Tackling ‘bogus self-employment’

Posted on October 9, 2026 by Darren Newman

At the Labour Party conference a couple of weeks ago, the Business Secretary announced that a forthcoming consultation would seek to address the issue of bogus self-employment. Delphine Strauss wrote about it in the Financial Times – and she was kind enough to quote me sounding a sceptical note about the whole exercise. Why am I such a killjoy? 

Most employment law consists of statutory rights that are given to either employees or workers. Broadly speaking a worker is someone who agrees to perform work for another person but who is not running a business of which that person is just a client or customer. Workers enjoy rights such as minimum wage, holiday pay, most trade union rights and a bunch of others. Employees have a full contract of employment with their employer and enjoy additional rights such as the right not to be unfairly dismissed or to be given a redundancy payment. I could insert a large table here explaining which rights apply only to employees and which apply to all workers but that would be dull. 

Let’s just say that in employment law you will have one set of rights if you are a worker and some important additional rights if you are also an employee. If you are neither of those things then employment law is simply not concerned with you. I try to avoid using the term ‘self-employed’ in this context – it is a term used by HMRC when assessing someone’s earnings and many people who are workers for the purposes of employment law will quite properly be classed as self-employed for tax purposes. 

Ceci n’est pas une pipe

There are always going to be some employers who try to deny that an individual is either an employee or a worker. If the employer can get the benefit of the work without the individual getting the benefit of employment rights, then for many employers that is going to be an attractive option. If that also comes with a lower National Insurance bill then so much the better. 

The problem of ‘bogus-self employment’ is not a new one and we have decades of case law explaining how to spot workers and employees in cases where the employer claims that they are neither. A common thread in those cases is the need to look at the substance of that was agreed rather than just the label attached to the agreement. 

I am writing this while sitting on an office chair. You can tell it’s a chair just by looking at it – it has all the features you would expect to see. My chair does not stop being a chair just because I loudly insist to everyone it is a coffee-table. Similarly, if you put a clause in the contract with an individual saying ‘this is not a contract of employment’ but all of the features of the contract are exactly those that you would expect to find in an employment relationship, then that will not get you very far. 

But suppose you go further – suppose you expressly exclude from the contract certain features that are central to the existence of an employment relationship. Take ‘personal service’ for example. It is an essential feature of both employees and workers that they undertake to perform work personally. It is the individual who is expected to do the work – he or she is not just being asked to ensure that the work gets done by somebody. So if you make it clear in the contract that the individual can send a substitute instead of doing the work themselves then that individual cannot be a worker or an employee. 

Of course, it’s often not put so straightforwardly. Sometimes the employer will want to limit who the substitute can be and when one can be sent – but the more they impose limits, the more it looks like the individual has some obligation to the employer to perform work for them. Nevertheless, an ‘unfettered’ right to send a substitute will, under the current case law, prevent an individual from being either an employee or a worker.

The reality of the agreement

Unless it doesn’t. The courts will not take a blanket substitution clause at face value. If it does not reflect how the parties genuinely envision the contract working in practice, then they may ignore it and find that the individual is either a worker or an employee. In the wonderfully titled Autoclenz v Belcher, the Supreme Court found that a substitution clause in the contract did not reflect what was genuinely agreed between the parties. Whatever the contract said on paper, the Tribunal found that in reality the workers were required to turn up for work every day and do the work that was given to them. The Supreme Court agreed and held that they were employees. 

The FT report makes specific reference to a case involving Deliveroo whose riders were allowed to let someone else use their log-in details and do their deliveries for them. In that case the Central Arbitration Committee – in considering a claim for union recognition – held that the substitution clause relied upon by Deliveroo was genuine. The CAC found that substitution was rare in practice but that it did happen. In a survey, 14 out of 65 Deliveroo riders said that they had used a substitute at some stage. Deliveroo did not attempt to police the practice and one rider gave evidence saying that he regularly engaged a substitute and took a 15-20 per cent cut of whatever the substitute earned. Whatever you think of the ethics of that, it really did seem to be true that someone could be a Deliveroo rider and not actually do any of the riding. On that basis I don’t see that the CAC had much choice given the existing case law. They ruled that the drivers were not workers and rejected the recognition claim. The Supreme Court held that the CAC’s analysis was the right one. 

According to the FT, the key proposal that the Government will make is to ‘de-emphasise’ this test of personal service. It’s not entirely clear to me what that will mean but I can see the argument that the courts have taken too strict a view on substitution clauses – even given their emphasis on the reality of the agreement. In the Deliveroo case the provision of a substitute was very much the exception rather than the rule. Surely it was envisaged that the vast majority of riders would perform the vast majority of their work personally? Shouldn’t that be enough? 

Perhaps in the definition of worker we could have a provision capturing the idea that a substitution clause will not prevent someone being a worker if it is envisaged by the parties that most of the work will be done personally. That could work – but it would require a new Act of Parliament and I really don’t see the Government finding time to legislate on employment status before the next election. I’m not holding my breath.

A broken system

In any event, I think the wider problem of bogus self-employment could be addressed without new legislation. We just need better and more consistent enforcement. Many workers are simply not aware of the rights they already have or that the contracts which tell them that they are self-employed contractors would not stand up to legal challenge. They may not have the means to bring a claim – or be prepared to wait until a year or more has passed before they can get a hearing in the Employment Tribunal. They might be even more discouraged if they found out how hard it was to enforce an Employment Tribunal award and how many awards go unpaid. 

This is where the Fair Work Agency could play a crucial role. With the power to enforce the key rights enjoyed by workers – minimum wage and holiday pay – it could actively pursue cases where the employer spuriously claims that its workers are self-employed. Unfortunately, its budget for 2026/27 is just £60.1 million. That is not much of an increase on the amount that was already being spent on Government enforcement and falls well short of what would be required to make a serious dent in the problem. There is just no avoiding the fact that the solution involves spending a lot more money – and realistically that isn’t going to happen. 

So instead, Government opts for the cheaper and easier option of changing the law itself – or at least announcing a consultation on the issue. But a change in the definition of a worker – even if that does eventually happen – will probably not have much of an impact. There are moves and counter moves. Employers determined to prevent their workforce from having employment rights would look carefully at any new definition and draft contracts specifically designed to get around it. Those contracts might not withstand legal scrutiny, but without proactive enforcement and a working Employment Tribunal system what scrutiny would they get? 

The real way to improve employment rights – and the rights of vulnerable workers in particular – is to make the system work. I would like to see the Government concentrate on the following three things: 

  • Giving the Fair Work Agency the resources to take a proactive approach to enforcement and to target the worst offenders. 
  • Fixing the Employment Tribunal system so that cases get to a hearing within a reasonable time frame. 
  • Taking a serious look at the enforcement of Employment Tribunal awards and actively pursuing those who refuse to comply with them. 

Without these issues being addressed, employment law really cannot do much to help the most vulnerable workers. Tinkering with definitions is no substitute for making the system work properly.

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Is the government serious about guaranteed hours?

Posted on June 2, 2026 by Darren Newman

A good chunk of the Employment Rights Act 2025 is given over to a right that is not yet in force – the right to be offered guaranteed hours. This is the method that the Government has chosen for tackling the issue of ‘exploitative’ zero hours contracts and it is an extremely complicated provision. It takes up the first 17 pages of the Act itself and there is a whole schedule applying the rights to agency workers which is another 17 (almost identical) pages. 

But even that huge amount of detail is not enough. The Act itself leaves many of the key parts of the new right – details such as who it applies to and what it consists of – to subsequent regulations. These regulations are, if anything, going to have to be even more detailed and complex than the Act itself. It is not surprising that there is currently no clear timetable for the introduction of this new right which has simply been scheduled for some time in 2027. 

But we do now have a consultation document from the Government that fleshes out some of this extra detail. So let’s take a look.

Who does the right apply to? 

The right to guaranteed hours does not just apply to zero-hours workers. The Act allows regulations to set a threshold of guaranteed hours per week above which the right will not apply. I wrote about this issue back in December 2024 when the then Employment Rights Minister Justin Madders suggested in Parliament that there was an argument that anyone below ‘full-time hours’ should be within scope.  

Eighteen months on from that comment the Government is seeking views on what the threshold should be. It does not spend much time debating the pros and cons of various options but then says:

The government’s preference is to set the threshold within the range of 8 to 20 hours per week – on the basis that options within this range are more likely to provide a favourable balance of costs and benefits

We then get a question asking respondents for their preferred option. 

So I think we can tick this issue as ‘yet to be resolved’ – but we at least have a clearer view of the range the government is considering.

The reference period – and ‘subsequent’ reference periods

The basis of the new right is that the employer will have to count the number of hours worked by the worker over a ‘reference period’ to determine whether they have exceeded their guaranteed hours in such a way as to trigger the obligation to make a guaranteed hours offer. The government has made it clear from the outset that they envisaged a 12-week reference period and they repeat that in this consultation. There is a question where respondees can express a preference for a longer period, but I think we can take that 12-week period as pretty much set in stone. 

What surprises me it what happens after the initial reference period. I had assumed that each subsequent reference period would also be set at 12 weeks, but the Government do not seem at all committed to that idea. In fact, they suggest that each subsequent reference period could be much longer, placing less of an administrative burden on employers. Respondees are asked whether they would prefer each subsequent reference period to be 12 weeks, 26 weeks, 52 weeks or some other period. 

