EmpLaw Newsletter May 2026

Employment Rights Act 2025: Trade Union change non-unionised employers need to have on their radar

If your organisation has never dealt with a trade union, the Employment Rights Act 2025’s changes to trade union law are not background noise. Two incoming reforms in particular will affect you directly - and the clock is already ticking down – these changes are due to come into effect this October.

A statutory right of access

From October (if the Government sticks to its current ‘roadmap for implementation’), trade unions will have a statutory right to request access to workplaces (both digitally and physically) to communicate with workers about membership and representation. This right will apply regardless of whether a union is recognised. The government has recently consulted on a draft Code of Practice to accompany this change. The Code clearly sets out that, where an access request is made, there is a presumption in favour of access being granted unless it would not be reasonable to do so.

Blanket refusals will carry legal risk, including the possibility of terms being imposed by the Central Arbitration Committee (CAC). For employers with no prior union engagement, this is a genuine shift. Previously, unions had limited grounds to interact with your workforce unless already recognised. HR teams need clear internal processes before the first access request arrives.

Ask yourself: who in your organisation handles a union access request, and what would a ‘reasonable’ response look like?

A duty to inform employees of their right to join a union

From October 2026, employers must actively inform employees of their right to join a trade union - likely through a written statement at the start of employment.

The shift from ‘employees have the right’ to join a trade union to ‘employers must tell them they have the right’ is meaningful. It increases the likelihood that employees who had not previously considered union membership will start to do so. We await government guidance on the form that this statement must take. HR teams need to decide where this information sits - contracts, onboarding materials, or standalone documentation.

The bigger picture

These two changes do not operate in isolation. Together, they are part of a deliberate policy direction: reducing barriers to union organisation and increasing union visibility. The realistic consequence, over time, is more union membership and more recognition requests — including in sectors that have historically been lightly unionised.

What to do now

1. Audit onboarding documentation and consider where you will build in the right-to-join notification ahead of October 2026.
2. Establish an internal process for handling union access requests before you receive one.
3. Brief managers on what they should say when employees raise questions about union membership.
4. Review your employee relations baseline. Unions gain traction where employees feel unheard.

Collective consultation: when does a “proposal to dismiss” arise?

The Employment Appeal Tribunal has provided important clarification on the trigger point for collective redundancy consultation in Ellard & Ors v Alliance Transport Technologies Ltd.

The key issue was whether the employer was “proposing to dismiss” 20 or more employees within a 90-day period at the relevant time. The Claimants were employed by a manufacturer with around 51 staff. The business entered administration on 2nd May 2023, and, on the same day, 15 employees were dismissed as redundant. Three days later, most of the remaining workforce was dismissed when the last prospective buyer withdrew. The tribunal awarded a protective award to the employees dismissed on 5th May but not to those dismissed on 2nd May (which included the Claimants), reasoning that only 15 dismissals were proposed on 2nd May, so collective consultation was not triggered. The Claimants appealed.

Allowing the appeal, the EAT emphasised that the concept of a “proposal” is fact-sensitive and does not require finalised plans. A proposal may exist even where alternative options remain under consideration. The correct approach is to assess the reality of the situation, including the viability of those alternatives.

On the facts, although a potential business sale had been explored, it was no longer realistically achievable by 2nd May. The administrators had formed a fixed, albeit provisional, intention to close the business. That was sufficient to amount to a proposal to dismiss 20 or more employees, triggering collective consultation obligations at that point. The failure to consult resulted in a 90-day protective award.

This decision is particularly significant in light of legislative developments. From April 2026, the maximum protective award has increased to 180 days’ pay per affected employee, substantially increasing financial exposure.

Practical implications for HR

Employers should reassess when consultation obligations arise. Key considerations include:

• Monitoring when redundancy becomes a realistic outcome, not just a confirmed decision
• Critically evaluating the likelihood of alternative options (e.g. sale or restructure)
• Initiating consultation at an earlier, provisional stage where large-scale redundancies are foreseeable

A cautious, early approach to collective consultation will be essential to mitigate risk.

The need to construct a ‘discrimination-free’ world when using post-discrimination conduct to assess discrimination compensation

In the recent case of KJ v British Council, the Employment Appeal Tribunal revisited a tricky but important issue for employers: how to assess losses flowing from discrimination, particularly where the employee’s later actions muddy the waters.

