, even when the Bill is passed, it seems clear that much of the detail will still be up for debate and discussion as the Business Secretary announced that 26 different consultations will be launched to “get down into the weeds” of implementation once the Bill becomes law.

Whistleblowing

Court of Appeal follows precedent on co-worker liability for whistleblowing dismissal but calls for Supreme Court clarification

The Court of Appeal has confirmed (being bound by current precedent) that an employee dismissed for whistleblowing can bring a detriment claim against a co-worker under section 47B of the Employment Rights Act 1996 (for which their employer is vicariously liable), in addition to an automatic unfair dismissal claim against their employer. The Court of Appeal considered two different appeals: the first “Wicked Vision” and the second “Barton Turns”. In both cases the employee argued that they were entitled to amend their claims to include their dismissal as a whistleblowing detriment for which their employer was vicariously liable. This amendment was permitted by the ET, but the EAT in Wicked Vision overturned this decision, stating that the law is clear that if an employee is dismissed for an alleged protected disclosure the claim they can pursue against their employer is for automatic unfair dismissal. The Court of Appeal disagreed with this conclusion, finding that it was bound by the earlier decision in Timis v Osipov, meaning that a claim for detriment (including dismissal) can be brought against a co-worker and, by extension, the employer vicariously. The Court of Appeal expressed reservations about the correctness of Osipov, paying particular attention to the fact that s.47B(2) unambiguously provides that where a detriment “amounts to dismissal (within the meaning of Part X)’ employees cannot make a detriment claim under Part V. However, it confirmed that pending consideration by the Supreme Court or legislative amendment the decision in Osipov remains binding precedent. (Rice v Wicked Vision Ltd and anor case (Protect Intervening))

Employee relations processes

EAT remits case for fresh consideration where Tribunal failed to address impact of significant delay in disciplinary process

The EAT has remitted a case for reconsideration after finding that the Tribunal erred in its approach in relation to the Claimant’s unfair dismissal and reasonable adjustments claims. The Claimant was employed by the Respondent as a ward manager. She was dismissed by the Respondent for misconduct following concerns that she had failed to work her contractual hours and falsely claimed overtime. The Respondent first became aware of concerns in relation to the Claimant’s working hours in 2018 (specifically between September and December 2018) but the decision to dismiss the Claimant was not taken until March 2021. A formal fact-finding was not commenced with the Claimant until October 2019 (this process was delayed from March 2019 due to a period of ill-health of the Claimant). At that point the Claimant contended that PTSD affected her ability to recall the relevant events. She also contended that it would have been a reasonable adjustment for the Respondent to have spoken to her informally about the concerns. The EAT found that the ET had not given proper consideration to the impact of the Respondent’s delay on the fairness of the Claimant’s dismissal, in particular on the Claimant’s ability to defend herself, particularly given her disabilities. The EAT took particular note of the provisions of the ACAS Code of Practice requiring employers to act “promptly”. (Ms C O’Brien v Cheshire and Wirral Partnership NHS Foundation Trust)

Seeking to resolve a breach of contract is not the same as affirmation

The EAT has clarified the approach to affirmation in constructive dismissal claims, overturning the ET’s finding that the Claimant had affirmed her contract by delaying her resignation while seeking to resolve a contractual sick pay dispute. The Claimant, a GP, developed laryngitis in April 2018 and was later diagnosed with autoimmune disorder. In September 2020 she was told by her practice that she had exhausted her sick pay. She entered into negotiations (assisted with her union representative) with the practice from that point, ultimately resigning on 6 April 2021. The ET found that she had affirmed her contract of employment by virtue of the long delay before she tended her resignation and a comment on 26 December 2020 that she was ready to return to work if the sick pay dispute could be resolved. However, the EAT held that the ET failed to properly consider the context and ongoing dispute, in particular that trying to resolve the perceived breach of contract with respect to sick pay was not the same as affirming her contract. The EAT substituted a finding of constructive dismissal and remitted the case for consideration of remedy, providing helpful guidance on affirmation in constructive dismissal claims. (Dr Kate Barry v Upper Thames Medical Group & Ors)

ACAS Early Conciliation period extended

From 1 December 2025, The Employment Tribunals (Early Conciliation: Exemptions and Rules of Procedure) (Amendment) Regulations 2025 will extend the Acas early conciliation (EC) period from six weeks to 12 weeks for all cases notified to Acas on or after that date. This change, introduced by new Regulations, means that Acas will have up to 12 weeks to facilitate settlement discussions between parties before issuing an EC certificate if no agreement is reached. The extension aims to help Acas manage increased demand and takes account of the growing complexity of cases. The new 12-week period will be reviewed in October 2026 to assess its continued suitability.