This is a big deal. Imagine a worker gets through the first 12 weeks of their employment doing no more than their guaranteed hours or works so infrequently that they do not qualify for a guaranteed hours offer. The Government is suggesting that it could be another year or so before the employer would have to look at the situation again. 

In fact the consultation goes further than that. Because the government makes it clear that once the initial reference period has ended there may be a considerable delay before each subsequent reference period begins. 

This was an issue that I had been wondering about. The 2025 Act specifically gives the Secretary of State the power to determine when subsequent reference periods begin and that always struck me as odd because it would seem that the natural thing to do would be to make one period follow immediately after another – in the same way that each holiday year begins as soon as the previous holiday years has ended. 

But if a new reference period starts as soon as the old one ends, then things get complicated. At the end of a reference period the employer has to be given time to make its calculations and offer the worker a contract setting out the guaranteed hours. This period of time is called the ‘offer period’ and has to be set by regulations. Once the offer has been made the worker then has a period time to consider whether or not to accept the offer. This is referred to in the Act as the ‘response period’ and that must also be set by regulations. As it happens this consultation does not ask how long either of these periods should be, but let’s not worry about that now. 

Suppose both the offer and response periods are set at two weeks. That would mean that it could be as long as four weeks after the end of the reference period when the contract containing the new guaranteed hours comes into effect. If by that time we were already four weeks into the subsequent reference period that would make the task of working out when and how often the worker had worked in excess of their guaranteed hours even more complicated. So it makes sense that there would be some sort of break while any new contractual arrangements are agreed and put in place. 

The government does not express a clear preference as to whether there should be break between reference periods, it just asks whether or not there should be one. It doesn’t even ask how long that break should be. But in the scenario it sets out explaining how a gap between reference periods would work it uses the example of a 26-week gap. This would be quite something. If the employer could get through the first 12 weeks without triggering the need for a guaranteed hours offer it could be a full six months before it need give another thought to the hours that it is offering the worker.

The combination of a lengthy gap between reference periods and long subsequent reference period will create a clear incentive for employers to avoid offering too many hours to workers in the first 12 weeks of their employment, after which they will essentially feel free to ignore the new right altogether for a year or so. There is a provision in the Act that is aimed at preventing an employer from deliberately limiting the hours offered to a worker in this way (it’s inserted as new S.27BG(4) of the Employment Rights Act 1996) but good luck to any zero hours worker in finding clear evidence of that happening.

I expect the responses to this proposal from the trade union side to be unenthusiastic.

Regularity requirements

The next issue that the consultation grapples with is the requirement of regularity. The Act says that the right to a guaranteed hours offer will apply where the worker works in excess of their guaranteed hours over the reference period and those hours meet ‘such conditions as to number, regularity or otherwise’ as are set out in Regulations. 

In asking about this, the government sets out two options – and does not seem to have any preference of one over the other. Option A is based on a ‘weekly distribution’ requirement. Option B is a weekly distribution and a total hours requirement. 

Under ‘option A’ the hours worked in the reference period would have to be distributed across a minimum number of weeks (the example given is 8). So if the worker worked well in excess of their guaranteed hours overall but only worked in seven of the 12 weeks in the reference period then that would not be enough to qualify. ‘Option B’ would be even more strict.  Not only would the worker have to work in, for example, 8 of the 12 weeks, but would also have to work a certain number of hours in excess of their guaranteed hours (spread across the whole reference period) in order to qualify. 

I have to say that this part of the consultation paper strikes me as not fully thought through. Choosing option A or B still leaves a lot of questions about exactly what the threshold should be and I’m not sure either of the options quite make sense. I am however going to resist going down this particular rabbit hole for now. Let’s just say that the Government has yet to set out the details of exactly what criteria will be used and how they will be applied. 

Seasonal work

One of the fundamental difficulties with the right to guaranteed hours is that it assumes that a working pattern spanning the previous 12 weeks is a reliable guide to the working pattern the employer is able to provide for the remainder of the worker’s employment. I’ve written about this problem already and I won’t rehash the argument here. When it comes to the consultation the Government is seeking views on any special cases of ‘temporary need’ that it may not have considered. This is a good opportunity for employers whose work is subject to seasonal fluctuations to explain the problem that the right to guaranteed hours poses for them. 

The guaranteed hours offer 

Assuming that the work done over the reference period means that the employer must make a guaranteed hours offer, what should that offer be? This is actually a complicated question. The new contract will not only need to reflect the number of hours worked across the reference period but will also have to set out when the worker can be asked to work. Suppose the worker has consistently worked a 35 hour week, but the working pattern has been hugely variable – including work at night and weekends. To what extent does that need to be reflected in the guaranteed hours offer? How do you stop the employer from making an offer that the worker will inevitably have to turn down because it requires that the guaranteed hours be worked at times when the worker is not available for work? 

There is no mention of this issue in the consultation – even though the Act itself creates a specific regulation making power to deal with it. In the absence of such regulations the employer is free to offer whatever working pattern it chooses so long as the offer reflects the overall number of hours worked in the reference period. 

The consultation does at least address that issue. It puts forward two options. Either the offer could reflect the ‘mean average’ number of hours per week or the ‘median average’. The key difference is that a median average is less influenced by outlier weeks. So while one particularly busy week out of the 12 when the worker worked for 60 hours could significantly increase the guaranteed hours offer if the mean average was used, it would have only a minimal impact on the median average. Its a clear choice and the government seems to express no particular preference – but it strikes me as very odd that this is the issue that the government is consulting on rather than the pattern of work that the employer will have to offer. As we get further into this consultation document I get the growing sense that it has been finished off in something of a hurry.

Is that it?

Sometimes you read a government consultation and it is clear exactly what the government wants to do and how it wants to do it. The purpose of the consultation is to sense check that approach and make sure it has not missed important unintended consequences. That is clearly not what we are dealing with here. 

This consultation feels more like a work in progress. We get some insight into what the Government is planning but no sense that it has really grappled with the difficulties that this new right presents. The issue of seasonal work is not seriously addressed and I am surprised that the government has not considered how a guaranteed hours offer should reflect the normal working pattern of the worker concerned. I really do think something has gone wrong with the questions about the regularity of the work – it might be a good idea for someone in DBT to have another look at that section. 

In any event, more detailed questions are needed if the Government is going to consult on all of the issues that the regulations will have to cover. There may need to be a further consultation exercise before the regulations can be finalised.

Remedies

One issue that is missing altogether is remedy. Regulations need to specify what multiple of a weeks’ pay could be awarded to a worker whose employer has failed to meet the requirements in relation to making a guaranteed hours offer. Perhaps one reason this was not covered by the consultation is that it doesn’t really matter very much. 

This is because the amount of compensation that the Tribunal awards must be aimed at compensating the worker for any financial loss sustained – and in many cases there wont be an identifiable loss at all. This new right is aimed at workers who are regularly working in excess of the hours guaranteed by their contract. A worker who remains in post and continues to work those excess hours will not be suffering any financial loss and will not be entitled to compensation. 

Of course you can construct scenarios where some compensation will be due – but it is likely to be a modest amount whatever limit is imposed. Indeed, this is a key reason why the new right will simply not work. There is a massive imbalance between the complexity of the right to guaranteed hours and the remedy available for its breach. You can’t have the most complex right on the statute book also be the one with the weakest remedy for its breach. 

Is this actually going to happen?

My theory remains that this will never in fact come into force. The current consultation ends in August this year. Perhaps we will get a response from the Government sometime before Christmas but it may well be later. There may then need to be another consultation to deal with the complex issues that this consultation has missed. Perhaps next we will get a set of draft regulations and a final consultation to go with them. When the regulations are laid before Parliament, the Government has made it clear that it will want to give employers plenty of time to get ready for the changes and there will be guidance published to help them. The Government does not need to abandon the proposal altogether – that would play very badly. But it is easy to see how it can eke out the rest of this Parliament without ever being quite ready to put it into effect. 

After the next election? Well, we may then have a whole different set of problems to worry about. 

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Is the trade union right of access a game-changer?

Posted on April 10, 2026 by Darren Newman

One of the challenges of assessing legislation like the Employment Rights Act 2025 is figuring out what it important and what isn’t. You see it every time. A new piece of legislation is accompanied by breathless articles and LinkedIn posts asking ‘are you ready for…’ some new provision that then sits largely ignored once the commencement date has come and gone. Think of exclusivity clauses in zero-hours contracts, the right to make a training request or the prohibition of questions about health prior to making a job offer. All of these generated plenty of copy in the run up to implementation but were barely discussed afterwards and seem to have had little real impact. 

On the other hand, something really important can sometimes slip through without anyone thinking much of it. I remember when the Working Time Regulations were introduced in 1998. I was obsessed with shift patterns and the definition of night work and paid almost no attention whatsoever to the rather more straightforward right to paid annual leave. After all, most of the employers I was working with already provided paid leave, so how difficult could that be? 

So I am trying to approach the 2025 Act with a certain amount of humility. Some issues that generate a lot of early excitement will hardly ever be referred to again and some issues that we are largely ignoring might turn out to be hugely significant. I think the trade union right of access might fall into this second category. 

The right of access would give trade unions a right to enter into an access agreement that would allow them onto the employer’s premises for the purposes of organising and recruiting members, facilitating collective bargaining or providing employees with support and representation. 

The Government has just published its response to a draft consultation carried out at the end of last year and has started a new consultation on a draft Code of Practice that is scheduled to run until 20 May. Reading these two documents has made me appreciate judt how significant this new right will be. Here is how it will work. 

Step one: a union fills in a form setting out the nature of the access agreement that it wants to reach with the employer. The employer has 15 working days to respond. 

