Welcome to the latest edition of The Loch Lens, where we highlight the key developments and emerging trends that employers, HR professionals and business leaders should be aware of, including:

From timely employment law updates to practical guidance on people strategy, leadership and effective decision-making, each issue is designed to help you stay informed and prepared. To receive monthly editions in your inbox, subscribe to our LinkedIn newsletter.

2026 is set to be a pivotal year for workplace compliance. The Employment Rights Act 2025 received Royal Assent on 18 December 2025, with many measures due to be phased in across 2026 and 2027, alongside further consultations that will shape how key reforms work in practice.  Join us at our Level Up webinar on Tuesday 10 February at 1pm to find out more. 

Unfair dismissal, family rights and sick pay are at the heart of the changes. The Act removes the cap on compensatory awards and reduces the unfair dismissal qualifying period to six months (rather than day one), with commencement expected from 2027.

From April 2026, paternity leave and unpaid parental leave are due to become day-one rights.  Cost and operational impacts will be felt quickly too, particularly around absence and resourcing. Statutory Sick will be payable from day one with the Lower Earnings Limit being removed. Alongside this, reforms on zero/variable-hours working will require more certainty (including guaranteed hours being offered, reasonable shift notice, and compensation for cancelled shifts).

There is also a wider reform package employers should keep on their 2026 radar. Flexible working remains a day-one right to request, but a stronger reasonableness test is expected to make refusals harder to justify (with implementation expected from 2027), and trade union reforms and enforcement changes are moving forward, including the new Fair Work Agency launching in April 2026.

Beyond employment law, immigration changes continue into 2026, most notably there is the move to B2 English for key work routes from 8 January 2026, ongoing scrutiny of salary thresholds, proposals to extend right to work checks into the gig economy, and consultation on “earned settlement” (including a proposed default 10-year route to settlement).

For more detail, here is an overview of the Employment Rights Act 2025.  

The Employment Appeal Tribunal (EAT) has issued a helpful clarification in Chaudhry v Paperchase Products Ltd & another [2025] EAT 181. It confirms the limits on recovering unfair dismissal awards from the National Insurance Fund (NIF) where an employer becomes insolvent.

Mr Chaudhry was dismissed shortly before his employer entered insolvency. He applied for a declaration under section 188(3) of the Employment Rights Act 1996 (ERA 1996) that the Secretary of State should pay him £4,826 as a basic award. However, his unfair dismissal claim had not been determined by a Tribunal, and no basic award had been made before insolvency.

The EAT upheld the earlier decision and confirmed a clear statutory requirement in Part XII ERA 1996. Employees can only recover a basic award for unfair dismissal from the NIF once an Employment Tribunal has first decided the unfair dismissal claim and formally made the award. Without that Tribunal determination, the statutory recovery mechanism is not triggered.

The claimant argued the law should be interpreted more flexibly to align with the EU Insolvency Directive (2008/94/EC) and EU principles such as effectiveness and non-discrimination. While the EAT noted there were strong policy arguments, it held the domestic wording could not be stretched. Permission to appeal to the Court of Appeal has been granted, but for now, no prior Tribunal award means no recovery from the NIF.

For more on the EAT decision click here.

In Peggie v Fife Health Board and another, the Employment Tribunal examined how employers should approach access to workplace changing facilities where competing protected characteristics are engaged. The case arose after NHS Fife granted a trans woman doctor permission to use a female staff changing room, and a female nurse raised concerns about that arrangement.

The Tribunal’s overall outcome was mixed. It found that NHS Fife harassed the claimant (under section 26(1) Equality Act 2010) in relation to specific aspects of how matters were handled after concerns were raised, but it dismissed the remaining claims against the Board and dismissed all claims against the doctor. It also noted that the Workplace (Health, Safety and Welfare) Regulations 1992 did not assist in determining Equality Act questions in this context.

