Employment Law Alert UK – January 2026

Workers' rights

Employment Rights Act receives Royal Assent. On 18 December the Employment Rights Act 2025 finally received Royal Assent, introducing a raft of employment law reform. There is a substantial amount of change coming down the pipeline as a result. Of particular significance, agreement was finally reached in relation to unfair dismissal protection under the Act. The two-year qualifying period for unfair dismissal will be reduced to six months and the cap on compensation for unfair dismissal claims will be removed. These changes are expected to take effect in 2027, although the exact commencement date is not yet known.

Employee relations processes

EAT clarifies collective redundancy consultation thresholds. The EAT has overturned the decision of the ET in relation to collective consultation, finding that the Tribunal misapplied UQ v Marclean Technologies.  The Claimant brought claims for unfair dismissal and a protective award for failure to consult collectively under s.188 TULRCA when he was made redundant by the Respondent. The EAT held that the ET had misapplied Marclean, which focusses on the interpretation of the threshold number of redundancies "effected" under Directive 98/59/EC. Instead s.188 TULRCA focuses on what the employer was in fact proposing at the relevant time for the future. This must be based on the employer's actual proposals at the time, not a retrospective aggregation of dismissals. The EAT also clarified that only employees with a contract with the Respondent count towards the threshold - the Respondent should not be considered the "de facto" employer, and remitted the case for reconsideration on these points. This case will come as welcome relief for employers previously faced with the challenge of looking forward and backwards when considering collective consultation thresholds. However, the EAT was keen to stress that Tribunals should be careful to scrutinise circumstances where an employer is in fact dismissing more than 20 employees in a period of 90 days to ensure that there have not been artificial divisions or dismissals or deliberate staggering to avoid collective obligations. (Micro Focus Ltd v Mr James Mildenhall)

EAT finds that COT3 settled an employment tribunal claim which it did not expressly reference. The Claimant worked for the Respondent as a mortgage advisor. As a result of ill health he had for some time received payments under a PHI scheme. He was notified that those payments would end in May 2021. In March 2021 the Claimant brought a claim challenging this, but this was subsequently withdrawn. On 4 May 2022 the Claimant presented a fresh claim which was heard in March 2023. The PHI claim was struck out and the Claimant appealed. However, after the appeal was lodged, the parties entered into a COT3 settlement agreement, which provided for a full and final settlement of all claims, including those that "may have" existed. The appeal was not withdrawn and was not expressly mentioned in the COT3. The EAT held that the COT3 agreement, objectively construed, settled the struck-out complaint. The case acts as a reminder of the importance of clearly documenting settlement terms, to avoid any future uncertainty about outstanding issues. (Mr T Turner v Western Mortgage Services Ltd)

DEI

Scottish Tribunal upholds harassment claim in connection with transgender changing room dispute. A Scottish Tribunal has upheld claims of harassment brought by a nurse, with gender critical beliefs, who challenged the use of the female staff changing room by a colleague, a trans woman. The Tribunal did not uphold claims of discrimination and victimisation. The Claimant, a nurse, was suspended following a confrontation with a trans woman colleague who was permitted to use the female staff changing room. The Tribunal considered whether following For Women Scotland, the Respondent's granting of permission for the use of the facilities was inherently unlawful, but found that it was not. The Tribunal concluded that it is "potentially, but not necessarily, lawful under the [Equality] Act to permit a trans woman to use a female only space, such as the changing room, in the context of work". However, it found that the Respondent had harassed the Claimant by failing to revoke the trans colleague's access after the Claimant's complaints, taking too long to investigate, and mishandling communications. There are a number of different ongoing legal challenges in this area, including the Darlington Nurses claim based on similar facts, and Good Law Project's challenge to the interim EHRC guidance (which is likely to be delaying progress on the final guidance by the government). In the meantime, it is especially important for employers to give careful consideration to any concerns raised by employees relating to these issues with a view to identifying workable practical solutions. (Peggie v Fife Health Board and Another)

