1. Update on the Employment Rights Bill

The Employment Rights Bill is expected to be finalised in the next few weeks. The majority of changes are set to come into force over the course of 2026, with changes to unfair dismissal likely applying in 2027. The House of Commons rejected certain non-government amendments which were said to have watered down the effects of the Bill.  A summary of the main changes (as of 25th September 2025):

  • Removal of the “right to request” guaranteed hours contracts: the Government believes that the obligation should be on employers to offer such contracts, not on employees to request them.
  • Unfair dismissal restored to a day-one right: The House of Lords proposed to amend this right to kick in after a 6-month period of employment, but as it was a key manifesto promise for the Labour Party, they are insisting on this remaining a day one right.
  • Enhanced unfair dismissal protections to whistleblowers: whistleblowers are no longer afforded special protection from unfair dismissal under the Bill after the most recent House of Lords amendment to the provision was rejected by the House of Commons. Under this proposal, employers would have been required to take reasonable steps to investigate whistleblowing concerns but because it was not originally tabled by the Government, it is not a primary concern in the House of Commons.
  • Non-Disclosure Agreements: the Government has indicated that they will consult secondary legislation to implement measures as soon as possible, which would prevent employers from using non-disclosure agreements to cover up harassment and discrimination in the workplace.

The departures of Angela Rayner (Deputy Prime Minister) and Justin Madders (Employment Minister) from the current Labour Government are likely to have an impact on the more contentious amendments in the Bill. However, any features which were promised in the Labour Manifesto will be difficult for the House of Lords to alter. The Bill is now in the final ‘Consideration of Amendments’ stage in parliament after passing through the House of Lords 3rd reading. More updates will follow.

If you have any queries or concerns regarding the implications of the new Employment Rights Bill, please do not hesitate to get in touch with Laura McKenna or Holly McLean for a confidential discussion.

  1. Pregnancy discrimination still prevalent, a recent study finds

In a study of 37 managers across the UK, the University of Bath found that there is a “stark divide” between those supportive of maternity leave and those who still partake in discriminatory practices. Employers were split into three categories: smaller, risk-averse firms who sought to avoid costs associated with maternity leave, business-first employers who offered maternity support only for more junior employees with smaller roles, and value-driven employers who treated maternity leave as a matter of equality and fairness. More than half of the employers interviewed held views that could disadvantage mothers’ careers, the report found.

It is important to remember that maternity leave is not an employment perk; it is a foundational employment law right. If you or someone you know is experiencing discrimination when exercising your right to maternity leave, please do not hesitate to contact a member of our Employment team for a confidential discussion.

  1. ‘AI Psychosis’ – a growing problem for Employers and a word of caution for Employees raising grievances and claims

There are increasing news reports discussing the over-reliance on Artificial Intelligence (AI) in an employment case context, to the detriment of the person relying on it. The phenomenon has been dubbed ‘AI Psychosis’, and refers to the unhelpful (and sometimes damaging) “legal advice” that is being offered by AI to individuals who input facts into the AI program about their particular circumstances. For example, when an employee uses AI to draft a grievance, there is a chance that the draft created by AI may contain legal errors and inconsistencies, which are not always picked up by the employee. This can also result in an overly long document being submitted, which the individual’s employer is obliged to respond to, and (if a claim is raised) a Tribunal must assess, which can add to the overall cost of a dispute.

A recent BBC article discussed how AI Psychosis led a Claimant, alleging unfair dismissal, to believe they had an extremely strong case with the potential for a large payout. The AI then suggested a book and movie could be produced based on the facts of his case. The AI went on to suggest he speak to a member of the Citizens Advice Bureau, but he was so confident in his case that he cancelled an appointment with them.

Validating users’ beliefs is a fundamental facet of any AI program which can, unfortunately, lead to scenarios like the above.

While there is no strict requirement to appoint a solicitor to act on your behalf in an Employment Tribunal (ET) claim, we do recommend that Claimants obtain legal advice on forming their claims and arguments, to ensure their claim is competent, relevant and that the ET has jurisdiction to hear it.

A final very important point to note for employers and employees is that AI chatbots are not confidential, so information that you input into the AI may be used for other purposes, including to train the model, and can appear in other users’ enquiries.

Case Reviews

Employer manufactured negative performance reviews to avoid a pay rise

The Case: G Ejiga v Olive Jar Digital Ltd: 6008746/2024

In this case, an employer disguised the true reason for dismissing an employee, attributing it to poor performance when in reality, the decision was financially motivated. The Employment Tribunal found that the dismissal was both unfair, under the Employment Rights Act 1996, and wrongful, under the terms of her contract.

The employer, a digital consultancy firm based in London, had previously made promises to the Claimant, Ms Ejiga, about a pay rise based on her performance as an executive within the firm. The Claimant was a part of the firm’s senior leadership team and was the highest-paid employee of the firm, and she had received consistently positive feedback in performance reviews for the preceding 3 years. However, in the first quarter of 2024, the firm entered a difficult period financially, which forced them to reconsider promises of pay rises.

In April 2024, the firm placed Ms Ejiga on a performance improvement plan (PIP). This was the first time the Claimant had been made aware of any concerns about her performance, and she was said to have been shocked by this review. The firm offered negative feedback on the Claimant as evidence of their concerns, such as an assertion that she over-delegated, and said that her consultancy work on LinkedIn was affecting her performance with the firm.

In the first half of May 2024, the Claimant and the firm negotiated her exit from the company. She provided a ‘Handover Note’ on the 6th May which outlined tasks to be reassigned/postponed as well as other admin-related concerns.  This handover note was treated by the firm as notice of her intention to resign, but the Tribunal did not believe that they truly viewed it as such, due to their brief and friendly emailed reply to the note.

