Employment 2020

Last Updated September 08, 2020


Law and Practice


DAC Beachcroft LLP is a leading international legal business with more than 2,500 people across Europe, Asia Pacific and Latin America. The broad-based commercial firm is a recognised leader in insurance, health and real estate. The Employment, Pensions and Immigration group combines 96 lawyers, including 18 partners based in London, Bristol, Manchester, Leeds, Newcastle and Dublin. The London team comprises eight partners and 16 lawyers. The firm has a proven global network of partner firms: it is regularly the central point for delivering multi-jurisdictional employment law advice; for example, on global restructuring exercises. It also advises on employment data privacy, business immigration and pensions issues for employers. The London team works for five investment banks, global insurers, international insurance brokers and FTSE 100 companies, including household-name corporates such as Unilever plc and Intel. The firm is also one of the largest full-service private and public health legal teams in the UK.

On 6 April 2020 the following changes to employment law were made:

  • giving workers the same right as employees to a written statement of terms and conditions from day one of their assignment/employment (see 2.2 Contractual Relationship);
  • lowering the threshold for a valid request for an information and consultation agreement from 10% to 2% of employees in workplaces with more than 50 employees;
  • increasing the holiday pay reference period for workers with variable pay from 12 to 52 weeks;
  • abolishing the Swedish Derogation (pay between assignments’ contracts) so all agency workers are entitled to the same rate of pay as their permanent comparators after 12 weeks; and
  • giving all employed parents the right to two weeks’ paid leave if their child under 18 dies, or if they have a stillbirth at 24 weeks or later.

Looking forward, the transitional arrangements in place until the UK-EU withdrawal agreement are expected to end at 11pm on 31 December 2020. No plans have yet been outlined for immediate changes to employment law as a result.

The COVID-19 crisis had an immediate impact on UK workforces with many businesses needing to stop operating overnight, creating a myriad of HR issues.

The Coronavirus Job Retention Scheme

On 22 March 2020 the UK Government announced the Coronavirus Job Retention Scheme (CJRS) which, in essence, underwrites up to 80% of a “furloughed” employee’s wage costs, capped at gross pay of GBP2,500 a month. Furloughing was essentially a new legal concept for the UK. Employee agreement to be furloughed was key to avoiding employment legal risks.

The CJRS closed to new entrants on 10 June 2020. A new Treasury Direction, which legally underpins the CJRS, was published on 26 June 2020. This enabled “flexible furlough” arrangements, making part time working permissible from 1 July until 31 October 2020 when the CJRS is expected to end. As COVID-19 started to impact the UK, the UK Government introduced amendments to Statutory Sick Pay (SSP) Regulations allowing self-isolation because of COVID-19 to be treated as sickness absence. Furthermore, businesses with 250 employees or fewer were allowed to claim back the costs of SSP from the Government. The three-day waiting period before SSP payments kick in was also abolished if the absence was related to COVID-19.

As the lockdown in the UK started to ease further amendments to SSP were made making it payable where an employee self-isolates because they are in a linked household with someone who has symptoms, as well as to those who need to self-isolate because they have been notified that they have been in contact with an infected person under the UK’s Test and Trace system.

The Working Time (Coronavirus) Amendment Regulations 2020

On 27 March 2020 the Government also passed emergency legislation (The Working Time (Coronavirus) Amendment Regulations 2020) to relax the rules on carrying over annual leave where it is not reasonably practicable for the worker to take some of all of their four weeks’ statutory holiday due to the effects of COVID-19 (this does not cover situation where a person wants to postpone their leave because they cannot travel to their preferred holiday destination). The untaken amount may be carried forward into the following two leave-years. Employers still need to do everything reasonably practicable to ensure the worker is able to take the leave in the leave-year to which it relates, and give workers the opportunity to take it at the earliest practicable opportunity.

As lockdown restrictions begin to lift, employers whose employees have mainly worked from home since 23 March, are looking at how they can bring them back into the workplace safely. The Government has made COVID-19 secure guidelines available to UK employers. Key to this is that all employers should carry out a COVID-19 risk assessment, and employers with over 50 workers are expected to publish this online. Workers should not be forced into an unsafe workplace, and some workers have been objecting to returning to the workplace on this basis.

