A pivotal ruling has raised a protective umbrella over those impacted by a toxic workplace environment, potentially extending employers' legal liability by months or even years.

An Employment Tribunal had to decide whether the employers of a harassed employee, who was actively considering a change of employment, could use this intention to leave as a pretext to slash their compensation. An employee of the British Council was posted to Morocco in October 2018, where she was subjected to a campaign of sustained harassment by a colleague, culminating in her filing a grievance. However, the report blamed her for “sending mixed messages,” romanticising the offender’s behaviour as that of a "spurned lover". Thus, the British Council refused to uphold her sexual harassment claims, despite actual evidence of physical assault. She resigned and presented her claims to an Employment Tribunal for constructive unfair dismissal, direct sex discrimination, sexual harassment, and victimisation.

The first Tribunal upheld all the claims, save that of victimisation, finding multiple repudiatory breaches of the implied term of trust and confidence, plus discriminatory conduct for which the British Council was vicariously liable. However, the first Tribunal applied a 35% Polkey reduction to the unfair dismissal compensation and a 35% Chagger reduction to discrimination compensation (based on the possibility that the appellant might have left her employment with a reduced benefits package, plus evidence that she was contemplating a move to other roles). She appealed the deductions, leading the British Council to cross-appeal, contending that the sexual harassment claim was ‘out of time’.

The Appeal Tribunal allowed the appeal on the Chagger deduction, as the victim’s urge to leave was influenced by the very harassment she had suffered, while the 35% Polkey deduction from discrimination compensation could not stand. The Appeal Tribunal also dismissed the British Council's cross-appeal, finding that the sexual harassment was part of a continuous pattern of discrimination.

This ruling upholds the notion that "career intentions" do not take place in an ivory tower. Thus, any compensation awarded should reflect a hypothetically successful career, given sufficient dignity and protection from harassment. Crucially, the "limitation period" for such a claim does not necessarily reset after every individual act of harassment. If a company handles a grievance poorly or tacitly permits a "climate" of harassment to persist, then it effectively creates a single, continuous legal event, one which allows a claimant to sue for historical misconduct. Thus, employers, especially in light of the recent advent of the

Employment Rights Act, must act swiftly to nip all such behaviours in the bud to prevent them from potentially escalating into a weighty compensation claim.

Annual leave & holiday pay (effective April 2026)

From 6 April, the Employment Rights Act (ERA) 2025 has introduced strict new record-keeping duties, requiring employers to maintain detailed records of annual leave, carried-over holiday, and holiday pay. Employers must keep these records for six years, with failure to do so potentially resulting in severe financial penalties under the newly created Fair Work Agency (FWA). These changes address previous gaps in law regarding record retention, placing a higher administrative burden on businesses to ensure compliance.

Redundancy provisions (April 2026)

The cost of procedural errors during collective redundancies has effectively doubled, as the maximum protective award for failing to properly inform and consult on redundancies involving 20 or more staff has increased from 90 days to 180 days of gross pay. This change places a significant premium on early and transparent consultation with staff and unions to minimise the risk of severe financial penalties.

National Living Wage to increase (April 2026)

As of 1 April 2026, all employers must ensure that their payroll reflects the new statutory rates, including an increase in the National Living Wage (NLW) to £12.71 per hour for those aged 21 and over, £10.85 for 18–20 year olds, and £8.00 per hour for 16–17 year olds and apprentices, while statutory maternity, paternity, and adoption pay have also risen to £194.32 pw.

Guaranteed hours (2027)

Zero-hours and low-hours workers will have the right to request guaranteed hours, compensation for cancelled shifts, and reasonable notice of working schedules. Employers must pay for shifts that are cancelled, moved, or reduced at short notice. Employers will be required to provide reasonable notice when scheduling or changing shifts, although the precise definition of "reasonable" is yet to be determined.

The FWA’s draconian new powers

To ensure these new rights are strictly followed, the government has established the FWA as a single, powerful enforcement body. The FWA has the authority to inspect workplaces (by forceful entry if necessary), audit payroll records for minimum wage and holiday pay compliance, and bring court proceedings against any organisations that fall short of statutory standards. This increased oversight coincides with major trade union reforms that make it significantly easier for unions to gain recognition. The membership threshold for recognition applications has dropped from 10% to just 2%, and the requirement for a 50% turnout in industrial action ballots has been removed. With the introduction of electronic and workplace balloting, the logistical barriers to organising industrial action have effectively been lowered, making it essential for employers to cultivate positive, proactive relations with their workforce.

Paternity Leave

As of Monday, 6 April 2026, the Employment Rights Act (ERA) 2025 will fundamentally transform the UK workplace by introducing several "Day One" entitlements. Now, paid paternity leave and unpaid parental leave are Day One Rights, granted immediately upon joining a firm. Fathers will also be permitted to take paternity leave, even after finishing a period of shared parental leave, a change that applies to all babies born or placed for adoption. Further, employers should take note of the recent introduction of Bereaved Partner’s Paternity Leave, which offers up to 52 weeks of protected leave for those whose partner dies before a child’s first birthday.

Statutory Sick Pay

The 3-day "waiting period" for Statutory Sick Pay (SSP) has also been removed, and SSP is now a Day One Right. Further, the Lower Earnings Limit (LEL), which previously required employees to earn at least £125 pw to qualify, has been scrapped, and all workers, regardless of their weekly pay, are now eligible for either the standard rate of £123.25 pw or 80% of their average weekly earnings, whichever figure is lower. This change obligates an immediate review of HR payroll systems and sickness policies to factor in a likely increase in both the number of eligible employees and total company expenditure on short-term absences.

Whistleblowing Protections

The whistleblowing laws, which have always been a de facto Day One Right, have been broadened to include complaints of sexual harassment as "protected disclosures explicitly". This means that any worker who reports harassment is shielded by law against detriment or unfair dismissal, requiring employers to update their internal whistleblowing and harassment policies to reflect this heightened level of legal protection.

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.