On the central “facilities” issue, the Tribunal rejected the proposition that the Supreme Court decision in For Women Scotland v Scottish Ministers automatically dictated the workplace outcome. Instead, it emphasised that workplace arrangements require a fact-specific balancing exercise, and it adopted an objective justification approach to help employers reach a lawful decision where rights conflict. Applying that approach, it held the initial permission was lawful on the facts, but that once a complaint was made the employer should have reassessed options and put suitable interim measures in place.

The key learning from the case is that there is no universal approach, and decisions about single-sex spaces at work are likely to turn on context, alternatives and proportionality. It is also worth noting that corrected versions of the judgment have been issued (without changing the outcome), so organisations referencing the case should ensure they are working from the latest published version. The decision is being appealed so this remains a developing case to monitor closely.

Explore more on the case here, and read about judge’s corrections to ruling here.

Recent coverage has highlighted the disruption employers can face when defending repeated Employment Tribunal claims. In Mr J Johnson v London Borough of Harrow and C Rowlands, the Tribunal considered claims including sex discrimination, whistleblowing, harassment and victimisation at a public preliminary hearing on 8 July 2025.

The Tribunal struck out the claims under Rule 38(1)(a), finding they were “scandalous or vexatious” and had no reasonable prospect of success.

In its written reasons, the Tribunal emphasised that the ET1 contained no pleaded acts or omissions capable of amounting to Equality Act contraventions, leaving the respondents unable to respond sensibly. It also took into account the claimant’s extensive litigation history, noting at least 47 claims since 2016 and describing this as the 54th claim.

While strike-out remains a high threshold, particularly in discrimination cases, Tribunals will use it where a claim is legally untenable, abusive, or impossible to meet due to a lack of particulars. Early case management (including seeking proper particulars and considering strike-out or deposit applications where justified) can be important in limiting cost and disruption, especially where proceedings appear to be used as a tactic rather than a genuine attempt to litigate a properly pleaded complaint.

Learn more about this case, and the claimant’s history of claims here.

In Kelly v Leonardo UK Ltd, the Tribunal rejected claims that an employer’s policy permitting transgender women to use female toilets amounted to unlawful sex discrimination or harassment against biological women.

Maria Kelly, an engineer employed since 2007, challenged a formal policy introduced in June 2023 stating that toilet access would be based on gender identity rather than biological sex. She questioned how gender identity would be determined, argued the policy effectively made facilities mixed-sex, and requested a single-sex toilet for women. After her grievance was not upheld, she brought claims under the Equality Act 2010.

The Tribunal dismissed the claims in full.  It found the claimant had not shown that the policy disadvantaged women as a group, created a greater risk of harm, or had the purpose or effect of violating her dignity or creating an intimidating, hostile, degrading or offensive environment. While the Tribunal accepted that she strongly objected to the policy, it held that subjective discomfort or disagreement was not enough to meet the legal threshold for discrimination or harassment.

The Tribunal did, however, criticise the employer’s process, noting the policy was introduced without proper consultation or an equality impact assessment, describing that as a procedural failing.

For employers, the case reinforces that sensitive workplace policies should be introduced with clear reasoning, proportionate decision-making, robust communication and appropriate documentation. Poor consultation can still create employee relations and trust issues, even where the policy itself is not found to be unlawful.

The full decision is outlined here.

In Thomas v Tindall Riley & Co [2025] EAT 182, the Employment Appeal Tribunal (EAT) has confirmed that recruitment costs incurred by an employer do not form part of a comparator’s “package” when assessing alleged less favourable treatment in a direct discrimination claim.

The claimant brought a direct age discrimination claim after the respondent recruited a younger individual at an apparent higher overall cost. She had previously been offered £110,000 (a £100,000 salary plus a £10,000 sign-on bonus), which she declined. The employer then recruited a younger comparator at a reported total cost of £115,000, including a £15,000 recruitment agency fee.

The Employment Tribunal struck out the claim and the EAT upheld that decision, finding the case had no reasonable prospects of success. It held the agency fee was an employer cost, not a benefit provided to the comparator, and therefore could not be treated as part of the comparator’s remuneration. On the facts, the comparator had actually received a lower compensation package than that offered to the claimant.