Step two: if the employer does not agree to the request in full there then follows a negotiation period where the parties are encouraged to seek agreement. This will last for a further 25 working days.

Step three: If there is a no agreement then the union can submit a claim to the Central Arbitration Committee which will make a determination of what access should be granted and under what conditions. Such an application should be made within 55 working days of the access request being made. 

Two gripes here. First of all the concept of ‘working days’ is really not helpful and just confuses everyone. Can’t we just measure things by the week? Secondly, this timetable is absurdly short. It actually represents a concession by the Government which at first had proposed that the employer would have to respond within 5 working days and would have had about a fortnight to negotiate an agreement. But moving from an impossible timetable to an impracticable one is not much of an improvement. For many workplaces the exact terms on which access will be granted will be complex and will involve the coordination of multiple departments. Expecting a detailed agreement to be negotiated in less than a month is hopelessly optimistic. 

The parties can agree to extend the response period – but not the negotiation period. However, if talks are continuing the draft code of practice suggests that the parties can continue past the deadline and once agreement is reached the union can submit a new request for access in line with the agreement that the employer can then just accept. This seems a sensible workaround – but the fact that a workaround is needed indicates an underlying flaw in the overall scheme. 

What access means

The nature of the access agreed or granted by the CAC will of course vary. The draft Code seems to envisage physical access being granted on an up to weekly basis with the union being able to hold meetings with either groups of employees or individuals. The employer will be expected to provide the same sort of facilities to the union that are used when it wants to meet its staff. That might mean meetings of the whole workforce in a canteen or auditorium  – or meetings with small groups on the shop floor or in break rooms. Digital access is likely to involve online meetings organised through whatever platform the employer uses to facilitate meetings. I particularly enjoyed this paragraph in the draft code:

Whilst employers will be required to take reasonable steps to facilitate access such as creating online calls or moving chairs and tables around to make space for a physical meeting, they will not be expected to make significant structural changes to, for example, their physical premises or their IT systems in order to facilitate access. It will be reasonable for the CAC to refuse access where the access request includes a requirement to make such significant changes. 

I struggle to imagine a union access request that required the employer to make ‘significant structural changes’ to the premises. But if I were the employer I think I would insist on the union being responsible for moving the furniture – and putting it back the way they found it when the meeting was over. Access agreements may turn out to be long and complex documents.

Overall, however, the draft Code of Practice seems pretty sensible and sets out sound advice on many of the complexities that the right of access might involve. For example, it talks about the need to respect the privacy of care home residents, ensuring appropriate DBS checks when granting access to workplaces where safeguarding is an issue, and considering health and safety briefings for union officials being granted access to hazardous environments. These are all matters that the union and employer may reach an agreement on – or which the CAC may determine if no agreement is reached. 

Enforcing an access agreement

One point that I hadn’t really clocked until I read the draft Code is that access agreements will be enforced by the CAC irrespective of whether they are negotiated or imposed. I had assumed that – as with the statutory union recognition scheme – parties who reached an agreement without the need for the CAC to make a determination would be left to themselves to implement and police it. But no. When an agreement is reached it is lodged with the CAC. It then has the same status as an agreement that is imposed by the CAC if no agreement is reached. 

If either party feels that the other has breached the agreement it can apply to the CAC for a determination. The CAC may issue a declaration and direct the party at fault to comply with the agreement. In the face of repeated or continued breaches the CAC can issue what are in effect fines – payments made to the Government – requiring the guilty party to pay up to £75,000. That maximum amount rises if the party continues to act in breach of the agreement so that by the time the third penalty is being imposed, the amount of the fine may be as high as £500,000. Employers negotiating access agreements will need to make sure they do not make promises that they will be unable to keep. 

Access agreements, once made, cannot be unilaterally revoked by either party. But the Government has made it clear that the CAC should not grant an access request unless it expires automatically after no more than two years – so employers will at least not be stuck in an unworkable agreement indefinitely. But any employer negotiating an agreement will have to make sure to include their own expiry period because I can’t find any provision that provides for the automatic expiry of an agreement that has been lodged with the CAC after being negotiated. 

A game-changer?

Looking at the scheme as a whole I am struck by how complex the process is and how easy it is for a union to put in a request that an employer will have to engage with in a meaningful and constructive way. There are no entry requirements – no membership thresholds that the union has to meet before it can request access. Indeed the whole process is designed to help unions recruit members in a workplace where they have little presence. 

The lack of an entry threshold means that any union that intends to seek recognition from an employer will inevitably first seek an access agreement from which it can build momentum. While recognition is only granted by the CAC on the basis that the majority of the relevant bargaining unit want it – a matter generally determined by ballot – there is no such requirement when it comes to access and it will be rare for the CAC to reject an access request entirely. The views of the workforce are not a consideration – after all they can simply choose to ignore the union’s presence if they wish.  The union may be entitled to invite them to a meeting, and the employer may be obliged to facilitate that – but the employees can’t be required to attend if they are not interested. 

When the Employment Rights Bill was first introduced I was highly sceptical that the right of access would have any real impact. But the more I look at it, the more of a game-changer I think it might be. Rather than be neutral, the law will actively encourage the presence of trade unions in the workplace. Politically you may be inclined to view that as a either a negative or a positive thing, but it is undoubtedly a significant change.

When will it happen? The right of access is currently scheduled to come into force in October of this year – just six months from now. Before then the Government will need to introduce Regulations setting out the full details of the process and that may turn out to be quite a complex task. Can they get the Regulations drafted and approved before October? Perhaps – but if they do, that won’t give employers much time to prepare for the change. 

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Sacking a hero? How limited is the right not to be unfairly dismissed?

Posted on February 6, 2026 by Darren Newman

While we all worry about the implications of reducing the qualifying period for unfair dismissal it is perhaps worth thinking about what the right not to be unfairly dismissed actually amounts to. 

I was out with friends last night who mentioned the recently reported case of a bus driver dismissed for chasing after and ‘assaulting’ someone who has stolen a necklace from a passenger. The driver had claimed unfair dismissal and had lost despite being widely acclaimed as a hero. My friends were very much on the side of the bus driver. I made my usual noises about how the press tend to give a very one-sided view of these cases and that it was important to read the decision itself. I may also have tried to explain the range of reasonable responses test – which always goes down well on social occasions. 

I have now read the Tribunal decision and am left feeling pretty dissatisfied with it. I want to look at what the Tribunal found and the issues I have with its conclusions. But I also want to look at what the case tells us us about the law of unfair dismissal and way Tribunals approach it. 

The case is Hehir v Metroline Ltd and I am taking all of my information from the decision itself. Some facts of the case are clear and others are in dispute. I have no independent knowledge of any of them, I am just going by what the Tribunal have said. 

What happened

In June 2024 Mr Hehir was driving a bus and pulled into a bus stop. A man pushed past a female passenger who was standing by the drivers cab, pulled a necklace from her neck and ran off the bus and away up the road. Mr Hehir got out of the cab and gave chase. He recovered the necklace and returned to the bus. 

It then appears that the thief returned to the bus. There is some dispute about why he did this and exactly what happened next. The result, however, was that Mr Hehir punched him, knocking him unconscious, and then detained him for some 30 minutes while the police were called. 

Mr Hehir was subsequently arrested on suspicion of assault, but was released without charge after CCTV from the bus persuaded the police that the thief had thrown a punch at him and that he had acted in self defence. 

Metroline took a different view of the CCTV footage. Mr Hehir was suspended and an investigation was launched. After watching the footage the investigator referred the matter to a formal disciplinary hearing. There were three allegations:

  • Bringing the company into disrepute by assaulting a passenger
  • Assaulting and injuring a passenger and
  • Failing to protect his own safety and that of passengers by leaving the bus unattended and chasing an assailant 

There are two things that annoy me about the way these ‘charges’ are framed. First of all I think it is a bit much to refer to the thief as a passenger. He had been a passenger of course – but I think by the time he was punched to the ground he had very much forfeited that status. ‘Assaulting a passenger’ is an odd way to describe punching someone who had just snatched a necklace and legged it down the street. 

I also don’t like the allegation of bringing Metroline into disrepute. I think this is a term that should be used much more sparingly than it is. In this case it is inseparable from the assault allegation. We can all agree that assaulting passengers is a bad thing to do and we really don’t need to create a second allegation of gross misconduct arising from the same incident. It artificially inflates the list of charges. The risk of bringing the employer into disrepute is one of the reasons that punching passengers is not allowed.

The third allegation is obviously something that you would expect the employer to look at carefully. I can see why an employer would have rules about how to deal with incidents like this that would forbid drivers from taking matters into their own hands. We’ll come back to this point later.

The key point of dispute in the case was why Mr Hehir punched the thief. He said it was self-defence and he pointed out in the disciplinary hearing that the police had accepted that and that the case against him had been closed. The manager conducting the hearing looked at the same CCTV footage that the police had seen and reached a different conclusion. She found that the thief had returned to the bus with the ‘clear intention’ of apologising to the passenger he had stolen the necklace from – and shaking her hand (an offer she understandably declined). When he attempted to shake hands with Mr Hehir, he was pushed away. Up until then the thief had not been aggressive but he then ‘came towards’ Mr Hehir with a closed fist, but did not punch him. Mr Hehir then pushed the thief again and went on to punch him and rendering him unconscious. The manager conducting the hearing concluded that this punch was ‘intentional and unnecessary’. 