Court of Appeal finds that Stonewall did not cause or induce Chambers to discriminate against barrister with gender critical beliefs. The Court of Appeal has upheld the decision of the ET, and EAT that Stonewall did not cause or induce Garden Court Chambers (GCC) to discriminate against Allison Bailey. In December 2018 the Claimant complained to her colleagues about Garden Court becoming a Stonewall Diversity Champion. In October 2019 she was involved in setting up the Lesbian Gay Alliance to resist transwomen self-identifying as women. She made a series of tweets about this which led to a number of complaints being made to Chambers, including one from Stonewall. Chambers tweeted in response that it would be investigating concerns about tweets posted and said that the Claimant's tweets may offend the Bar Standards Board Code. The Employment Tribunal upheld the Claimant's claims that this was an act of discrimination. The Claimant's claims against Stonewall (that they had induced or attempted to induce Garden Court to take action against her) were unsuccessful. While the ET found that GCC had directly discriminated against and victimised Ms Bailey, it dismissed her claim against Stonewall, finding that Stonewall's complaint about Ms Bailey's tweets was a protest rather than an inducement or instruction to discriminate. The Court of Appeal upheld this decision, confirming that Stonewall's actions did not amount to causing or inducing discrimination under section 111 of the Equality Act 2010, and that the effective cause of the detriment was GCC's own actions, not Stonewall's. (Allison Bailey v Stonewall and Others)

Tribunal dismisses sex discrimination claims over toilet access policy. The ET has dismissed claims of direct and indirect sex discrimination and harassment on the grounds of sex brought by a Claimant on the basis of the Respondent's policy allowing transgender staff to use toilets aligned with their gender identity rather than biological sex. The Tribunal found that while the policy was unwanted by the Claimant and related to sex, it did not have the effect of violating her dignity or creating a hostile environment, nor did it amount to less favourable treatment or put women at a particular disadvantage compared to men. (B M Kelly v Leonardo UK Limited)

Non-binary status not protected under gender reassignment. The ET has dismissed claims of harassment brought by a non-binary employee, finding that they did not fall under the protected characteristic of gender reassignment.  The Claimant, who identifies as non-binary, brought claims of harassment related to gender reassignment after colleagues repeatedly used incorrect pronouns and their "deadname" (name given at birth). The Tribunal found that, following the Supreme Court's decision in For Women Scotland, the Equality Act 2010 protects those reassigning from one binary sex to the other, and that non-binary status alone does not meet the statutory definition of gender reassignment. Consequently, the Claimant was found not to have the protected characteristic, and all harassment claims were dismissed. (Haech Lockwood v Cheshire and Wirral NHS Foundation Trust and Others)

European Court of Human Rights finds that employee's dismissal breached human rights. The ECtHR has found that the Spanish courts breached the European Convention on Human Rights by finding that the dismissal of an employee who disclosed salary information in connection with sex discrimination proceedings was lawful. The Claimant, a finance manager, successfully brought a claim in Spain for sex discrimination, alleging that she was paid less than her male colleagues in equivalent positions. Shortly after, she was dismissed by her employer for disclosing confidential salary information as part of her claim. The Claimant brought further proceedings alleging that her dismissal was an act of retaliation. The domestic courts upheld her dismissal but the ECtHR upheld her claim. The ECtHR held that the Spanish courts have a positive obligation (under Article 14 and Article 8, taken together) to ensure real and effective protection against retaliation. The domestic courts had upheld the Claimant's dismissal without sufficiently weighing the context of persistent sex discrimination, the purpose of the Claimant's disclosure, the limited impact of the disclosure and the severity of dismissal as a sanction. The Claimant was awarded EUR 12,000 in non-pecuniary damages. (Ortega Ortega v Spain)

Tribunal finds constructive dismissal and disability discrimination of employee with ADHD following implementation of PIP. The ET has upheld claims of discrimination, harassment and constructive dismissal brought by a Claimant who suffers with ADHD. The Claimant joined the Respondent in October 2018. She was diagnosed with ADHD in 2021. In 2022 concerns started to be raised about the Claimant's performance. These concerns related to missed deadlines, lack of communication, and organisational issues, all being documented symptoms of ADHD. The Claimant ultimately resigned and claimed constructive unfair dismissal and disability discrimination, alleging failures to make reasonable adjustments and discriminatory treatment. The Tribunal found that the Respondent failed to provide ADHD coaching, did not implement structured objectives or regular reviews, and escalated to a performance improvement plan prematurely. These failures, together with undermining comments, notably that she was disorganised, amounted to breaches of the duty to make reasonable adjustments, discrimination arising from disability, and constructive dismissal. The Tribunal extended time for the claims, finding them to be conduct extending over a period and that it was just and equitable to extend time. This case emphasises the importance of careful management of performance concerns which may be linked to an underlying disability. Employers should exercise caution where performance issues may, in fact, be the impact of a disability, and consider the adjustments which are needed to usual processes if proceeding to performance manage these issues. (Ms Nicole Hogger v Genesis PR Ltd)