The employment status of a former bricklayer was recently called into question in establishing liability for asbestos exposure. The widow of the late Mr. Eric Alger, who died from mesothelioma, sought access to historical Employer’s Liability

Insurance. Mr. Alger had been contracted to work on a major refurbishment project in 1988. However, because the company had long since been wound up, it had to be restored to the register for this case to be heard. Mr. Alger had worked alongside demolition gangs on the site, although he claimed that he had never been provided with a mask or warned about the risks of asbestos.

The widow’s case was that, while Mr. Alger was self-employed for tax purposes, he was directly engaged by the company to work on the project. The High Court determined that, on the balance of probabilities, Mr. Alger was directly employed by the company and thus fell under the definition of an “employee” for the purposes of Employer’s Liability Insurance, allowing the widow to proceed with the claim for damages. As Mr. Alger had been moved between different areas of the site and performed general labour rather than just specialist bricklaying, the Judge concluded that he was effectively being managed directly by the main contractor and was effectively an employee.

While Mr. Alger was “self-employed” in the eyes of HMRC, if workers provide “labour only,” use the company’s tools, and are moved between tasks at the manager’s discretion, then they are classified as employees, allowing them access to compensation otherwise denied to truly independent businesses. This case further demonstrates that a company’s legal liability may persist long after it has been wound up.

This case has profound implications for any sector that provides equipment or infrastructure, yet declares its workers to be independent subcontractors. Moreover, this landmark ruling may not be confined to liability insurance and could also be extended to other areas of accountability. Employers should thus ensure that the roles of subcontractors are clearly specified.

The National Minimum Wage (NMW) Act 1998 remains contentious, especially after the introduction of the NMW (Amendment) Regulations 2025, as it draws the legal line in the sand between employment and slavery, as highlighted by a recent case.  

The claimant was born in the Philippines in 1990 and travelled to the UAE in the employ of a diplomat and his family, after which she was relocated to London. Her three months of employment in the UK involved extreme exploitation, verbal abuse, threats and isolation, as she was effectively forced to work eighteen-hour days, with no breaks or rest days. Her movements were strictly controlled, as the family retained custody of her passport and frequently locked her inside the flat when they were away. She was further isolated by being denied access to a SIM card or the household Wi-Fi, while her compensation was almost non-existent, falling far below the statutory NMW.

It was concluded that, as she had been a victim of human trafficking and suffered from PTSD, she was granted leave to remain in the UK in 2015. The High Court awarded over £146,000 in ‘punitive’ damages in a “default” assessment, including £85,000 for false imprisonment and injury to feelings, £35,000 for psychiatric injury, and £15,000 in exemplary damages. Given the resurgence of modern slavery and human trafficking cases, this ruling renders “sub-clinical distress” a litigable tort in forced labour cases, potentially reaching the highest band of compensation.  

While the NMW Act allows for a “current rate” uplift in a standard Employment Tribunal, the Judge ruled that this does not automatically apply to a claim brought in tort. If a claimant sues for “servitude” or “negligence” rather than a straight breach of contract, they may only be entitled to the wage rates that existed at the time the work was done. This presents a claimant with a strategic choice between pursuing a statutory (i.e., for higher money) or a tort claim (for general damages, including PTSD).

Cases of severe harassment and abuse can result in a “loss of earnings” that can extend far beyond the period of employment, due to traumatic psychological damage or unwarranted references. Thus, HR departments should actively monitor ongoing workplace conflicts to safeguard against claims under the new Employment Rights Act and NMW (Amendment) Regulations. 

A claimant made allegations of unfair dismissal, discrimination, and detriment resulting from whistleblowing. While his claim against the Council was subsequently withdrawn early on, the claim against the private limited company proceeded.

The respondent, however, argued that the claimant was a volunteer and that his claims were vexatious, threatening to apply for a strike-out order and a costs award in the range of £2,500 to £3,000, although the case was postponed due to bereavement. The conflict escalated when the claimant sent two emails to the Tribunal, the first expressing extreme concern over the respondent’s costs warning, stating that, in the absence of certainty regarding the maximum costs the Tribunal might award, he was considering withdrawing his claim. Later that afternoon, after receiving no reply, he sent a second email declaring that he wished to confirm the withdrawal of his claim unless the Tribunal assured him that no costs order would be made against him.

However, the Tribunal’s internal processing of these emails was disorganised, and the Employment Judge, having seen only the first email, correctly identified it as a potential tactical withdrawal and invited the claimant to clarify his position within 14 days. However, a staff member who had seen the second email, but not the first, sent a letter treating the claim as having been fully withdrawn and cancelled the upcoming hearing, although the claimant had since explicitly stated that he wished to continue with his claim. The chaos continued with the Tribunal asserting that the claim had been unambiguously withdrawn and could not be resurrected.