Applying the Burchell test

Now you may have an instinctive opinion about how the employer has viewed what happened. Frankly, so do I. But it is important to bear in mind what the Tribunal’s job is when deciding an unfair dismissal claim. It is not its job to decide what happened or to assess whether or not the employee is actually guilty of the misconduct alleged. The key question is whether the employer has acted reasonably and in the context of a misconduct dismissal we boil that down to a three-point test derived from the classic 1978 case of BHS v Burchell:

  • Did the employer honestly believe that the employee was guilty of the misconduct alleged? 
  • Did the employer have reasonable grounds for that belief?
  • Has the employer conducted a reasonable investigation of the allegations? 

If the answer to all three questions is yes then, provided the employer has followed a reasonable procedure and dismissal falls within the ‘range of reasonable responses’, the dismissal will be fair even if the Tribunal believes that the employee is innocent.  

In this case the key question was whether the interpretation the employer placed on the CCTV footage was a reasonable one – did it give reasonable grounds for the belief in Mr Hehir’s guilt? The fact that the police were satisfied that there was no case for him to answer is one circumstance for the employer to consider, but they are not bound by that finding. An employer might reasonably think that the police were wrong. 

So the Tribunal had to look carefully at the CCTV footage and consider not how it would interpret the events as they were captured, but whether the employer’s interpretation of them was a reasonable one. This is what the Tribunal had to say about that issue (Miss King is counsel for the claimant, Mr Hehir and Miss Caralambous is counsel for the respondent, Metroline):

61. Miss King submitted that the respondent reached a faulty interpretation of th CCTV. Miss Charalambous puts the respondent’s position on this in her closing note, especially paragraph 7. As I have noted, whilst both parties reminded methat it is not my role to decide what happened, they spent a considerable timereviewing the CCTV and cross examining on what it showed. The claimant submitted that I should find that the respondent’s interpretation of the CCTVwas flawed, the respondent that it was correct.

62. My conclusion is that the findings that the Disciplinary and Appeal Managersreached about what the CCTV showed were not faulty and were a reasonableinterpretation of the CCTV evidence. Despite extensive cross examination about the CCTV taken on a frame-by-frame basis Miss Giodric maintained her description of what she saw on the CCTV, as reflected in her disciplinary findings, and her explanation as summarised at paragraph 36 was cogent and reasonable. Mrs Dubarry spoke to the CCTV in answering cross examination and again her answers were consistent with her appeal decision and were reasonable.

And that is all we get on the subject. The tribunal is asking the right question, but I don’t feel any the wiser as to why they found that it was reasonable for the employer to differ so dramatically from the police in their interpretation of the footage. What was it the Tribunal saw in that footage that could support the employer’s interpretation? I’m not sure that this is enough to give grounds for appeal, but If I were Mr Hehir I would feel pretty aggrieved. Tribunal decisions are supposed to be detailed enough for the losing party to understand why they lost and I don’t think this decision does the job. I want more actual analysis of what we see in the footage that could lead a reasonable viewer to think that the thief approached his victim with the ‘clear intention’ of apologising and that Mr Hehir’s punch was unnecessary. 

Gross misconduct

I also have an issue with the way the Tribunal approached the third allegation – that Mr Hehir breached safety rules by going after the thief himself rather than staying in his cab and following what was called the ‘code-red’ procedure. You can see why such rules would be in place. Leaving a bus unattended, unsecured and with passengers on board is obviously something that a bus driver should not do. He knew what the proper procedure to follow was and had followed it in the past. It was brave of him to put himself at risk as he did, but an employer is entitled to instruct employees not to be brave. If they are seen to condone such behaviour that might put pressure on other drivers to behave in the same way and what would happen if one was seriously hurt as a result? I don’t think there is any escaping the fact that Mr Hehir’s behaviour warranted a disciplinary sanction of some sort. But was it fair to dismiss him for it? It was misconduct – but was it gross misconduct? 

The policy the employer relied on did not expressly say that any breach of its provisions would amount to gross misconduct. The position was that a breach might amount to gross misconduct depending on its seriousness. That seems fair enough. Here is the Tribunal’s analysis. 

68. Miss King also submitted that its failure to consider the Safety Allegation as misconduct rather than gross misconduct meant that the respondent’sinvestigation was flawed. I conclude that this submission is not supported by the facts. It is for the employer, with knowledge of its business, to make thejudgment on whether the behaviour constitutes misconduct and, if so, howsevere that misconduct is. I have reminded myself to be careful not to fall into thetrap of substitution. This employer’s policy allows safety issues to be treated aseither misconduct or gross misconduct depending on their severity and in thiscase, the respondent treated the allegations as gross misconduct and foundthem to be gross misconduct with reasons why given at the dismissal stage.

This was a claim of unfair dismissal not wrongful dismissal. In a wrongful dismissal claim – which is a claim for breach of contract – the question is whether the employee should have been given notice and the answer depends on whether they were actually guilty of gross misconduct. The Tribunal has to be make its own finding in that case of whether or not the conduct was serious enough to warrant dismissal without notice. In an unfair dismissal case the question is whether the employer was acting reasonably in concluding that there was gross misconduct for which the penalty should be dismissal.

Even allowing for that distinction, however, I think the Tribunal’s analysis falls short. It seems to suggest that the matter is entirely one for the employer to decide and does not include the caveat that the employer’s decision needs to be reasonable. There is no analysis of why Mr Hehir’s breach of the rule could reasonably be viewed by the employer as amounting to gross misconduct – what were aggravating factors that made the conduct more serious and how did the employer weigh them against the mitigating factors of the driver’s good intentions and bravery? Those issues may have been extensively discussed in the hearing – but there is no analysis of them in the decision itself. 

The limits of an unfair dismissal claim

All I have done is read the Tribunal’s decision. I wasn’t present at the hearing, I didn’t hear from the witnesses and I haven’t seen the evidence. So I am not saying that an appeal would succeed or that there would be a different outcome if the decision was overturned and sent back to a fresh Tribunal. Tribunal decisions have to be considered as a whole and should not be subjected to overly picky analysis of exactly how they have phrased particular points. All the same I think Mr Hehir has good grounds to be dissatisfied with the decision that has been handed down by the Tribunal.

But I think the wider point is just how limited the right not to be unfairly dismissed is. The employer has considerable leeway in deciding whether someone should be dismissed or not and – as this case shows – decisions that might strike many people as harsh or even extreme can be held to be fair. Unfair dismissal is a very employer-friendly right and, for all the talk of radical change, the Employment Rights Act 2025 does nothing to shift that balance. 

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Holiday Pay and the Fair Work Agency

Posted on January 19, 2026 by Darren Newman

One item on the list of ‘things you didn’t notice in the Employment Rights Act 2025’ is the duty to keep records relating to annual leave and holiday pay. Section 35 of the Act introduces a new Regulation 16B into the Working Time Regulations 1998 requiring an employer to keep records that are ‘adequate to show’ whether it has complied with its obligations in relation to annual leave. The form that these records take is up to the employer, but they must be kept for at least six years. Failing to keep adequate annual leave records becomes an offence. It is not yet clear when this provision will come into force – but there is no reason why it shouldn’t happen soon.

It’s not a dramatic change – but it is worth bearing mind when we look at creation of the Fair Work Agency which is expected to be set up and running this April. The Government has set a lot of store by the Fair Work Agency – but I have to confess I haven’t paid much attention to it. Oddly the Employment Rights Act itself makes no mention of it. Instead what it does is give the Secretary of State the power to enforce particular areas of employment law, allows those powers to be delegated to officials, requires the appointment of an advisory board and the publication of a three year enforcement strategy and annual reports. The Fair Work Agency will then be set up as an executive agency within the Department for Business and Trade. This means that it will have its own budget and managerial structure, but it will not be a legal entity in its own right. It will not have the independence of Acas or the Equality Commission but will carry out the labour market enforcement functions of the Secretary of State in line with Government policy. 

To an extent the agency will simply bring existing enforcement functions under one roof. The minimum wage enforcement teams currently sitting within HMRC will be transferred as will employees of the Employment Agency Standards Inspectorate – although they are already employed in the Department for Business so they won’t have to move far. The Fair Work Agency will also take over the functions of the Gangmasters and Labour Abuse Authority which the Employment Rights Act abolishes (S.148). 

None of this may seem very interesting – just an internal reorganisation of existing functions. But the Employment Rights Act also extends the enforcement powers of the Secretary of State to cover SSP and paid annual leave. That means that an employer that is not paying statutory sick pay or complying with its obligations to provide paid annual leave is subject to broadly the same regime of inspections, notices of underpayments and financial penalties that currently face employers not paying the minimum wage. If the Agency is given the resources to tackle those issues in a meaningful way then that will be an important change. 

If an employer is given a notice of underpayment in relation to an individual it will also – unless the Secretary of State provides for exceptions – be required to pay an additional financial penalty directly to the Government. The amount of the penalty is set at 200% of the amount owed to each individual covered by the notice to a maximum of £20,000 per individual. If you’re a logistics company and have wrongly assumed that your huge team of delivery drivers are not workers and so are not entitled to holiday pay, then that could prove very expensive.

And viewed in that context, the new duty to keep accurate records of paid annual leave may be significant. There is no duty on employers to keep records of Statutory Sick Pay. There used to be one, but it was revoked back in 2014. So if I were an inspector, I might struggle to audit the extent to which an employer was complying with its duties to pay SSP. When it comes to paid annual leave, however, an inspector could simply ask the employer to produce its records demonstrating compliance. If those records are not adequate then that would give good grounds for a more detailed investigation potentially leading to enforcement action. As we know, getting annual leave right is not straightforward – particularly for workers with complex working patterns or pay arrangements – so many employers may be underpaying their staff. Indeed, the Resolution Foundation has estimated that as many as 900,000 qualifying workers may be given no paid annual leave at all.  