Under UK employment law there are three categories of individuals who perform work for others: employees, workers and self-employed contractors. An employee will work under a contract of service, a self-employed contractor will work under a contract for services and anyone who is neither an employee nor a worker will be self-employed for employment law purposes.

The distinction is significant as many important employment rights are only given to employees. For example, all workers are entitled to the National Minimum Wage and working time rights protection; however, only employees can claim unfair dismissal, maternity leave and redundancy rights.

It is not always easy to establish which category an individual falls into. There are statutory definitions for the first two categories. There has been a significant quantity of litigation about worker status in the UK in the recent past, particularly as a result of the rise of the gig economy.

Employment contracts can be varied to reflect working arrangements. Contracts will have specific clauses depending on whether they are indefinite/fixed duration or for full-time/part-time work.

There are no formal requirements to enter into an employment contract. Notably, there is no requirement for an employment contract to be in writing. Employees and workers must, however, be given a written statement of certain specified terms from day one of their employment/assignment. This must include details such as how much the employee is to be paid, their job title (or a brief description of their role) and the holidays to which they are entitled. As of 6 April 2020 additional information has to be provided about:

  • working days, whether the hours are variable, and if so how;
  • any paid leave entitlement beyond annual and sick leave;
  • any probationary period;
  • any benefits; and
  • training entitlements.

It for the parties to agree the terms of the employment contract, however, due to the unequal bargaining power, statute sets out a minimum entitlement in various areas, as discussed below.

Working hours in the UK are governed by the Working Time Regulations, which set out that most workers' average working time (including overtime) must not exceed 48 hours per week. However, there is some flexibility; if a worker wants to work in excess of this limit, they can agree in writing to "opt out" of the limit.

While there are no statutory maximum working hours per day, in general a worker is entitled to the following breaks and rest periods:

  • a 20-minute break every six hours;
  • 11 consecutive hours' rest in any 24-hour period;
  • one day off each week or two consecutive days off in a fortnight; and
  • a limit on the normal working hours of night workers to an average eight hours in any 24-hour period.

There is no statutory right to payment for overtime in the UK. Employers must ensure that all overtime rates are set out in an employee’s contract of employment. Employers also often pay an enhanced rate for overtime, although they are not obliged to do so.

Employees with 26 weeks' continuous service with their employer have the right to make a flexible working request that could entail, for example, part-time employment,  or working from home. The employer needs to follow a reasonable process when considering this request.

Atypical Working Arrangements

Various types of atypical working arrangements may also be implemented, including fixed-term employees, agency workers (ie, individuals who are employed by an agency and assigned to end-user clients for specific engagements) and zero-hour contract workers (ie, workers who are engaged on an ad hoc basis with no guarantee of work). Atypical workers such as these will still benefit from the applicable statutory and contractual protections if they meet the relevant employment status test.

These atypical working arrangements are also specifically regulated:

  • fixed-term employees are protected against less favourable treatment compared to permanent employees and the non-renewal of a fixed-term contract constitutes a dismissal for the purposes of a claim for unfair dismissal; and 
  • agency workers have various "Day 1" and "Week 12" rights such as the right to the same basic pay and working conditions as permanent employees after week 12 of their engagement.

There are no specific terms required for a part-time contract, but part-time employees are protected from being treated less favourably than full-time employees.

Most workers aged 16 or over are entitled to receive the National Minimum Wage (NMW). Workers aged 25 and over are entitled to the National Living Wage (NLW). The exact rate is dependent on the worker’s age. The rates are set by the government and change every April. The rates applicable from 1 April 2020 are:

  • workers aged 16 and 17 – GBP4.55 per hour;
  • workers aged 18 to 20 – GBP6.45 per hour;
  • workers aged 21 to 24 – GBP8.20 per hour; and
  • workers aged 25 and over – GBP8.72 per hour.

In the UK there is no requirement to make a thirteenth month salary payment.


Employees may receive a bonus as part of their compensation. Bonuses can be guaranteed, discretionary or a combination of the two. The bonus will be guaranteed where it is stipulated as such in the contractual agreement. The bonus amount may be based on criteria such as the achievement of individual and team/ company targets.

Where a bonus scheme is discretionary, an employer will have reserved the right to decide whether the payments are actually made. An employer cannot act in a way that is arbitrary or capricious when exercising its discretion. Where a bonus is a combination, there will be a discretionary element built into a contractual right to participate in the bonus scheme. Employees are often expected to remain employed at the date the bonus is announced and/or paid.