For employers, the decision provides helpful clarity in recruitment and pay negotiations: Tribunals will focus on what the comparator actually receives, not ancillary recruitment expenditure. For claimants, it is a reminder that comparator arguments must fit closely within the section 13 Equality Act 2010 test and cannot be expanded to cover costs unrelated to an individual’s contractual terms.

Further details can be found here of the EAT judgement.

The government has published the proposed statutory payment rates for the 2026–27 year, giving employers early sight of the payroll uplifts expected from April 2026. For HR and payroll teams, this is a helpful prompt to build increased statutory pay costs into forecasting and workforce planning.

From April 2026, the standard weekly rate for most statutory family-related payments is due to rise to £194.32 (up from £187.18). This rate applies across Statutory Maternity, Paternity, Adoption, Shared Parental, Parental Bereavement and Neonatal Care Pay, and it also aligns with the Maternity Allowance standard rate.

Statutory Sick Pay is also set to increase to £123.25 per week (from £118.75). The lower earnings limit for eligibility for most statutory family payments and SSP is proposed to rise from £125 to £129 per week, while the Maternity Allowance threshold remains £30 per week.

In practical terms, employers should ensure payroll systems, policy documents and employee communications are updated in good time and consider how these changes interact with any enhanced company schemes. For employees, the increases provide a modest improvement in support during family leave and sickness, though the gap between statutory pay and typical earnings remains a key factor in retention and benefits strategy.

Click here for more of the proposed rates and thresholds.

In Kaur v Birmingham City Council [2025] EAT 190, the Employment Appeal Tribunal (EAT) upheld a Tribunal decision to dismiss a discrimination claim following withdrawal, despite the claimant’s evidence of significant mental health difficulties and her later argument that she did not understand the consequences of withdrawing.

Ms Kaur, acting as a litigant in person, presented Tribunal claims in March 2022 and then withdrew them in June 2022, stating she was “struggling extensively” with her mental health. Once a claim is withdrawn, the rules require the Tribunal to issue a judgment dismissing it, unless the claimant expressly reserves the right to bring a similar claim for a legitimate reason, or dismissal would not be in the interests of justice.

Several months later, after obtaining legal advice, Ms Kaur applied to overturn the dismissal. She argued that dismissal of the Tribunal proceedings could prevent her from bringing a related civil personal injury claim and said her mental ill-health and lack of understanding should have meant the Tribunal did not dismiss the claim. The Tribunal accepted her mental health issues but found she was able to engage solicitors in relation to the personal injury claim and could have informed either the Tribunal (at the point of withdrawal) or her advisers about the withdrawn proceedings.

The EAT dismissed the appeal, holding that the Tribunal had applied the “interests of justice” test correctly and was entitled to conclude that the limited exceptions did not apply. For employers, the decision provides reassurance that dismissals following withdrawal will generally stand where the procedural rules have been applied properly.

The case is outlined in more detail here.  

In Turner v Western Mortgage Services Ltd [2025] EAT 191, the Employment Appeal Tribunal (EAT) considered whether a COT3 settlement brought an ongoing appeal to an end, even though the appeal was not expressly mentioned in the agreement.

Mr Turner’s underlying Employment Tribunal claim included a complaint about alleged non-payment under a permanent health insurance (PHI) scheme. That PHI element was struck out, and he appealed the strike-out to the EAT. While the appeal was pending, the parties entered into a COT3 providing for withdrawal of the Tribunal claim and a “full and final settlement of any and all claims” the claimant had or may have against the employer.

The EAT held that, objectively interpreted, the COT3 wording settled not only the live Tribunal proceedings but also the struck-out PHI complaint, and therefore the appeal relating to it. The EAT also noted that, once the underlying complaint had been compromised, the appeal was in any event academic, and the EAT will not generally entertain appeals that cannot lead to any practical outcome.

Broad “full and final settlement” wording in a COT3 can therefore extend beyond the Tribunal claim to cover related appeals, even if not specifically referenced. If either party intends an appeal to continue (or to be excluded), that needs to be clearly carved out in the COT3, and it is sensible to ensure the EAT is notified promptly where a settlement is reached.

The judgement is detailed further here.

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