But just how active will the Fair Work Agency be in pursuing its enforcement functions? That is the key question. There were 750 penalty notices issued in relation to the Minimum Wage in 2024/25, while the Office for National Statistics estimates that some 447,000 workers are paid less than the minimum wage. So far, Government enforcement of employment law has barely scratched the surface of non-compliance. Resources for the new agency are likely to be tight and I would be surprised if its budget allowed for any real change in the overall picture.

It might be worth double checking your annual leave records though – just to be on the safe side. 

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Employment Rights Act 2025 – doubling the ‘protective award’

Posted on January 5, 2026 by Darren Newman

One of the most simple and straightforward provisions of the Employment Rights Act 2025 is also one of the most consequential – at least for larger employers. Section 30 makes a change to S.189 of the Trade Union and Labour Relations (Consolidation) Act 1992 doubling the maximum level of the protective award from 90 days to 180 days.

The protective award is an odd thing in UK employment law. It is made when a Tribunal finds that an employer has failed to carry out proper consultations with employee representatives in relation to a collective redundancy exercise. There are two things about the protective award that are particularly unusual. 

The first is that it is typically a representative action. If appropriate representatives are in place – for example, a recognised trade union – and the employer fails in its duty to consult them, then the claim is brought by the representatives or the relevant trade union rather than by the individuals who are dismissed. The protective award is then made in favour of the individuals they represent and who have been made redundant – even though they themselves have not brought a claim and might not even be members of the trade union that has brought the proceedings.

The second unusual thing is that the protective award is punitive. It does not seek to compensate employees for what they have lost but to punish employers for what they have done – or rather, failed to do. 

This history of the protective award is complex, but I think it is interesting so strap in. Rules on collective redundancy consultation were first introduced by the Wilson Government in the Employment Protection Act 1975. They were designed to implement a European Directive from 1975 but in those days we had a rather vague notion of the impact of European law and the way in which the Government went about implementing the Directive would cause problems some 20 years later. 

The 1975 Act provided that an employer who was proposing to dismiss 100 or more employees had to begin consultation with any recognised trade union at least 90 days before the first dismissal took effect and an employer proposing to dismiss 10 or more employees had to begin consultations at least 60 days in advance. If fewer than 10 employees were being dismissed then the consultation simply had to begin ‘at the earliest opportunity’.

The protective award was described as an order by the Tribunal for the employer to continue paying remuneration to employees who had been dismissed or who were about to be dismissed in contravention of these requirements. The award was limited to 90 days’ pay where the consultation period was set at 90 days – and 60 days pay where the consultation period was 60 days. In cases of fewer dismissals, the maximum protective award was set at 28 days. 

Things were very different back in the 70s and it is clear that the assumption was that a union would be able to get in front of the tribunal really quickly. The protective award was designed to protect the employees from being dismissed before the consultation period was complete. Nowadays that never happens. I have never seen a case in which the protective award covered employees who were still in post. By the time they get to the Tribunal, the dismissals will have taken effect long ago.

Over the years the collective redundancy provisions were amended. Within a couple of months of the 1979 Election the Government had introduced Regulations reducing the consultation period when there were to be between 10 and 100 dismissals from 60 days to 30. The protective award in such cases was also capped at 30 days rather than 60.

The big change, however, was prompted by Europe. The UK was held to be in breach of the Collective Redundancies Directive by the European Court of Justice in 1994. The Court held among other things that UK law could not limit collective consultations to cases where there was a recognised trade union in place. The Government responded with Regulations in 1995 providing for elected representatives but also – as permitted by the Directive – introducing a threshold of 20 proposed redundancies at a single establishment before any duty to consult representatives applied.

The law was then amended by the Labour Government in 1999 abolishing the lower maximum protective award in cases where the employer proposed dismissing between 20 and 100 employees. The protective award was now capped at 90 days’ pay in all cases involving a breach of the collective consultation provisions no matter how long the consultation period was. The link between the protective award and the consultation period was further eroded in 2013 when the Coalition Government reduced the 90 day consultation period to 45 days but kept the maximum protective award at 90 days. 

The result is that the 90 day maximum has no relationship with the duration of the consultation that the employer is required to undertake. The award is no longer even pretending to offer a period of protection during which wages are paid while consultations take place. So an employer proposing to make 20 redundancies should begin consulting representatives at least 30 days before the first dismissal occurs – but faces having to give any dismissed employees up to 90 days’ pay if it fails to do so.

Nor is the amount of the award concerned with the personal circumstances of the employees who have been dismissed. An employee who is fairly dismissed for redundancy and walks straight into a better paying job with no time spent out of work will still receive a protective award if the employer failed in its duty to consult. The Tribunal must award an amount that is just and equitable having regard to the ‘seriousness of the employer’s default’ (S.189(4)(b)) rather than any losses suffered by the employee. That means that if an employer completely disregards the duty to consult then a 90-day award is likely. If the breach is more technical than substantial then a much lower figure would be appropriate. 

So what the 2025 Act does is double the risk faced by an employer obliged to engage in collective consultations over redundancy. In large-scale redundancies the financial implications of this are significant – and they are supposed to be. P&O has a lot to answer for here. When they sacked 800 employees in 2022 without engaging in any meaningful consultation, they were making a deliberate calculation. They must have judged that the amount they would save from acting quickly would outweigh the amount they would have to spend in paying out compensation to the dismissed employees. The sight of a large employer disregarding its legal obligations because it could afford to do so made a firm and lasting impression. The doubling of the limit on protective awards is designed to change the economics of situations like that and persuade more employers to engage in consultation rather than opt-out and pay-out. It is hard to argue with the logic.

The Government has said that it will implement this increase in the protective award in April this year. There is no reason why they should not keep to that timetable. No further Regulations are needed and I don’t see any need for a consultation on the issue. It’s good that at least one provision of the Employment Rights Act 2025 is so straightforward. 

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The Employment Rights Bill reaches the endgame

Posted on December 11, 2025 by Darren Newman

It was close – but the Employment Rights Bill failed to pass last night. The Lords voted down the Government’s proposal to scrap the compensation limit on unfair dismissal and so the process of ‘ping-pong’ must continue.

There were basically two objections to the Government’s position. The first was that this was very late in the day to insert a brand new provision into the Bill. There is no escaping that. I have never come across such a major change being introduced into a Bill at the ‘ping-pong’ stage. Compensation for unfair dismissal was not even referred to at any other stage in the passage of the Bill and it is absolutely extraordinary that such a momentous amendment should be introduced at a stage were the Lords and Commons should really just be tying up the loose ends before the Bill is passed.

The second objection was intriguing. The Government insists that the abolition of the cap on compensation was agreed in a meeting between representatives of unions and businesses. It was a way of breaking the deadlock on the qualifying period for unfair dismissal. The Government was, after all, abandoning its manifesto pledge to make unfair dismissal a day one right so it needed to show that it had got something in return?

But how clearly was this agreement understood by those who were in the room? In the Commons on Monday, Lib Dem spokesperson Sarah Olney said

The Minister will be well aware that abolishing the cap was not agreed in recent negotiations between employer groups, trade unions and the Government. Most businesses would have been happy for the cap to have been increased, but completely scrapping it, without any consultation or negotiation, has understandably left employers feeling deeply worried and facing yet another nasty surprise. 

Employment Rights Minister Kate Dearden intervened and said:

With respect, I was in the room as part of the negotiations with business representatives and trade unions, and I thank them again for the constructive dialogue and leadership that they showed throughout the numerous days of conversation. I can confirm that the compensation cap was discussed and agreed in the room, so I ask the Liberal Democrat spokesperson to reflect on her comments. I was in the room; with due respect, she was not. That is a true reflection of what was discussed and agreed.

And in responding to the Debate she said:

I know that my hon. Friends’ suggestions are well intentioned, but I stress that, as a package, our amendments reflect the agreement reached between business representatives and trade unions in a collaborative and constructive process.

Perhaps a little ambiguity there in the phrase ‘as a package’? Just how specific was this agreement?

The issue was picked up again in the House of Lords. Lord Sharpe for the Conservatives said:

The Government claim that this change reflects an agreement between business groups and trade unions but I wonder whether this is true.

Neil Carberry, chief executive of the Recruitment and Employment Confederation, was explicit. He said:

“For the employer side of the table last week ‘lifted’ did not mean ‘abolished, right now’. We agreed that the 52 week cap should go—protects ordinary workers better—as part of the deal that retained the qualifying period. We anticipated a further discussion about the future of the cash cap, too. But the decision to go for abolition, now is political”.

The Federation of Small Businesses said on Times Radio this week: “In the agreement between us as business groups and the unions, we agreed that there would be a lifting of the cap. We didn’t suggest it would be both caps abolished. So that’s broader than the agreement, and it helps a very small number of very, very rich people working for corporates”.

When those alleged to have agreed to this package say plainly that they did not agree to abolish both caps, the government rationale collapses. It is rumoured that there are minutes of these various meetings and, to clear all this up, perhaps, I ask the Minister whether that is the case and, if it is, will they place a copy of the minutes in the Library?