The Claimant, based in Morocco, succeeded in claims of sex discrimination, harassment and constructive dismissal following a poorly handled grievance. The tribunal reduced her compensation by 35%, relying on evidence suggesting she may have left her role anyway (including job applications and engagement with a head-hunter).

However, the EAT overturned that reduction, finding that the tribunal had misapplied Chagger v Abbey National. The key principle in Chagger is that tribunals must construct a “non-discriminatory world” and assess what would have happened absent all discriminatory acts.

Crucially, this requires careful scrutiny of post-discrimination conduct. If an employee’s actions - such as exploring other roles - may themselves have been influenced by the discriminatory treatment, they cannot be relied upon to reduce compensation.

Key takeaways for HR:

• Causation is not straightforward: Actions taken after discrimination may still be part of the causal chain.
• Document carefully: If arguing for reduced compensation, employers must be able to show that the employee’s actions were independent of the discrimination.
• Avoid assumptions: Job searching does not automatically mean an employee would have left anyway.

This case is a reminder that distinguishing between the consequences of discrimination and independent employee decisions is rarely clear cut.

Implied Terms: The hidden rules in Employment Contracts

Implied terms are a fundamental - yet often underestimated - component of the employment contract. While employers tend to focus on the written agreement, the reality is that the contractual framework extends well beyond express terms. A range of obligations may be implied into the contract, carrying equal legal force and, in some cases, significant liability if breached.

Implied terms arise through three primary mechanisms: by fact, by law, and through custom and practice.

Terms implied by fact are those necessary to give the contract business efficacy, or so obvious that they go without saying. The courts apply well-established tests, including the “business efficacy” test and the “officious bystander” test, to determine whether such a term should be implied. For example, a requirement for an employee to hold a valid driving licence may be implied where it is essential to the role, even if not expressly stated.

Terms implied by law are automatically incorporated into all employment contracts as a necessary incident of the employment relationship or by statute. These include, most notably, the duty of mutual trust and confidence, the employee’s duty of fidelity, and statutory rights such as entitlement to the National Minimum Wage and working time protections. Such terms cannot be excluded by agreement.

Finally, terms may be implied through custom and practice, where consistent and well-established workplace behaviours become contractually binding over time. For a term to be implied in this way, the practice must be “reasonable, notorious and certain”. This is often a fact-sensitive exercise and a common source of dispute.

For HR professionals, the key risk lies in the dynamic nature of implied terms. Unlike express terms, they may evolve over time through conduct, communication, and managerial decision-making. This makes them inherently more difficult to control.

What this means in practice:

• The written contract is not exhaustive - legal obligations may exist beyond it.
• Informal practices and repeated behaviours can create binding rights.
• Failure to recognise an implied term may result in breach of contract claims or constructive dismissal risk.

A clear understanding of implied terms is therefore essential to managing contractual risk and maintaining control over the employment relationship.

When does an Employment Contract bite? Possibly sooner than you think

You may end up owing a new hire three months' notice before they have spent a single day in the office. That is the practical consequence of the Employment Appeal Tribunal's decision in Kankanalapalli v Loesche Energy Systems, and it should prompt every HR professional to revisit their offer letter templates and early employment terms without delay.

What happened?

The Claimant was offered a project manager role, conditional on satisfactory references and a right to work check. He accepted by email and began preparatory steps. Before his start date, the employer withdrew the offer for reasons entirely unrelated to those conditions. The employment tribunal found no binding contract had formed: the conditions were unsatisfied, and the employer was free to walk away. The EAT disagreed.

The critical distinction

The EAT drew a line between two types of contractual condition. A condition precedent must be satisfied before a contract comes into existence at all. A condition subsequent operates within an already-formed contract, capable of terminating it if certain events occur. The EAT held that the conditions in the offer letter were the latter: a binding contract had formed on acceptance, and the conditions could have ended it, but they had never been triggered. The employer withdrew for an unrelated reason without notice. An implied term required reasonable notice; given the seniority of the role, three months was appropriate. The employer was in breach.

Why this matters for HR

Many HR teams have historically operated on the assumption that unmet pre-employment conditions mean no contract and therefore no liability. That assumption is no longer safe. The financial exposure is real, particularly for senior hires who carry no shortened probationary notice period.

Practical steps

• Review your offer letters and contract templates now. The language must explicitly state that conditions are conditions precedent - that no contract exists unless and until each condition is satisfied.
• Track conditions actively and do not permit new starters to provide services before conditions are met; accepting services will undermine any argument that no binding contract existed.
• For senior appointments, take specific drafting advice - these roles carry the greatest financial exposure. Short notice in the early stages of employment could have avoided the costly three-month payout in this case.