Notwithstanding the Claimant’s purported resignation, negotiations for the Claimant’s exit continued; however, they broke down, and she attempted to return to work. When the Claimant enquired as to when her access to the firm’s systems would be restored, they emailed the Claimant on the 21st of May to ‘clarify the position’ that they were treating her handover note as a letter of resignation. They also confirmed that in the period of the Claimant’s absence, they had uncovered evidence of “gross misconduct” and said that “under no circumstances” would they have continued with her. The Claimant was not paid her notice pay.

The questions the Tribunal had to answer were whether Ms Ejiga had resigned, and if she had not, whether her dismissal was wrongful and / or unfair.  When determining whether Ms Ejiga had resigned, the court took the recent decision in Omar v Epping Forest District Citizens Advice into account, which clarified the law on resignations. It said that, whilst a notice of resignation cannot be unilaterally retracted once offered, any words in an alleged ‘resignation’ must be construed objectively according to normal rules of contractual interpretation. Moreover, the perspective of such words is to be judged by that of a reasonable bystander in the position of the recipient (in this case, the firm), to determine if the other party used words that constitute an immediate resignation.  It is insufficient for a party to merely show intention to resign in future. Based on these principles, the Tribunal held that the Handover Note simply contained relevant information for negotiation purposes, and that the firm could not conceivably construe it as a resignation; thus, any suggestions from the firm that they believed it was a resignation were artificially designed. The Tribunal held that the Claimant was, in fact, dismissed by the firm on 21st May.

Turning to the fairness of the dismissal, the Tribunal determined that ‘evidence’ of Ms Ejiga’s poor performance in her last performance review was weak, and that the strongest factor that pointed toward them issuing her with a PIP was so that they could withdraw from their promise of a pay rise, a view which was shared by the Claimant. Similarly, evidence of ‘gross misconduct’ was tenuous, and the Tribunal asserted that the firm had not even come close to proving ordinary misconduct had occurred, let alone gross misconduct. As a result, the Tribunal held that the Claimant had not been provided with a fair reason for dismissal and so, she was unfairly dismissed. They also said that the firm had mishandled the PIP process by shocking the Claimant with a negative review after years of glowing appraisals.

The Tribunal also held that Ms Ejiga had been wrongfully dismissed, as she had not been paid notice pay under the terms of her contract. This was awarded with a 25% ACAS uplift, totalling £18,288.82. Along with compensation awarded for unfair dismissal and unpaid wages (for the relevant period in May), this brought the total awarded sum to over £25,000.

This case raises some interesting issues about performance procedures and what counts as a resignation.  As this case illustrates, getting it wrong can be costly.

Race Discrimination Claim against Employer’s Discipline Process

The case: Leicester City Council v Mrs B Parmar [2024] EAT 85

In this Appeal Tribunal case, a 2023 decision holding an employer liable for direct discrimination was affirmed. The Claimant, Mrs Parmar, is a British national of Indian origin. She was employed by Leicester City Council as a senior social worker, and had not previously been disciplined by the council since the beginning of her employment in 1989.

A summary of the original case in 2023

In January 2021, the Council initiated a disciplinary investigation into Mrs Parmar based on vague allegations, and at the same time, transferred her out of her Head of Service role. Mrs Parmar alleged that she had little idea of what misconduct she had apparently engaged in. When a director in the Council eventually discontinued the investigation due to a lack of evidence of misconduct, Mrs Parmar brought a claim against them for direct race discrimination, under Chapter 2 of the Equality Act 2010. She also alleged unfair dismissal, albeit that claim was to be decided in a later hearing.

The Tribunal found that the Council had previously dealt with white employees facing similar allegations in an informal manner, by way of mediation; on the other hand, a formal investigation into Mrs Parmar’s conduct was raised immediately. This was after the Claimant had already raised concerns regarding potential unconscious racial bias held by her line manager. The Tribunal said that this was enough to demonstrate a prima facie (face value) case of discrimination, which shifted the burden of proof to the Council to demonstrate that no discrimination took place.

The Council asserted that there were serious allegations against the Claimant that required investigation, but the Tribunal ultimately found that only employees of Asian descent had been disciplined in this manner previously. The Tribunal decided that the Council had not adequately discharged their burden of proof, and as such, a finding of direct discrimination was made.

The Appeal

The Council appealed against the 2023 decision on 11 separate grounds, including an allegation that the Tribunal made an error when shifting the burden of proof to them to disprove the discrimination, and objecting to the Tribunal’s use of hypotheticals. The Employment Appeal Tribunal dismissed all 11 grounds.

The correct approach in such discrimination cases is to shift the burden of proof to the employer where a prima facie case has been shown, as stated in Section 136 of the Equality Act 2010.  It was held that the Council’s treatment of Mrs Parmar was more than “mere difference in treatment” and a pattern of discrimination had been demonstrated by the Claimant. The vagueness of the Council’s allegations also played a part in the EAT’s decision. Regarding use of hypotheticals, the EAT confirmed that an exact comparison need not be sought if an appropriate hypothetical can be shown.

The case demonstrates the difficulties that employers can face when defending a discrimination claim, particularly relating to the burden of proof. Employers must ensure that any allegation of misconduct is accurate, precise and capable of being relied on during an evidential hearing at Tribunal if required. 

If you have any questions regarding these judgments and what they mean for your organisation, please do not hesitate to get in touch with a member of our Employment Team for a confidential discussion: Laura McKenna or Holly McLean

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