Responding for the Government Baroness Effra said:

I will address some of the points made. Again, coming back to the nature of it all, these were discussions between business representative organisations, trade unions and the Government. Specifically on the question of the minutes, there are Civil Service contemporaneous notes of the meetings, but they have not been shared with participants or more widely. We think that it would be impolite and inappropriate to share the meeting notes without the agreement of those who attended the meetings. The Government’s statement and update on the Employment Rights Bill, released on 27 November, and the subsequent Written Ministerial Statement laid in both Houses provide the public summary and conclusion of that meeting.

So the ‘deal’ that led to this amendment was not put in writing and no-one was given notes or minutes of the meeting that agreed it. It is easy to see how the discussion of a ‘lifting’ of a cap would be understood by some in the room as a clear commitment to abolish it altogether and by others as a rather more vague undertaking to increase the maximum amount that can be awarded. Personally I think if you lift something (like an embargo) then you remove it altogether – but I know other people take a different view.

Does anyone else have that song from Hamilton running through their head?

“No one really knows how the parties get to “Yes”
The pieces that are sacrificed in every game of chess
We just assume that it happens
But no else is in the room where it happens”

I’m not sure Lin-Manual Miranda would find the current debate worth his attention. But the Lords have a good point I think that an ambiguous deal – not put in writing – between a limited number of trade union and employer representatives is not a sound basis for one of the most significant changes in employment law that has ever been proposed.

Some have argued that the change is not that significant because the median Employment Tribunal award for unfair dismissal is well below the statutory cap – and on the most recent figures is less than £7,000. I have little patience with this argument.

Tribunal awards for unfair dismissal are rare. The median figure is based on just 650 awards. The vast majority of the thousands of potential claims for unfair dismissal that arise each year are settled before that stage is reached. One factor that aids settlement is that the statutory cap means that those who have suffered very large losses will settle and never reach the stage of the Tribunal actually making the award. If you have lost £1 million as a result of being dismissed then you will quickly settle for the maximum amount. Remove that maximum and a settlement will not be easy. Daniel Barnett has recorded a podcast explaining exactly how lifting the cap will change things and I strongly recommend listening to that if you have any notion that this reform would not have a dramatic impact.

So where now? The Government are likely to act quickly so any prediction will soon be taken over by events. Nevertheless I would expect something like an agreement to carry out a full consultation on the issue coupled with amendments that would allow the Government to remove the cap by secondary legislation. Currently, Section 15 of the Enterprise and Regulatory Reform Act 2013 prevents the Government from increasing the overall cash limit on the award beyond three times median earnings. Going by the 2025 figures I work that out as being just over £119,000 – basically, about what the limit is now.

In theory the Lords could vote down any attempt to increase the limit if that did not genuinely reflect the outcome of the consultation process. In practice they seem allergic to ‘fatal motions’ (which sounds like a horrible way to go) and prefer to simply pass a ‘motion to regret’ if they are unhappy with a statutory instrument. This means that the Government could be pretty confident that it could make the changes it thought appropriate whatever emerged from the review process. Honour would be satisfied and the Bill would (finally) pass.

This is very much the endgame now. The compensation limit is the only outstanding issue that needs to be agreed. It would be a big surprise if the Government didn’t find a way to get the Bill over the line in the next round of ping-pong. But if they want that done by Christmas they will have to move quickly.

[Update: the Guardian is reporting that the Government will make no more concessions and intends to force the Bill through. It will return to the Commons on Monday and the Lords on Tuesday. Let’s see how that goes down.]

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Breaking the Deadlock on the Employment Rights Bill?

Posted on December 1, 2025 by Darren Newman

Anyone reading this will know by now that the Government has made a major concession in order to break the deadlock on the Employment Rights Bill. Almost every employment lawyer I know has been saying for ages that a six-month qualifying period is the obvious compromise to make. It is a major improvement (from a claimant perspective) on the current qualifying period of two years and it avoids all the trouble of coming up with a ‘light touch’ approach to reasonableness during the initial period of employment. 

But just because the compromise is obvious, that does not mean that it was always inevitable. Without the cabinet reshuffle back in September I really don’t think we would be where we are now. It appears the compromise was reached as a result of intensive talks between trade unions and representatives of the business community but not every Labour MP will be happy about it. After all, a day one right to claim unfair dismissal was an express manifesto commitment. So it makes sense that concessions had to be made on the employer side to sweeten the pill. 

Lifting the Cap

But what exactly were they? Here is what the Government press release says:

“To further strengthen these protections, the Government has committed to ensure that the unfair dismissal qualifying period can only be varied by primary legislation and that the compensation cap will be lifted. ” 

Removing the ability of further changes to the qualifying period by statutory instrument makes sense. But what really took me aback was the reference to lifting the compensation cap. Where did that come from? And what exactly is the Government proposing to do? 

At the end of last week a number of us over on LinkedIn were looking at what this might mean and exactly how the law might be changed. In this post I want to set out the options as I see them. I won’t credit the individuals over on LinkedIn who have helped me try to understand what is going on and what might be proposed – but if you follow me over there you can see who was involved in the discussion. 

But first I want to set out a bit of the history of unfair dismissal compensation.  

Compensation limits through the ages!

In the Industrial Relations Act 1971 the new right to unfair dismissal was introduced with an overall limit on compensation set at either 104 weeks’ pay or £4,160 – whichever was the lower. For a bit of context, using the Bank of England’s Inflation calculator, £4,160 comes out as the equivalent of just over £53,000 today.

The annual increase I the limit continued to fall behind inflation – and even further behind wage inflation. When Labour came to power in 1997 they increased the limit from £11,300 to £12,000 but had a more radical change in mind. The Fairness at Work White Paper in 1998 said: 

“3.5… Although many awards are well below the current limit on compensation, which the Government has recently increased, the existence of a limit prevents some individuals from being fully compensated for their loss. The likelihood of proper compensation being awarded should also encourage employers to put proper voluntary systems in place. The current cap on compensation for unfair dismissal, which has steadily fallen in real terms, provides no such incentive. The Government therefore proposes to abolish the maximum limit on such awards.”

In the event the Government was persuaded not to abolish the limit altogether – but they did increase it significantly to £50,000. They also provided for that sum to be increased in line with inflation each year. Then in 2013 the Coalition Government introduced a new limiting factor. Instead of a simple limit on compensation – and in an echo of the 1971 Act – compensation was limited to the lower of a fixed sum of £74,200 and 52 weeks’ pay. That fixed sum has since increased with inflation and is now set at £118,223. 

So that means that someone earning £50,000 – a bit above national median earnings – has their compensatory award capped at one year’s pay. Someone earning £1,000,000 a year on the other hand can only get £118,213 – just over six weeks’ pay. Poor them.

Unfair dismissal compensation can be quite unpredictable. The compensatory award is based on the employee’s financial losses arising from the dismissal. If the employee finds a new job within the year then that will likely mean that their overall loss is below 52 weeks. A Tribunal also has a wide discretion to reduce the amount awarded to reflect the possibility that the employee would have been dismissed even if the employer had behaved reasonably or because of the employee’s ‘contributory fault’. 

Nevertheless for many potential claimants the limit on compensation for ordinary unfair dismissal is a frustration and means they will recover less than the amount they have lost. There is of course no such limit on discrimination cases or in cases where the employee was dismissed for making a public interest disclosure (whistleblowing). As a result, there are undoubtedly some cases where an employee seeks to shoehorn a discrimination or whistleblowing claim into what would otherwise be a normal unfair dismissal case – though opinions vary on the extent to which that is an issue. 

Labour’s pre-election approach

When the Employment Rights Bill was published back in 2024 it did not seek to make any changes to compensation for unfair dismissal. Nor was the issue mentioned in the Labour Manifesto or “Labour’s Plan to Make Work Pay” – the policy document that the manifesto promised to implement in full. 

But the proposal that was abandoned in 1998 is still discussed in Labour circles. Back to 2022 Labour’s Employment Rights Green Paper said: 

“Caps which limit the amount of compensation that workers can receive are unfair and discourage companies from following the law. Labour will ensure that workers will receive full compensation, without statutory limits, if they suffer loss because of employers’ breaches of the law.”

That Green paper emerged from Labour’s “Power in the Workplace Taskforce” chaired by Andy Mcdonald MP who soon afterwards resigned from Keir Starmer’s Shadow Cabinet citing a lack of support for his proposals to increase the Minimum Wage. So the Green Paper did not exactly emerge from Starmer’s inner circle. But it was still published and it’s proposal on compensation  would instinctively be supported by many Labour MP’s 

Options for ‘lifting the cap’

So given that background what do we think the Government is actually proposing? There are I think, three main options.

  1. Abolish all limits on compensation for unfair dismissal
  2. Abolish (or substantially increase) the limit of 52 weeks’ pay but keep the overall limit of just over £118,000 and continue to increase it in line with inflation
  3. Increase the overall limit  by a significant, above inflation amount

I don’t know what deal has been done or indeed how specific the Government was when it made its deal to accept a six-month qualifying period. But it does seem to me that the most sensible option is to remove the 52-week limit imposed under the Coalition and revert to one overall limit that is uprated each year in line with inflation. 

Such a change would chiefly benefit workers on average (or just above average) wages. Those on low wages, without much in the way of pension entitlement, are unlikely to get anywhere near the 52 week limit if they are dismissed unfairly but not subject to any form of discrimination. 

