Welcome to this month’s edition of Worked Up – your one-stop shop for the latest updates in employment and immigration law.

In this month’s (not so) seasonal edition, we consider a selection of proposed amendments from MPs to the Employment Rights Bill, cover a recent ruling on the inadmissibility of pre-termination negotiations, examine changes to priority processing for sponsor licence applications and explore a case where “some other substantial reason” for dismissing an employee does cut the mustard.

If you would like to discuss any of the below updates, please do get in touch. Alternatively, if you would like to receive these updates directly to your inbox, please subscribe here.

A bumpy road ahead for the Employment Rights Bill?

Helpful Employment tribunal ruling regarding pre-termination negotiations

Changes to priority processing for sponsor licence applications and sponsor updates

Breaking down dismissals arising from an irretrievable breakdown in trust and confidence

If you want to stay ahead of the curve and keep updated on the key employment and immigration changes (including proposed legislation, consultations and case law) on the horizon over the next 24 months, check out our “What’s on the horizon” tracker.

On 27 and 28 November 2024, a number of MPs put forward amendments to the Employment Rights Bill (‘ERB’), which will now be considered by the Public Bill Committee.

The key proposed changes up for consideration include:

• An increase in the employment tribunal limitation periods for bringing claims to six months, which is double the current three-month limit for most claims. This would be a significant change that would almost inevitably increase the number of employment tribunal cases UK businesses face if adopted;
• A restriction on the use of substitution clauses in contracts between employers and employees, workers or dependent contractors. These clauses permit the individual to appoint a substitute to undertake the work on their behalf, and are often used to demonstrate self-employed status. The proposal is to prohibit these, with little explanation given as to why;
• It is proposed that employers be required to include an explanation in their equality action plans on how they support employees with menstrual problems / disorders;
• A prohibition on non-disclosure agreements that prevent a worker from making a disclosure about harassment (including sexual harassment); and
• increases to family-friendly leave and pay, which include doubling the rate of statutory maternity, paternity, adoption, shared parental and parental bereavement pay, increasing statutory paternity leave to six weeks, and introducing the right to kinship care leave. Employers with 250 or more employees would also be required to publish information about their parental leave and pay policies if the proposals were adopted.

The above are all fairly significant and further emphasise the seismic shake-up in employment law that is potentially on the horizon in this Parliament.

In a separate (and obviously related!) development, the Regulatory Policy Committee (‘RPC’) – an advisory body sponsored by the Department for Business and Trade – has assessed the government’s overall Impact Assessment (‘IA’) for the ERB and (fairly damningly) reported that it is not fit for purpose. The RPC’s role is to evaluate the quality of evidence and analysis behind government regulatory proposals.

The RPC identified gaps in the rationale for the following six individual IAs: (i) day one unfair dismissal rights; (ii) repeal of the Strikes (Minimum Services Levels) Act 2023; (iii) Adult Social Care Fair Pay Agreement; (iv) flexible working; (v) repeal of the Trade Union Act 2016; and (vi) employer liability for all workplace harassment of employees by third parties.

The RPC concluded that the government has not fully thought through, or at least has not fully evidenced that it has thought through, the potential impact of the ERB on either businesses or the workforce. Although the RPC’s report (accessible here) may provide juicy material for the government’s opposition, the RPC’s role is ultimately an advisory one, and its negative opinion will not directly impact the passage of the ERB through the Parliamentary process. That said, it is likely that some of the concerns raised will be brought up in the consultations and parliamentary debates that will take place before the ERB is finalised. In any event, we’ll continue to provide updates on this as the ERB will likely hit further bumps in the road before coming into force.

Back to top

Mr Kevin Gallagher v McKinnon’s Auto and Tyres Ltd: [2024] EAT 174

Facts: Mr Gallagher, a former branch manager of McKinnon’s Auto and Tyres Limited (“MAT”), went off on sickness absence for two months. During his absence, the directors of MAT determined that there was no longer a need for a branch manager. Upon his return, MAT initiated a redundancy process and, in an ‘off-the-record’ conversation (which was initially pitched as a return-to-work conversation) Mr Gallagher was verbally offered a settlement agreement and given 48 hours to respond. After refusing the offer, he was later dismissed due to redundancy. Mr Gallagher subsequently brought unfair dismissal proceedings and sought to use the settlement discussions as evidence of unfairness.

Judgment: The Employment Tribunal (“ET”) found that the settlement negotiations qualified as pre-termination negotiations under section 111A(1) of the Employment Rights Act 1996. It held there had been no impropriety on MAT’s part regarding the settlement negotiations and that Mr Gallagher had not been subjected to undue pressure, which would have displaced the general rule that the pre-termination negotiations were inadmissible. Indeed, it was found that nothing improper, such as raised voices or aggression, had occurred during the meeting and Mr Gallagher’s claim was subsequently dismissed.

At appeal, the Employment Appeal Tribunal (“EAT”) agreed with the ET’s judgment. The EAT further held that providing Mr Gallagher with 48 hours to respond to the verbal settlement offer was not improper, given the circumstances. While the Acas Code advises that employees should be given 10-days to consider a settlement offer, this is only after written settlement terms are provided, which was not yet the case here.

Take away: This case offers reassurance to employers that, as long as they conduct pre-termination negotiations appropriately, such discussions are likely to remain inadmissible in any subsequent unfair dismissal claims. Notably, the judgment indicates that the ET sets a relatively high bar for determining whether impropriety or undue pressure under section 111A has occurred, which would allow the general inadmissibility of these negotiations to be overridden.