Holiday Entitlement and Pay

Most workers have a right to a minimum of 5.6 weeks' holiday (28 days for a full-time worker) and must be paid their normal remuneration during that time. Any additional contractual holiday will be set out in the individual's terms and conditions.

Family Leave

Parents and adoptive parents benefit from paid leave on the birth, or adoption, of a child. It is open for employed women to take up to one year's statutory maternity leave. This is a right from day one of their employment. Whether an employed woman is entitled to statutory maternity pay will depend on how long she has worked for her employer at the point at which she is expecting the child. It is paid at 90% of average earnings for the first six weeks and then a flat statutory rate for the remaining 33 weeks. This rate changes annually in April and is currently GBP151.20. Fathers are also entitled to two weeks' paternity leave paid at the flat rate.

In addition, shared parental leave was introduced in 2015 to offer flexibility to parents and adoptive parents as to how they take leave in the first year after the child is born or placed for adoption. Shared parental leave effectively allows parents to share the statutory maternity or adoption leave, and pay, that is available to mothers and primary adopters under the maternity and adoption provisions.

After one year's employment, each parent is also entitled to 18 weeks' unpaid parental leave. This is per child and can be taken between the child's birth and their 18th birthday.

Parents also have a right to a legal minimum of two weeks’ statutory parental bereavement leave if they’re an employee, and statutory parental bereavement pay, if they’re an employee or a worker. Notice provisions apply to the leave and pay and the leave must end within 56 weeks of the child’s death.

Sick Leave

Employees are entitled to statutory sick pay (SSP) after four days' consecutive leave up to a maximum of 28 weeks. SSP is paid by the employer. The rate changes annually in April and is currently GBP92.05 per week. Many employers offer enhanced sick pay.


During employment, employees have an implied duty of confidentiality. This also applies after the end of employment but in a more limited manner. Where employees have access to confidential information, it is advisable to include an express confidentiality clause in the contract of employment preventing disclosure or use of any confidential information both during and after employment. It is also important for employers to define what they class as confidential information.

Employee Liability

Employees are not generally liable for any loss or injury to others while at work. Employers therefore must hold employer’s liability insurance to cover this. One exception is when a colleague, or former colleague, successfully brings a discrimination or whistle-blowing claim against a named individual employee respondent. In those circumstances, an employee may be liable for acts of discrimination or detrimental treatment.

Restrictive Covenants

The starting point is that restrictive covenants, including non-compete clauses, are void because they restrain trade and are contrary to public policy. If, however, an employer can show it has a legitimate business interest (for example, confidential information or customer connections) and the clause is no wider than is reasonable to protect that interest, the employer may well be able to enforce the covenant.

Non-competition Clauses

A non-competition (or non-compete) clause prevents an employee joining a competitor for a defined period after the termination of their employment.

Non-compete clauses, and other forms of restrictive covenants, need to be incorporated into the contract of employment either in the contract itself, or in a side letter signed by the employee.

Consideration is required for entering into restrictive covenants, including non-compete clauses. If entered into at the start of employment, consideration will be in the form of the employee's regular salary and benefits. If covenants are introduced or amended at a later date, such as on promotion, new consideration, for example, a pay rise will be required.

Non-compete clauses are the hardest restrictive covenants to enforce. They are more likely to be enforced by the court if the individual employee's influence over customers or suppliers is so great that the only effective protection is to ensure they are not engaged in a competing business for a limited period of time.

Covenants that are sufficiently clear, and not broad in nature, are more likely to be deemed enforceable, particularly where limits are set out in the clause (such as the definition of a competitor, the geographical scope and the length of time to which it applies).

Whether to enforce the clause by granting an injunction is at the court's discretion. It will consider a range of factors, including the nature and extent of the damage caused by any actual or threatened breach of the non-compete clause. If contractual undertakings have been offered to mitigate any damage caused, or damages would in itself be an adequate remedy, the court is unlikely to enforce a non-compete clause.

Workforce Restrictions

As with non-compete clauses the question here is: does the employer have a legitimate business interest it needs to protect and does the covenant go no wider than necessary to reasonably protect that interest? Protecting the employer's legitimate interest in the stability of its workforce is an interest that a court would be willing to protect.