But abolishing the limit altogether would mainly benefit those earning well above the average. It would also be disastrous for the Employment Tribunal system. Imagine an investment banker who claims unfair dismissal because he was not given an opportunity to improve his performance before being dismissed. With salary, bonus, share options and pension contributions his losses could easily run into the millions. That would be a claim worth investing in and he would be able to afford top-flight lawyers to represent him. The employer would also need to be seriously lawyered up and would put a great deal of effort into defending the case. Every issue would be litigated and much more Tribunal time would be taken up than for a normal unfair dismissal claim – crowding out claims from those who might be in much more need of the compensation they are seeking. 

I am not at all convinced that the parties in a case of that sort should have recourse to the Employment Tribunal system where there are no fees to pay and no significant cost risk if they lose. Altogether I think it would be odd if a Labour Government made a change that would mainly benefit the very highly paid (and those who represent them). 

As I write this, we don’t know what the Government’s proposal actually is. That in itself is a bit puzzling. The press release was ambiguous and we still don’t have any formal announcement clarifying the position. Perhaps there is all sorts of wrangling going on in the background. Perhaps there is a technical issue about whether it is now too late to make an amendment to the Bill that introduces a whole new topic rather than fine tune the detail of a provision that is already in there. Could it even be that talk of a deal is premature? 

We should find out very soon. The Bill returns to the Commons on 8 December and before then we should get an amendment paper indicating just what the Government is actually proposing. So far, the Bill’s website has posted 139 amendment papers since the Bill was introduced. Number 140 is going to be very interesting.    

[UPDATE: Actually I was wrong about that. Number 140 is just a single amendment from Andy McDonald MP insisting on rejecting the Lords amendment to the qualifying period. This is backed by a group of left wing MPs and will be rejected. We still need to see what amendments the Government puts forward]

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The Employment Rights Bill and day-one rights

Posted on October 29, 2025 by Darren Newman

The Employment Rights Bill failed to clear the final stage of its passage through Parliament last night. The House of Lords chose to insist on a number of amendments that had been rejected by the Commons meaning that the Bill must now go back to the Commons to see if they insist on rejecting the amendments that the Lords are insisting on – or whether some sort of alternative amendment (referred to as an amendment in lieu) can be made that the House of Lords could live with.  For obvious reasons, this stage of the process is known as ‘ping-pong’.

In this post I want to concentrate on the amendment concerning the unfair dismissal qualifying period – where the Lords have insisted on a six month qualifying period rather than allowing unfair dismissal to be a ‘day-one right’. It struck me, watching the debate, that the Government has got itself into a bit of a mess. 

The current position – understood by everyone with any involvement in employment law – is that in order to claim unfair dismissal an employee must have two years’ continuous service with their employer (I’m just going to ignore the lack of a qualifying period for ‘automatic’ unfair dismissals for reasons such as whistleblowing or belonging to a trade union). That requirement is found in S.108(1) of the Employment Rights Act 1996. Importantly the two year qualifying period can be amended (or scrapped) by Regulations under S.209 of that Act. So when the coalition government of 2010-2015 wanted to increase the qualifying period from one year to two years back in 2012 it did not need to get a Bill through Parliament to do that, it simply issued an Order which took effect after a single resolution in each House of Parliament. 

Labour’s 2024 manifesto was very clear. It committed the new Government to:

introducing basic rights from day one to parental leave, sick pay, and protection from unfair dismissal. 

It is important to remember in all this that the total abolition of the qualifying period for unfair dismissal is an unequivocal manifesto commitment on which all Labour MP’s stood at the last election. It cannot be abandoned lightly. 

Making this change would not need primary legislation – it could be done using the same sort of Order that was used to increase the qualifying period back in 2012. Given it was a manifesto commitment, it is difficult to see how that could be opposed in the House of Lords. 

But the Employment Rights Bill went further than just disapplying the qualifying period – it repealed S.108 altogether and removed any reference to it from S.209. This would mean that a future Government could not simply reintroduce it with an order of its own – a fresh Act of Parliament would be required. 

In order to try to reassure employers, however, the Government provided for special rules to apply during an ‘initial period of employment’. The details are to be worked out after consultation which means that the Government is currently unable to explain how this would work in practice. I think it is a needless complication. Indeed when I considered the option of something like this before the Bill was published, I said it would be an ‘abomination’ and that I would stand outside Parliament with a loudspeaker protesting about it. Please don’t hold me to that. 

Business was not however reassured and just last week the Resolution Foundation published an article entitled ‘Day One Frights’ (well done) which said that the total abolition of the qualifying period would have the potential to inhibit hiring and could be particularly damaging to younger workers looking for their first role. It really is a very cogently argued piece and is well worth reading. The conclusion was that the qualifying period should be reduced to six months. 

As it happens, that mirrors an amendment made by the House of Lords at the Report stage and which was rejected by the Commons when it considered the Lords amendments in September. When the issue came back to the Lords to be debated yesterday the Government frontbenchers really struggled to make a coherent case – it was quite painful to watch. The Resolution Foundation’s position was referred to time and again by the Opposition and the Government seemed to have no answer to it. Of course they weren’t helped by the fact that the ministerial team was new to the issue following the reshuffle back in September.

Breaking the deadlock

So what is the Government to do? It surely can’t abandon such a clear manifesto commitment? Here is my suggestion. 

Why not accept a six-month qualifying period – for now – and pledge to work towards a total abolition in the future?  That means replacing the current House of Lords amendment (which has some technical issues and which currently – and bafflingly – has the ‘initial period employment’ beginning at the end of the first six months of employment) with something much shorter and cleaner which would: 

  • Keep S.108(1) in place but specify a qualifying period of six months
  • Provide that there will be no qualifying period where the dismissal was due to a spent conviction within the meaning of the Rehabilitation of Offenders Act 1974 (this was inserted in the Bill by the House of Lords and is so obviously a good idea that it is rather surprising that it is not already in the Employment Rights Act)
  • Scrap all references in the Bill to special rules applying during an ‘initial period of employment’ and save us all a lot of needless hassle 
  • Keep the ability under S.209 of the Employment Rights Act 1996 to amend or disapply the qualifying period for unfair dismissal in the future. 

The Government could then make it clear that it still has the ambition of making unfair dismissal a day one right but that it accepts that work needs to be done to make sure that this does not deter employers from hiring and that the economic conditions need to be right. It can then ask Acas to work on guidelines for a fair way of operating probationary periods and only commit to abolishing the qualifying period altogether when there is broad consensus as to what that involves. Any future change would be made by Order and the power to reintroduce a qualifying period would be retained should it become clear that the lack of one is inhibiting growth. 

Since there would no longer be any need to spend a year working through the details of the ’initial period of employment’ the Government could also announce that the qualifying period will be reduced to 6 months in April 2026 rather than at some time in 2027 as currently planned. If they were feeling cautious, they could also phase it in with Regulations reducing the qualifying period to 12 months in the first instance. 

Taking this approach would mean that the manifesto pledge remains on the table and that tangible progress would be made towards it much more quickly than is currently envisaged by the Government’s implementation timetable. It would also be a clear win for the Government. After all they will have persuaded the Conservatives that a six month qualifying period for unfair dismissal is reasonable and will not deter employers from taking people on. Had the Bill started with a six-month qualifying period I very much doubt that they would have been prepared to accept that.  

Implementing the Employment Rights Bill is a huge task and there are a number of areas where the Government is going to struggle (I still think that the whole guaranteed hours thing is a disaster waiting to happen). Accepting – for now – a six-month qualifying period allows the Government to make a tangible improvement in workers’ rights and also provide some reassurance to the business community. I think it would be a smart move. Let’s see what happens. 

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Government consults on Pregnancy Dismissals

Posted on October 27, 2025 by Darren Newman

We all know that it is unlawful to dismiss an employee either because she is pregnant, for a reason connected with her pregnancy or because she has taken maternity leave. In fact the combination of the pregnancy and maternity provisions of the Equality Act 2010 or the unfair dismissal provisions in Regulation 20 of the Maternity and Parental Leave etc Regulations 1999 means that employees who are pregnant or have recently given birth are pretty well protected against dismissal (on paper, at least).

So why have the Government just launched a consultation on “Enhanced Dismissal Protections for Pregnant Women and New Mothers”? What problem are they seeking to address? 

Labour’s pre-manifesto policy document – ‘Labour’s Plan to Make Work Pay’ – said:

‘Labour is committed to strengthening protections for pregnant women by making it unlawful to dismiss a woman who is pregnant for six months after her return, except in specific circumstances. This will give new mothers certainty that the law is on their side.’

And that was all it said. No analysis of what the law currently is, why it is unsatisfactory or what ‘specific circumstances’ might be appropriate when considering the dismissing an employee who is currently or recently pregnant. 

The reference to ‘specific circumstances’ is interesting. Article 10 of the EU Pregnant Workers’ Directive says

“1. Member States shall take the necessary measures to prohibit the dismissal of workers, within the meaning of Article 2, during the period from the beginning of their pregnancy to the end of the maternity leave referred to in Article 8 (1), save in exceptional cases not connected with their condition which are permitted under national legislation and/or practice”

While we were in the EU there was an argument that UK law did not go far enough. It prohibited discrimination because of pregnancy but did not provide that dismissal of pregnant women was only allowed in ‘exceptional circumstances’. Is the ‘Making Work Pay’ proposal an echo of that concern? 