When benefits become liabilities: PHI, dismissal and wage claims

Permanent health insurance (PHI) continues to present complex and often underestimated risks for employers. The recent Scottish Court of Session decision in McMahon v AXA ICAS Ltd has reinforced just how significant those risks can be, particularly where dismissal intersects with PHI entitlement.

PHI, or group income protection, typically provides a proportion of salary where an employee is unable to work due to long-term illness. While funded through insurance, entitlement is usually conditional on continued employment. This creates an inherent contractual tension: the very circumstances triggering PHI (incapacity) are often those that might otherwise justify dismissal.

The well-established principle in Aspden v Webbs Poultry addresses this tension by implying a term into employment contracts preventing dismissal where the purpose or effect would be to deprive the employee of PHI benefits. This implied term can override an express contractual right to dismiss for incapability. The Supreme Court’s reasoning in Tesco Stores v USDAW has further strengthened the broader legal framework for such implied protections.

The McMahon decision extends this risk landscape. The Court confirmed that PHI payments may constitute “wages” for the purposes of unlawful deductions claims - even post-termination. This is a significant development. It means that an employee who is wrongfully deprived of PHI may pursue both a breach of contract claim and an unlawful deductions claim, with differing limitation periods and remedies. Notably, unlawful deductions claims do not impose a duty to mitigate loss, potentially increasing the employer’s financial exposure.

Employers must also consider the consequences of lapses in insurance cover. If PHI is a contractual entitlement and cover is discontinued, liability transfers directly to the employer - potentially for the duration of the employee’s incapacity.

In this context, careful contractual drafting remains essential but is not a complete safeguard. Employers should ensure alignment between contractual terms and insurance arrangements, exercise caution when contemplating dismissal of employees approaching or receiving PHI, and treat policy continuity as a critical risk issue.

Modern Dress Codes – Inclusion, Flexibility and Practical HR Strategy

Dress codes are evolving rapidly, and HR professionals must ensure their policies keep pace with both legal developments and workplace expectations.

One of the most significant changes in recent years has been the move towards greater flexibility. Traditional distinctions between male and female dress requirements are increasingly difficult to justify. While the law permits different standards, they must be broadly equivalent. In practice, highly prescriptive or gender-specific rules now carry considerable risk.

For example, requiring women to wear make-up, skirts or high heels is likely to amount to direct sex discrimination. Government guidance has made clear that such requirements are difficult to defend. Similarly, enforcing different rules on jewellery or hairstyles for men and women can expose employers to claims.

There is also growing focus on gender identity. Employers should allow transgender employees to dress in accordance with their gender identity, whether or not they have undergone any formal process. Imposing restrictions—such as requiring more “androgynous” presentation—would almost certainly be discriminatory. Many organisations have responded by introducing gender-neutral uniform options or allowing employees to choose which version of a uniform they wear.

Beyond gender, HR must also consider disability and race. Dress codes may need to be adjusted for employees with medical conditions—for example, allowing alternative fabrics, footwear or fastening methods. Hairstyles associated with Afro-textured hair must not be treated as unprofessional, as this is likely to constitute race discrimination.

Tattoos present a more nuanced challenge. While not a protected characteristic in most cases, attitudes towards tattoos are changing. A blanket ban may limit recruitment, while unrestricted visibility may raise client-facing concerns. A balanced approach - permitting non-offensive tattoos but restricting those that are prominent or inappropriate - is often the most practical solution.

So, what should HR teams do? First, review existing policies to ensure they reflect current working practices, including hybrid working. Second, avoid overly detailed rules - broad principles such as “smart” or “appropriate” attire are often safer. Third, consult employees before making changes, both to reduce risk and improve engagement.

Ultimately, the most effective dress codes are those that combine clarity with flexibility. They protect the organisation’s interests while respecting individual identity - reducing both legal risk and employee dissatisfaction.

The “Vanishing Dismissal” – Understanding the effect of a successful appeal

Where an employer takes an initial decision to dismiss an employee, but that decision is overturned on appeal, this instinctively feels like a positive outcome. However, for HR, it carries legal consequences that must be fully understood.

If an appeal results in reinstatement (whether or not a lesser sanction is imposed), the original dismissal is treated in law as if it never happened. This is often referred to as the “vanishing dismissal” principle.