The length of the restriction, the seniority of the departing employee and the status of the staff the departing employee is being prevented from poaching will all be relevant. A clause seeking to stop a departing employee poaching any employee of their former employer irrespective of their expertise, seniority or whether they worked with them during their employment is unlikely to be viewed as a reasonable restraint.

Customer Restrictions

The position for restrictive covenants concerning customers is the same as the above. Protecting the employer's legitimate interest in customer connections is an interest that a court would be willing to protect.

A restriction on the solicitation of customers usually prevents the ex-employee from contacting a customer with a view to obtaining their business. This can be extended to cover where no active steps are taken by the outgoing employee, but where the customer approaches them and wishes to move its business in any event. The latter prohibition is known as a non-dealing covenant and is a broader prohibition that a court is likely to be more cautious when considering.

Again, the length of the restriction and the identity of the customers that the departing employee is prevented from soliciting or dealing with will be relevant. Enforcement will be more likely where the employer can establish a substantial personal connection between the departing employee and the particular customers, and in the case of non-dealing, that significant loss will occur regardless of whether it was the customer or departing employee that made the approach.  A restriction preventing any contact at all with customers is unlikely to be enforceable.


UK employers, as data controllers, must process personal data in accordance with the EU's General Data Protection Regulation 2016/679 (GDPR) and the UK's Data Protection Act 2018 (DPA).

Employers need to comply with the GDPR’s data protection principles when handling their employees’ personal data and, among other things, ensure that they:

  • have a legal basis for their data processing activities;
  • store employee records in a secure manner;
  • keep employee records up to date and for no longer than necessary, and have clear guidelines regarding retention periods; and
  • inform employees about what personal data they collect, why they collect it, who it is collected from and who it is shared with.

Data Processing Conditions

In order to process data lawfully, the employer's processing of the personal data must satisfy one of a number of prescribed conditions for processing. The most relevant conditions for an employer are likely to be that the processing is necessary:

  • for compliance with a legal obligation to which the controller is subject (eg, right to work checks, PAYE deductions and health and safety);
  • for the performance of a contract to which the data subject is a party (ie, for the performance of the employment contract); and
  • for the purposes of the legitimate interests pursued by the employer or by a third party except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject (eg, monitoring of IT systems and CCTV recording).

Additional conditions must be satisfied in order to process "special categories of data" such as health information, racial or ethnic origin, trade union membership, etc, and criminal conviction information.

Employee Rights as Data Subjects

Employees, as data subjects, also have various rights, including the right to seek the erasure or correction of their personal data, to object to particular aspects of how their data is processed, and otherwise to seek the restriction of the processing of their personal data. Employees also have the right to request the transfer of their personal data to another party in a commonly used format and the right to request access to their personal data.

When conducting employee monitoring within the workplace, employers need to have regard to this statutory framework as well as the guidance and codes of practice issued by the Regulator (the Information Commissioner) and the contractual implied term of trust and confidence. The Information Commissioner’s Office has also published guidance to employers on the data protection implications of workplace testing to deal with COVID-19.

Accordingly, it is important for an employer to consider undertaking a data privacy impact assessment, before conducting employee monitoring activities or testing and to publicise details.

British citizens and some Commonwealth citizens have a right of abode under the Immigration Act 1971 which means they are free to live in and travel to/from the UK without hindrance. Those without the right of abode must obtain leave to enter or remain under the Immigration Rules HC 395 (as amended) (the "Immigration Rules"). EEA and Swiss nationals still benefit from Free Movement Rights along with their family members but this is expected to end at 11pm on 31 December 2020 when the UK leaves the EEA. After this time, EEA and Swiss nationals (together with their family members) who arrive in the UK will require leave to enter or remain under the Immigration Rules unless an exception applies, eg, family members of Swiss nationals.