We are no longer bound by the Pregnant Workers Directive, but in any event it seems that our law was probably fine anyway. In 2018 the European Court of Justice ruled in Porras Guisado v Bankia SA that provided the dismissal was not connected with the pregnancy and the employer gave substantial reasons for it in writing there was no breach of the Directive. In the UK pregnant workers are indeed entitled to written reasons for dismissal (see S.92 Employment Rights Act) and if those reasons are connected with pregnancy the dismissal will be unfair.  So there is no international standard that requires dismissal only be allowed in ‘specific circumstances’   

What the Employment Rights Bill provides

When the Employment Rights Bill was published the new Government’s policy was reflected in a Regulation-making power. The Bill amends S.49D of the Employment Rights Act 1999 which is the statutory basis for the 1999 Regulations dealing with the duty to offer suitable alternative work in relation to an employee who becomes redundant during pregnancy, maternity leave or within 18 months of the birth of a child. Essentially the power to make regulations is extended so that instead of just covering redundancy they can cover any dismissal ‘during or after a protected period of pregnancy’. It pretty much gives the Minister a free reign in deciding what additional protections against dismissal should be introduced. 

But that still doesn’t answer the question: what shortcoming in the law is this consultation intended to address? Nobody sought to answer that question as the Bill went through Parliament. Indeed in Committee, Conservative shadow minister  Greg Smith said: 

“ I think this is one of the least contentious parts of the Bill, and we do not seek to oppose in any way the important protections for pregnant women and new mothers”

Which is fine – and very generous given that he could not be expected to know what these important protections will actually be. 

What the new consultation is about

The consultation that was launched last week gave the Government an opportunity to explain exactly where they think the current law is lacking and what extra protections are needed. Do they set out a clear case? Take a guess.

It seems to me that there are two possible bases for amending the law on pregnancy dimsissals. 

The first is that despite the prohibition on dismissals connected with pregnancy, there is evidence that such dismissals remain a problem and so the law needs to be changed to make it easier for claimants to assert the rights that they currently enjoy in theory but do not always benefit from in practive. 

The second is that the law is currently insufficient in that it allows for employees to be lawfully dismissed in circumstances where a dismissal should be unlawful. In other words that there is a gap in the law that needs to be filled. 

It looks as though the Government is relying on the first ground as justifying action:

“While legal protections against dismissal related to pregnancy and maternity already exist. And was strengthened in 20/23/24 to include enhanced redundancy protections. Many expectant and new mothers continue to report experiences that suggest unfair treatment persists.

This is deeply concerning and highlights the need for further action. That is why this government will put in place legislation that makes it unlawful to dismiss pregnant women, mothers on maternity leave and mothers who return to work for at least the six-month period after they return (“The protected period”) except in specific circumstances.”

The problem however is that having identified the problem of unfair treatment persisting despite the law that is already in place, the Government assumes that the answer is to widen the law rather than look at issues of enforcement. Not only that, but the consultation is not informed by any clear idea of what circumstances justify dismissing someone during the ‘protected period’. Rather, we are being asked what the ‘specific circumstances’ under which dismissal is permitted should be. 

A new test of fairness?

The consultation basically offers up two options for considertation. Option 1 would introduce a new test of fairness that would apply to all dismissals of protected employees. This would be a stricter standard than the current test of reasonableness. 

Here is what the Government suggests under this option: 

35. Option 1: Introduce a new general test for fairness 

Under this option, employers would still be able to rely on any of the existing fair reasons for dismissal, but they would also be required to meet a new stricter standard when relying on that reason to dismiss a pregnant woman or new mother. 

Example: Employers could still be required to show a fair reason, and also show that letting someone go is, for instance, necessary to avoid serious harm to the business or other staff.

And that is it. No other discussion of ‘Option 1’ is set out in the consultation. Nowhere does the consultation expand on what ‘serious harm’ to the business might mean. And of course this is only an example of what the stricter test might be. The Government is inviting other suggestions as to what test should apply – which very open minded of them – but really serves to emphasise that the Government does not have a clear idea of what problem it is trying to solve. 

Limiting the reasons for dismissal?

There is a much more detailed discussion of Option 2 – but mainly to point out what a bad idea it is. Option 2 is expressed as narrowing the scope for dismissal or ‘removing some of the fair dismissal reasons’. This refers to what are generally known as the ‘potentially fair reasons for dismissal’ set out in S.98 of the Employment Rights Act 1996. Technically they are categories of reason rather than reasons in their own right, but don’t get me started on that point. To all intents and purposes the employer msut show that the dismissal was for one of the following reasons: 

  • Conduct
  • Capability
  • Statutory Ban
  • Redundancy 
  • SOSR (often pronounced ‘sozzrer’ this stands for ‘some other substantial reason’)

So under Option 2  one or more of the reasons on this list would not be available to an employer who had dismissed a protected employee. The Government accepts that this would lead to difficulties and gives a number of examples illustrating this. 

Let’s take conduct. The suggestion is that the law might only allow for dismissal in cases of gross misconduct rather than ordinary misconduct. Quite fairly the Government then asks about dismissals for multiple instances of ordinary misconduct. Here is the first hypothetical example it comes up with. 

“Example A. An employee repeatedly ignores safety protocols in the workplace, such as failing to wear required protective equipment. On two separate occasions, the employee receives a formal warning in line with the employer’s disciplinary policy. Shortly after receiving the second warning, the employee informs her employer that she is pregnant. During the predicted period to the employee again disregards a key safety rule and this incident results in the minor injury to a colleague. Several team members raised concerns with management, stating that the repeated behaviour is creating an unsafe work environment and affecting morale.”

Or how about this?

“Example B. A pregnant employee uses insensitive language relating to race in front of their team. A single incident of using this specific language would not usually be sufficient for dismissal, according to the employer’s policy on conduct, but it would usually merit a final written warning. A month later, while still pregnant and at work, the employee uses the same form of words again in front of a customer who complains to management.”

I think these examples neatly illustrate That carving out some sort of exception under which pregnant employees could not be dismissed for misconduct in the same way as their colleagues would be completely unworkable. Surely nobody is going to suggest that a pregnant employee should have more licence to use racist language in front of customers than someone who is not pregnant?

Issues around capability are more complex. Clearly, there are circumstances in which the fact that someone is pregnant will affect the way in which they do the job and can also affect their attendance. Issues of performance may also arise when an employee returns to work after the extended period of leave – particularly if there has been a change in the way the work is organised or performed while the employee was away. It is important to remember that to a large extent, the law already protects women in these circumstances. Pregnancy related absence cannot be taken into account when dismissing an employee for poor attendance. And where pregnancy has affected the employee’s performance in the role any dismissal would be likely to amount to discrimination as well as being automatically unfair. 

What is this all for?

The truth is I just don’t understand what the Government is trying to achieve by changing the law. Is the argument that employees who happen to be pregnant should be protected from dismissal in circumstances where the dismissal is not in any way related to their pregnancy? Or is the underlying justification for a special rule protecting pregnant employees and new mothers that while they may be protected on paper, they are not necessarily protected in practice? 

If it is the latter then surely any change in the law needs to focus on how existing rights can be enforced. I appreciate that asking for a swift and efficient Employment Tribunal system is unrealistic, but perhaps the law could do something to make it easier for dismissed employees to win their case? I can quite see that a current problem might be that an employer could make an employee redundant without giving any indication that the decision was prompted by their pregnancy or maternity leave but where the employee strongly suspects that there was a link. If we want to address that issue then maybe we should focus on the burden of proof rather than the definition of when a dismissal will be fair. 

Suppose you provided that if an employee is dismissed during the ‘protected period’ it falls to the employer to prove that pregnancy or maternity played no part in the decision to dismiss. If the employer passed that test the Tribunal could go on to consider the fairness of the dismissal in the normal way. If it could not, then the dismissal would be unfair. 

In a case of gross misconduct, passing the test should be straightforward. A Tribunal might easily be persuaded that anyone who, for example, stole money from the till would be dismissed and that the employee’s pregnancy was neither here nor there. On the other hand an employer who dismissed an employee whose output suffered in the later stages of her pregnancy might struggle to prove that her poor performance was unconnected with her condition. In cases of redundancy the Tribunal could take some persuasion that the selection of the employee had nothing to do with the fact that she was pregnant or on maternity leave.

Choosing Option 3

Of course employers already have to prove the reason for dismissal under unfair dismissal law, but I still think that placing a particular burden on employers who have dismissed a pregnant employee (or someone on leave etc) would move the dial significantly in the employee’s favour. It would go further, for example, than the convoluted burden of proof provisions in the Equality Act which could also be amended to keep the test consistent. It would also have the advantage of not interfering with the fundamental test of when the dismissal of an employee is fair, would be easy to draft and would not involve employers having to apply different rules or procedures to different employees when contemplating dismissal. 

As an added bonus, such a change would bring UK law into line with Article 8 of the International Labour Organisation’s Maternity Protection Convention (No 183) which provides:

“It shall be unlawful for an employer to terminate the employment of a woman during her pregnancy or absence on leave referred to in Articles 4 or 5 or during a period following her return to work to be prescribed by national laws or regulations, except on grounds unrelated to the pregnancy or birth of the child and its consequences or nursing. The burden of proving that the reasons for dismissal are unrelated to pregnancy or childbirth and its consequences or nursing shall rest on the employer.”

So given the choice between Option 1 and Option 2, I am going to add in Option 3 – placing the burden of proof on the employer to show that the dismissal was unrelated to pregnancy or maternity. Will making such a change solve the problem? Of course not. But the problem is not really the result of the current rights being too narrow. If employers can still dismiss employees for reasons connected with their pregnancy or maternity leave then that is a failure of the system we have developed to enforce and uphold existing rights. I don’t think anything suggested in this consultation is likely to address that. 

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