The immediate advantage for employers is that there is no longer a dismissal for the purposes of an unfair dismissal claim. However, this comes with a significant trade-off. The employment contract is treated as having continued uninterrupted, meaning the employee is entitled to back pay and all contractual benefits for the period between dismissal and reinstatement.

This can have substantial financial implications, particularly where there has been a lengthy gap between dismissal and the appeal outcome.

The principle was explored in Marangakis v Iceland Foods Ltd. In that case, the Employment Appeal Tribunal confirmed that where an appeal is upheld and reinstatement follows, the dismissal is effectively erased—even if the employee had indicated they did not intend to return to work.

This creates a potential trap for both employers and employees. An employee may pursue an appeal simply to comply with the Acas Code and avoid a reduction in compensation in a future tribunal claim. However, unless they clearly and unequivocally withdraw their appeal before a decision is made, a successful outcome will remove their ability to claim unfair dismissal altogether. The dismissal will have ‘vanished’!

For HR professionals, the key point is to approach appeal decisions with care. Upholding an appeal has clear legal and financial consequences.

Before confirming the outcome, ensure this is genuinely the intended result. If reinstatement is offered, be prepared for the associated liabilities. Equally, ensure the outcome letter clearly explains the decision and confirms that it is final.

Handled properly, the appeal stage can resolve disputes internally. But it is not without risk—and understanding the consequences is essential.

Automated Decision-Making in Recruitment: What the ICO wants from you

An algorithm may already have shortlisted - or rejected - your next hire. The ICO's Recruitment Rewired initiative, which gathered evidence from over 30 employers across multiple sectors, has placed automated decision making in recruitment firmly under the regulatory microscope.

What is ADM?

Automated decision-making (ADM) refers to decisions made about individuals by automated means, without meaningful human involvement, that produce legal or similarly significant effects. In recruitment, this covers AI-driven CV screening, applicant tracking systems and profiling tools: software that analyses patterns in employment history, online assessments or digital behaviour to infer candidate suitability before a human has reviewed the application.

The legal landscape post-DUAA

The Data (Use and Access) Act 2025 significantly liberalised the UK's ADM framework. The previous general prohibition on using ADM under Article 22 UK GDPR has been removed. Since secondary legislation took effect in February 2026, organisations may now conduct ADM on any lawful basis - including legitimate interests - provided mandatory safeguards apply. These require notifying candidates that ADM is used, giving them the opportunity to make representations, ensuring meaningful human intervention is available, and allowing decisions to be contested.

Meaningful human involvement

This is where the ICO found widespread failure. Tokenistic review - a recruiter scanning an algorithm's output without genuinely interrogating it - does not meet the legal threshold. Human involvement must be applied consistently across all candidates at the same stage and must be genuinely capable of altering the outcome.

Bias and discrimination

Algorithms trained on historical hiring data risk replicating and amplifying embedded biases, particularly around age, gender and socioeconomic background. The ICO singled out profiling tools and online behavioural assessments as areas of particular concern, noting public wariness about the novel forms of bias these introduce. Regular bias testing and outcome monitoring are legal obligations, not optional refinements. Protection from discrimination under Equality Act 2010 applies from the job application stage.

What to do now

• Audit every stage of your recruitment pipeline for ADM use and document your lawful basis
• Update privacy notices and DPIAs to reflect the DUAA's new requirements
• Train hiring managers to genuinely interrogate - rather than rubber-stamp - algorithmic outputs
• Implement regular bias testing and keep records of the results
• Ensure candidates can meaningfully contest automated decisions, and that the process for doing so is accessible and clearly communicated

And finally,

a gentle reminder, courtesy of the employment tribunal, that even the most well-intentioned workplace “terms of endearment” can come with a price tag.

In Esteves v West London NHS Trust, a 61-year-old healthcare assistant successfully brought a harassment claim after a colleague repeatedly referred to her as “auntie” - despite being asked to stop. The colleague maintained that the term, influenced by his Ghanaian heritage, was intended as a mark of respect. The tribunal accepted that point but nevertheless found that its continued use created an offensive environment once the Claimant had made her objection clear.

The result: a finding of age- and sex-related harassment, and £1,425 in compensation for injury to feelings. Other claims fell away, but the message from the tribunal was clear: personal boundaries must be respected at work.

While workplaces rightly celebrate cultural differences, respect is best demonstrated in the way conduct is received—not just the way it is intended. And when a colleague asks to be called by their first name, it may be wise to take the hint.