There are a number of different visa categories under the Immigration Rules that allow non-UK/European Economic Area (EEA) nationals to live and work in the UK. Some of these categories require a sponsor whereas others are non-sponsored routes. The most notable are:

  • Tier 2 (General) – which allows employers to recruit skilled workers from a global talent pool provided there is no suitable settled worker available to fill the role. The Tier 2 (General) visa includes the streamlined route for Health and Care workers which will launch on 4 August 2020. From 1 January 2021, the new skilled worker route will allow licenced sponsors to recruit skilled workers who will be performing a role skilled to RQF3 or above provided the individual meets the English language requirement and further criteria relating to their salary, whether the job is in a shortage occupation or having a relevant PhD.
  • Tier 2 (Intra Company Transfer) – which allows employers to transfer staff from an overseas branch to the UK provided they have worked in the overseas branch for a specified period.
  • A new route will be created after 1 January 2021 for the most highly skilled workers who do not require a sponsor to come to the UK. The numbers of highly skilled workers will be capped and further details of the eligibility criteria will be published following consultation with stakeholders.
  • Global Talent – which enables global leaders and those showing exceptional promise in the fields of science, humanities, engineering, the arts and digital technology to live and work in the UK. Applicants will need to be endorsed by an approved endorsing body and demonstrate their leadership in their respective fields.
  • Tier 2 (Sportsperson) – which enables sports teams to bring elite sportspeople and coaches to the UK.
  • Tier 5 (Temporary Worker) – which enables employers to bring staff to the UK for 12-24 months in specific sectors such as the creative, charitable, sporting and religious sectors.
  • Tier 5 (Youth Mobility) – which enables nationals of Australia, New Zealand, Canada, Japan, Monaco, Taiwan, Hong Kong and South Korea aged 18-30 to come and work in the UK for two years; Tier 1 (Exceptional Talent) – which enables businesses to recruit world-renowned leaders, or emerging leaders, in the fields of science, humanities, engineering, medicine, digital technology and the arts.
  • UK Ancestry – available to Commonwealth citizens with a grandparent who was born in the UK. Those who are eligible can get permission to live and work in the UK for five years.
  • Representative of an overseas business – available to senior employees of an overseas business in order to establish a branch in the UK.
  • Family members of British citizens – available to certain family members of British citizens, such as spouse, civil partner or unmarried partner.

Each visa category has specific conditions on who the individual can work for and in what capacity, together with how long they can spend in the UK on that visa. It will therefore be important for employers to weigh up which is the most appropriate visa before making a selection.

Free Movement Rights of EEA and Swiss Nationals

Freedom of movement allows EEA and Swiss nationals to live and work in the UK subject to certain criteria being met. Free movement will continue operating until 11pm on 31 December 2020 when the transitional period ends. Until that time, the rights of residence of EEA and Swiss nationals are split into three categories.

An EEA or Swiss national is permitted to enter the UK for up to three months on proving their nationality.

In order to reside lawfully in the UK beyond the first three months, EEA and Swiss nationals must demonstrate that they are exercising Treaty rights by :

  • being a jobseeker;
  • a worker;
  • a self-employed person;
  • a self-sufficient person; or
  • a student.

This is known as the Qualified Person test. Provided the individual falls into one of the categories set out above, they will enjoy an extended right of residence and can continue to reside lawfully in the UK. They can also have their family members join them in the UK whilst they remain a Qualified Person.

Once an EEA or Swiss national (or their family members) spends five years in the UK in accordance with the Free Movement Regulations, they automatically acquire a permanent right of residence.

In anticipation of the UK leaving the EEA, the Government established the EU Settlement Scheme, which allows EEA and Swiss nationals (along with specified family members) to obtain residence documentation in certain circumstances to evidence their continued right to live and work in the UK.

Aside from routine registration requirements such as registering biometric details or nationals of certain countries having to register with the police, there are no special registration requirements for EEA or non-EEA workers.

A trade union is a membership-based organisation. They play a significant role in employee relations in the UK and are present in both the public and the private sector. Trade unions negotiate terms and conditions with employers on behalf of employees, seek recognition from employers to represent employees, provide legal and sometimes financial assistance and services to their members as well as campaigning for social and political change.

A trade union is governed by its rule book, and an Executive Council will be responsible for implementing these rules. The rule book will typically cover the aims of the union, union membership, how it is structured (often by region through branches), workplace representation, funding and the legal assistance a union will provide if a member suffers an injury at work or has an employment issue.

A trade union can apply to have its name included on a public list maintained by the Certification Officer that provides the union with procedural and tax advantages. The Certification Officer also provides statutory oversight of the union and has a range of powers and duties to ensure trade unions abide by statutory requirements, their own rules, and that their finances are managed effectively. Union members are protected from detrimental treatment by employers because of their union membership or activities.