Tribunal procedure

EAT sets aside Tribunal decision where ‘smoking gun’ email subsequently uncovered

The EAT has set aside the liability and costs judgment of the ET after the Claimant discovered, post-hearing, an email showing he had in fact been offered a job—contrary to the ET’s key finding that no offer was made. The Claimant brought claims for breach of contract, race discrimination, victimisation and harassment after the Respondent denied offering the Claimant a job. The ET found that the Claimant was not a credible witness. Not only did the ET dismiss his claims, but costs were awarded against him. After the hearing the Claimant found an email from one of the Respondent’s managers offering him the job. In light of the evidence the EAT found that the ET’s decision, and in particular its assessment of the Claimant’s credibility was “built on foundations of sand” and was fundamentally unsafe. The liability and costs decisions were set aside in light of the new evidence and the case was remitted to a new tribunal for a fresh hearing. (Mr J Mayanja v City of Bradford Metropolitan District Council)

EAT allows appeal on application of Polkey to dismissal of Chief Executive

The EAT has disagreed with the finding of the ET that the Claimant could have been fairly dismissed “a little over two months” following his termination, finding that the termination date was not the correct reference point. The ET should instead have considered a sensible timeframe for a fair dismissal process from the point at which concerns in relation to the Claimant crystalised. The Claimant was employed by the Respondent as Chief Executive from 1 October 2018 to 31 March 2023 when he was dismissed for capability (specifically his capacity to make the business profitable). The Respondent did not follow its own procedures when dismissing the Claimant and accordingly upheld a finding of unfair dismissal. The EAT upheld the Tribunal’s finding that the Claimant’s dismissal was procedurally unfair due to a failure to follow the employer’s own procedures, which mirrored the ACAS Code. The EAT also found the Tribunal had erred in its Polkey assessment by ignoring the period from 24 February 2023 when concerns about the Claimant were clear and providing insufficient reasoning for its conclusion that a fair dismissal would have taken place within 2 months. The case has been remitted for reconsideration. Interestingly, the EAT also noted that, whilst “exceptional” there may be cases where a dismissal for capability might be fair even in the absence of prior warnings or an opportunity to improve. (Zen Internet Ltd v Mr Paul Stobart)

Successful contempt of court proceedings brought in respect of false allegations of sexual harassment and assault

The High Court has found a former employee in contempt of court for knowingly making false statements of truth, giving false evidence, and fabricating documents in support of his ET claims for discrimination and harassment. Mr Ajao commenced employment with Commerzbank on 1 May 2019. On 21 November 2019 his employment was terminated due to his conduct and behaviour. Mr Ajao brought claims of race and sex discrimination, victimisation, wrongful dismissal, bullying and harassment and breach of contract. He also brought claims of sexual harassment and assault alleging that a colleague had made inappropriate comments about his clothing and attempted to grab his crotch. His claims were dismissed by the ET in a judgment dated 14 February 2022. The High Court concluded that 12 of the 13 grounds of contempt were proven beyond reasonable doubt and that Mr Ajao has been deliberately dishonest with the aim of bolstering his ET claims – he had gone as far as to fabricate entries in his work diary to strengthen his case. The allegations were a deliberate attempt to deceive the ET and damage the reputation of others. This case serves as a cautionary tale for Claimants of the wider potential consequences of false allegations in proceedings. (Commerzbank AG v Damilare Ajao)

Harassment

Update on Equality and Human Rights Commission (EHRC) enforcement

The EHRC has taken further action in relation to sexual harassment in the workplace at two major employers. On 7 November 2025, the EHRC announced it had extended its legal agreement with McDonald’s, requiring the company to implement a strengthened action plan following serious allegations of sexual harassment. Under the updated plan, McDonald’s must conduct regular inspections, enhance risk assessments, survey staff quarterly, ensure complaints against managers are investigated outside its restaurants, and engage external experts to design a safeguarding plan for all sites. In contrast, the EHRC has ended its two-year monitoring of IKEA after the company demonstrated significant improvements to its sexual harassment policies. The EHRC welcomed IKEA’s meaningful steps to prevent and address sexual harassment, noting that the company had strengthened its response following earlier concerns about the handling of workplace sexual assault and harassment allegations. The Commission emphasised the importance of ongoing vigilance to maintain harassment-free workplaces.

Data protection

ICO launches consultation on investigation and enforcement action

The ICO has launched a consultation on new draft guidance outlining its approach to investigations and enforcement action under the UK GDPR and Data Protection Act 2018. The proposed guidance, published on 31 October 2025, aims to provide greater transparency and detail on how the ICO decides whether to open an investigation, the processes followed during investigations, and the use of its information-gathering and enforcement powers—including new powers under the Data (Use and Access) Act 2025. Once finalised, this guidance will sit alongside the ICO’s Data Protection Fining Guidance and replace the current Regulatory Action Policy. The consultation is open until 23 January 2026.