However, the Appeals Tribunal ruled in favour of the claimant as he had made his intent to withdraw conditional upon receiving advice or guarantees regarding potential costs. This ruling means that employers and respondents can no longer immediately rely on a frustrated or conditional email from a claimant as a “get out of jail free” card. Thus, in future cases, Judges are expected to be more interventionist when an unrepresented party suggests they want to drop a claim due to fear or pressure rather than through a genuine desire to end the pursuit of justice.

This case marks a potential end to the prevalent tactic of sending “warning letters” over potential costs to pressure claimants into dropping ‘weak claims’. While these letters are legally valid and often necessary, the bar for such tactics has now been raised, and respondents should be wary of using the threat of costs to trigger an automatic procedural win, as judges may now be more sympathetic to those in financial distress.

A Tribunal recently ruled that payments made for work into a third-party trust constitute immediate employment earnings. This decision effectively precludes employers from using loan-based structures to obfuscate remuneration.

Mr. Jack was employed by an offshore company based in the Isle of Man while living and working in the UK. Under this arrangement, the fees paid for Mr. Jack’s services were split into a modest basic salary and an employee benefit trust (EBT), which would then advance these funds to Mr. Jack in the form of interest-free loans. Because these payments were categorised as loans rather than salary, they were not initially reported as taxable employment income.

Following an enquiry into Mr. Jack’s self-assessment return, HMRC issued a closure notice concluding that the £48,034 transferred to the EBT actually constituted “redirected earnings” and was, therefore, taxable as employment income under Section 62 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003. Mr. Jack appealed, arguing that a significant portion of the funds should be exempt from tax since he had repaid approximately £23,479 of those loans in April 2011.

The Tribunal upheld HMRC’s closure notice and applied the Supreme Court’s decision in RFC 2012 plc. The Judge held that, when money was paid into the EBT for work done by Mr. Jack, it effectively became taxable employment income at that exact juncture as “redirected” earnings. Mr. Jack’s argument that he had “fixed” the tax issue by repaying the loans was also rejected, as the tax charge arose on the transfer to the EBT, and anything that happened to the money afterwards did not affect the tax already owed for the 2010/11 tax year.

This ruling confirms that the legal characterisation of a relationship or a payment in a contract is secondary to the reality of the work performed. Care must be taken when creating structures to minimise tax burden and maximise profits, as the full amount transferred to a trust could be seen as ‘earnings’. Based on the Rangers case, if money is paid in return for services, it constitutes remuneration. On the other side of the coin, if a court views a loan as salary, it may also come to view the recipient as a worker who is entitled to full statutory rights.

The High Court recently ruled on the interpretation and enforceability of “discretionary” bonus provisions in employment contracts. Mr. Gagliardi brought a breach of employment contract claim against a former hedge fund which had contracted him as a senior portfolio manager. The contract in question included a salary, a sign-on payment, a new-issue bonus, and a discretionary bonus based on profitable revenues. Mr. Gagliardi was specifically recruited by the CEO to expand into the US market owing to his expertise in block trading and his valuable relationships with major US banks. The hedge fund’s primary goal was to secure the benefit of these relationships and scale its business quickly, with the CEO tacitly acknowledging that they were essentially “buying his relationships,” hiring Mr. Gagliardi on a “trade and get paid” basis.

Upon joining, Mr. Gagliardi immediately began actively trading in the A1 share class without completing his onboarding process or receiving formal risk limits, leading to conflict with the CIO and risk manager. However, the CEO consistently prioritised Mr. Gagliardi’s trading activity over internal procedure, despite him often exceeding specified trading limits, frequently granting retrospective approval. Mr. Gagliardi’s lack of attention to compliance was also overlooked, as the CEO continued to prioritise profitability. However, a market-wide regulatory inquiry into block trading led to subpoenas to the claimant and the hedge fund by early 2022, prompting the fund to withhold payment of his discretionary bonus. This led the claimant to sue the hedge fund for breach of contract.

The High Court ruled in favour of Mr. Gagliardi, awarding him $5.385m in damages (plus interest), determining that his former hedge fund had indeed breached its contractual obligations in failing to award him any discretionary bonus for his trading activities in 2021. The Judge ruled that the hedge fund’s contractual discretion (governed by Delaware law) was neither broad nor unfettered and, as such, was subject to prescribed contractual criteria.

Despite the use of the term “discretionary,” the High Court has affirmed the principle that an employer’s discretion is not absolute where a bonus is tied to measurable performance criteria such as revenue contributions and profits. This ruling emphasises that, where an employee delivers exceptional financial performance, an employer cannot arbitrarily or irrationally refuse to pay a bonus, as this would constitute a breach of contract, irrespective of any allegations of minor breaches, misconduct or poor attitude that did not reach the threshold for disciplinary action or termination over the period in question. Employers should thus take care over phraseology when structuring discretionary bonuses into contracts.