Works councils are not widely used in the UK. However, a statutory framework is in place for employers to establish a permanent consultative body made up of management and employee representatives to inform and consult its workforce about economic and employment-related matters.

There are many forms of employee representative bodies in the UK. A union may perform this function and trade union members at each workplace will be elected among themselves to the forum in agreed cycles.

Alternatively, an employer may establish a standing employee representative forum that both acts as a conduit between management and staff on informal issues, and discharges statutory obligations, such as the need to inform and consult in a collective redundancy situation. Each representative will gather the views of their constituents on issues collectively affecting the workplace. Such bodies are governed by their own informal constitution.

A union may be voluntarily recognised by an employer. There is no prescribed format for this, it is a matter of whether the employer agrees to such recognition and what the union is recognised to bargain over.

If a union has been refused voluntary recognition and the workforce has 21 or more employees, the union can apply for statutory recognition from the Central Arbitration Committee (CAC), an independent statutory body and there is a complicated, statutory process for doing this. If recognition is granted through this process and no agreement is reached on what recognition should cover, the CAC will make a declaration it covers pay, hours and holidays.

A trade union that is recognised by an employer acquires further rights, including the ability to negotiate collective bargaining arrangements on behalf of a group of workers and for its workplace representatives to be eligible for time off to carry out union duties. Union representatives may negotiate with their employers for their members on pay and other conditions (such as working hours and holidays), be informed and consulted with about redundancies and staff transfers, and accompany members to disciplinary and grievance meetings.

Unions also have the ability to call for industrial action (including organising strike action). They are subject to a complicated process for balloting their members, and over the subject of the collective dispute if they wish to avoid being legally liable to the employer and third parties affected by the action. Most commonly a union organising a strike induces workers to break their contracts of employment, which the union can be sued for unless it has complied with these legal duties.

An employer can dismiss an employee at any point. The courts, or more commonly the employment tribunals in the UK, will only look at the dismissal if an employee challenges it as unfair, wrongful, or discriminatory (see 8.1 Wrongful Dismissal Claims and 8.2 Anti-discrimination Issues). If an employment tribunal finds that the dismissal is unfair, it can order the employer to re-engage or reinstate the employee, or, more often, pay the employee financial compensation.

Generally speaking, employees with more than two years' service have the right not to be unfairly dismissed. This means that they must be dismissed for one of five potentially fair reasons, and that the employer must act reasonably in all the circumstances in treating that reason as sufficient reason for dismissal. The employer will also need to show that they followed a fair procedure.

The five potentially fair reasons are: conduct, capability (covering poor performance and health), redundancy, illegality (such as losing the right to work in the UK under immigration rules) and "some other substantial reason", which would cover, for example, dismissing an employee as part of a reorganisation that does not fit the statutory definition of redundancy.

If an employee has less than two years' service, they could still be unfairly dismissed if the employer dismisses them for an "automatically unfair" reason (see 7.5 Protected Employees).

Each of the potentially fair reasons for dismissal requires a different procedure to be adopted by the employer. There are some principles of procedural fairness that apply to most potentially fair reasons such as that the employee should know they are at risk of dismissal, and why, and they should be allowed to make representations about this (usually at a meeting or hearing).

Conduct and Capability

In cases of conduct and capability involving poor performance, the Advisory Conciliation and Arbitration Service (ACAS) Code of Practice on Disciplinary and Grievance Procedures sets out principles for the procedure an employer should adopt before dismissing an employee. This involves holding a meeting at which the employee may be accompanied by the trade union representative or colleague, and offering the employee a right of appeal against the dismissal decision.

In conduct cases, thorough investigation is key as the employer will need to show that it genuinely believed that the employee had committed the act of misconduct and it had reasonable grounds for that belief. It must also show that the dismissal fell within the range of responses open to a reasonable employer in light of the employee's conduct, and that it has acted consistently with other employees who have committed similar acts of misconduct. Any mitigation offered by the employee also needs to be taken into account by the employer.

In capability involving poor-performance cases, the employer will need to show how the employee was underperforming and that this was the genuine reason for the dismissal. The procedure adopted will involve telling the employee how they are underperforming, warning them what will happen if they do not improve, and giving the employee a reasonable period of time to improve. It may also involve giving them training and coaching, and thinking about alternative roles that might be available before dismissing them. There is no time limit for ensuring a performance-related dismissal is fair, but, generally, a fair poor-performance procedure will take between three and six months.