However, the decision was based on the specific facts of the case and, ultimately, there is no one-size-fits-all approach to pre-termination negotiations. While employers certainly should not shy away from pre-termination negotiations, they should carefully assess what is reasonable in each situation and consider potential risks, including whether an employee may bring other claims, such as discrimination, which fall outside the scope of section 111A protections.

Back to top

Ms Anne-Marie Alexis v Westminster Drug Project: [2024] EAT 188

Facts: The claimant, Ms Alexis, and two colleagues were part of a restructuring exercise where three roles were replaced by two, requiring them all to reapply and interview for the positions. Ms Alexis, who has dyslexia, was unsuccessful at interview and raised a grievance, arguing she should have received the interview questions 24 hours in advance. Despite favourable grievance and appeal outcomes, in which she was offered a new interview, she rejected these outcomes and sent multiple aggrieved emails to the decision-makers and senior management.

Following these emails, a meeting was held to assess her continued employment, and it was concluded that the employment relationship had irretrievably broken down. She was dismissed with 11 weeks’ notice for “some other substantial reason”. Ms Alexis subsequently brought an unfair dismissal claim and claims for disability-related harassment, failure to make reasonable adjustments, dismissal arising from disability, and victimisation based on her grievance.

Judgment: The Employment Tribunal dismissed her unfair dismissal claim on the basis that Ms Alexis’ employer genuinely and reasonably believed that there had been an irretrievable breakdown in the employment relationship, a reasonable enquiry had been held and Ms Alexis had been given an opportunity to put forward her arguments in response to this enquiry.

On appeal, the EAT upheld the decision, stating that the breakdown in trust and confidence left no alternative to dismissal. Although Ms Alexis’ appeal stated that sufficient consideration was not given to her length of service, the EAT ruled that an employer is only required to consider length of service if it is relevant to the dismissal decision. In this case, the dismissal was based on an irretrievable breakdown in the employment relationship, making her length of service irrelevant.

Takeaway: This decision is helpful for employers as it demonstrates that employers can dismiss an employee for an irretrievable breakdown in the relationship if it is genuinely considered and believed to be irretrievable. Claims related to this type of dismissal can be risky, particularly within the context of a redundancy exercise, and this decision highlights the importance of employers thoroughly documenting their dismissal decisions and acting reasonably and fairly when considering dismissal for some other substantial reason.

Back to top

The Home Office has recently introduced a series of updates to its pre-licence and post-licence priority services, as well as to the categories under which a Skilled Worker Certificate of Sponsorship (CoS) can be assigned. These updates are aimed at streamlining the sponsorship system, reducing processing times, and enhancing the experience for businesses navigating the immigration landscape.

Improvements to Pre-Licence Priority Services

One of the most significant developments is the increased availability for priority processing of sponsor licence applications.

Historically, this priority service was limited to 30 applications per day, and securing a slot required businesses to compete via email submissions between 9:00 a.m. and 11:59 p.m., Monday to Friday. This created a bottleneck, with many organisations unable to access the priority service. However, the latest guidance removes any mention of the 30-slot daily cap. While this change has not been explicitly confirmed as a complete removal of the cap, it strongly suggests greater availability, which would allow more businesses to benefit from expedited processing times.

This is particularly critical for organisations seeking to address skills shortages and market demands promptly. Faster licence approvals mean businesses can bring overseas talent onboard more efficiently and stay competitive in a rapidly evolving market.

Enhancements to Post-Licence Priority Services

The Home Office has also revised its post-licence priority service, which allows sponsor licence holders to fast-track essential updates to their licence. These updates include:

• allocating an additional undefined CoS;
• changing or replacing Authorising Officers, Key Contacts, or Level 1 users;
• adding representatives; or
• amending organisational details (e.g. relocation to a new office).

Under the standard service, such updates can take up to 18 weeks, which can delay a company’s ability to comply with Home Office demands. With the priority service, however, eligible updates are processed within just five working days of payment for a £200 fee per request.

Previously, this service was capped at 60 priority requests per day, which was often insufficient to meet demand. The updated guidance increases this cap to 100 requests per day and extends the submission window from 7:00 a.m. to 5:00 p.m., Monday to Friday. This expanded timeframe and higher cap provide sponsors with greater access to priority processing, reducing delays and ensuring compliance obligations are met more efficiently.

Updates to Skilled Worker CoS Categories

In addition to these service improvements, changes have been made to the categories under which Skilled Worker CoS can be assigned. A new bulletin on the Sponsor Management System released on 22 November 2024 outlines updates for sponsors supporting individuals switching from the Student or Graduate routes to the Skilled Worker route.

The bulletin specifies that the previous CoS category for “Tier 4/Student graduate switching to Skilled Worker” will no longer be in use. Instead, it will be replaced as follows:

• Students completing their courses and switching to the Skilled Worker route must now use the category “Skilled Worker (Student course complete switching to Skilled Worker).”
• Individuals on the Graduate route switching to Skilled Worker should use the category “Skilled Worker (Switching immigration category – ISC liable).”

This change helps clarify the appropriate CoS categories, reducing the risk of errors. Importantly, mistakes in this category selection cannot be rectified via sponsor notes, so these clarifications are particularly helpful.

These updates seem to demonstrate the Labour government’s promised commitment to modernising the UK’s immigration system. The enhancements to the pre- and post-licence priority services reflect the government’s focus on making the sponsorship system more efficient and accessible. This will only be improved when the new ‘Sponsor UK’ system is introduced next year.

Takeaway: Despite these improvements, demand for priority services remains high. Businesses should prepare their applications in advance and submit them as early as possible to maximise their chances of securing a slot.

Additionally, sponsors should stay informed of further updates via the SMS message board, as changes to caps or processes may still occur.

Back to top