Where the dismissal is on health grounds, the procedure will depend on whether the employee has had intermittent sickness absence or is on long-term sickness absence. Many employers have triggers for absence and once these have been reached convene a hearing to issue a warning. This will set out what will happen if their absence record does not improve; usually this will be another warning before dismissal.

With long-term sickness absence, a fair procedure will involve obtaining up-to-date medical advice, including a prognosis for the employee, if and when they might be able to return to work and on what basis (part-time, full-time, or phased return) as well as what they will and will not be able to do when they return. The employer will then have to consider whether they can reasonably wait for the employee to return, and if not, why not. The employer will need to consult with the employee, and consider any alternative vacancies where they could be re-deployed.

In both cases of dismissing on health grounds, employers need to make adjustments for employees who have a qualifying disability (see 8.2 Anti-discrimination Issues) to avoid disability discrimination. The burden is on the employer to show they have done this.


Redundancy has a specific legal definition and involves a reduced requirement for employees due to: a reduction in the amount of work, fewer employees are needed to carry out the particular work or the business closes. If the ground for dismissal is redundancy, and fewer than 20 employees are affected, a fair procedure will involve warning the employee they are at risk of redundancy, selecting them fairly from the pool of those at risk using objective selection criteria, consulting with them individually about their redundancy and considering whether there is any suitable alternative employment available to avoid the redundancy. An employee will also be entitled to a statutory redundancy payment. If more than 20 employees are affected, the employer will also have to follow collective consultation obligations, in addition to individual consultation, to ensure it has conducted a fair procedure.

Collective consultation

Where an employer proposes to dismiss 20 or more employees at one establishment by reason of redundancy within a 90-day period, UK law places an obligation on the employer to inform and consult appropriate representatives of the affected employees. Redundancy in this context is wide enough to catch re-organisations and changes to terms and conditions as well as the standard redundancy definition for dismissal. Collective consultation may be with a trade union, representatives of a standing employee forum or those elected specially for the purpose of collective consultation.

Consultation must involve a meaningful exchange of views, and be undertaken with a view to reaching agreement. It must cover ways to avoid the redundancies, reducing the number of dismissals and mitigating the consequences of dismissals. It does not matter if agreement is not reached provided the consultation has been genuine.

The law does not stipulate minimum periods for consultation, but states that consultation should begin "in good time" and before any firm decisions on redundancies are taken. Minimum periods between the start of consultation and the first dismissal taking effect are stipulated by the relevant statute. This is 45 days before the first dismissal where 100 or more dismissals are proposed, or 30 days before the first dismissal where between 20 and 99 dismissals are proposed.

The penalty for failing to inform and consult is a protective award of up to 90 days' gross pay per employee. This is the starting point, but it might be reduced depending on the extent of the employer's failure to comply with its collective consultation obligations.

Some Other Substantial Reasons

In "some other substantial reason" dismissals, the decision needs to fall within the range of reasonable responses open to a reasonable employer. This might involve the employer investigating the situation, consulting with the employee, warning the employee of the risk of dismissal, giving them a chance to state their case, and exploring alternatives to dismissal.

Notice requirements are usually set out in an employee's contract of employment. This will also usually stipulate that notice must be given in writing.

If there is no contractual notice period, the law imposes a statutory obligation on the employer to give an employee a minimum period of notice. If an employee's contractual notice is longer than the statutory minimum, the contractual notice period will prevail.

Statutory Minimum Notice

Statutory minimum notice depends on an employee's length of service: if an employee has been employed for more than a month but less than two years, they are entitled to one week. After that, minimum statutory notice is one week per year of service up to a maximum of 12 weeks. Notice must be communicated to the employee with an ascertainable date on which the employment will end.

An employee can waive their right to notice, or accept a payment in lieu of it. Other than by making a payment in lieu of notice (if the employer has reserved this right in the contract of employment), an employer may only dismiss without giving an employee (contractual or statutory) notice if the employee has committed a fundamental breach of contract, which is also usually an act of gross misconduct.

Statutory Redundancy Pay

In addition to receiving notice, or a payment in lieu of it, employees who are made redundant are entitled to a statutory redundancy payment provided they have worked for their employer for at least two years. This is worked out according to a statutory formula, which is subject to a cap, and takes into account the employee's age, length of service and pay. The maximum statutory redundancy payment until 5 April 2021 is GBP16,140. Some employers offer enhanced redundancy payments.

As long as notice is given in accordance with the contract of employment, or statutory minimum notice requirements, no further specific procedures need to be followed when giving notice.

When an employee is dismissed for gross misconduct, their employer may also be entitled to dismiss them without the appropriate contractual notice, or a payment in lieu of it, because they will also usually have committed a repudiatory, or fundamental, breach of contract. Such a dismissal will also have an impact on any reference that an employer can give if their reference policy is to give anything more than a name and dates of employment.

A repudiatory breach of contract is a breach that is so serious it entitles the innocent party to the contract to terminate it without giving notice. This is known as summary dismissal.

Examples of gross misconduct include theft, physical violence, serious insubordination and bullying. Despite being a summary dismissal, the employee is still entitled to a fair conduct dismissal procedure (see 7.1 Grounds for Termination), including knowing what the allegations are against them, attending a disciplinary hearing and being offered an appeal.

An employee who is summarily dismissed may claim they have been wrongfully dismissed (see 8.1 Wrongful Dismissal Claims) and/or unfairly dismissed. If an employee succeeds in a claim of unfair dismissal, they will be entitled to compensation made up of a basic award (calculated by reference to the employee's age, length of service and pay). This is capped at GBP16,140 until 5 April 2021. They will also be entitled to a compensatory award that reflects the loss they have suffered as a result of the unfair dismissal. The maximum compensatory award until 5 April 2021 is the lower of a year's salary or GBP88,519. The claim usually needs to be bought within three months of the termination date.

Employees may settle or waive most claims they may have against their employer by using a settlement agreement that complies with certain statutory requirements.

ACAS has a duty to try to settle both potential and actual employment-related claims. These settlements are recorded on a COT3 form and the terms of such an agreement are binding, meaning the employee cannot bring any employment tribunal claims for the matters they have settled.

For a settlement agreement to be valid, certain conditions must be met. In particular, the agreement must be in writing and relate to a particular complaint or proceedings that an employee could bring in relation to the termination of their employment. The employee must also receive independent legal advice (usually from a solicitor but sometimes this is from a trade union adviser) on the terms and effect of the proposed agreement and its effect on the employee's ability to pursue any claims before an employment tribunal. Often the employer will pay for at least some of the employee's legal fees.

The independent adviser must have a current contract of insurance, or professional indemnity insurance, in place covering the advice, so that if they are wrong, the employee can sue them in negligence. The agreement must also identify the adviser and state that the conditions regulating settlement agreements under the relevant statutory provisions have been satisfied. In practice, settlement agreements also waive contractual claims, such as wrongful dismissal, alongside the statutory claims even though meeting the requirements to waive statutory claims is not necessary.

Some employees are further protected against dismissal in the workplace if they are dismissed for an automatically unfair reason. In such circumstances they do not need to have two years' service in order to bring an unfair dismissal claim. This would include dismissing an employee for making a protected disclosure ("whistle-blowing"); a reason relating to pregnancy, maternity or other family leave; carrying out health and safety activities, trade union membership or otherwise acting as an employee representative.

Employees who are dismissed because they have blown the whistle are also entitled to uncapped compensation.

As well as protection from dismissal, UK law affords some employee's protection from action short of dismissal, known as detriment, because they have exercised various statutory rights. This includes exercising rights in relation to part-time or fixed-term work, working hours, being accompanied at a disciplinary or grievance hearing, requesting flexible working or acting as a trade union or employee representative.

A wrongful dismissal claim is available where an employee is dismissed in breach of contract. This is usually when they have been dismissed without being given the appropriate contractual notice period.

An employee who succeeds in a wrongful dismissal claim is entitled to compensation for salary and other benefits they would have received had they been dismissed in compliance with the contract (ie, had they remained employed until the end of their notice period, or until the end of the contract's fixed term).

As wrongful dismissal is a contractual claim, rather than one rooted in statute, employees can bring their claims in the employment tribunal or the civil courts. If they bring the claim in the employment tribunal, any damages are limited to GBP25,000.

Protection from discrimination in GB is governed by the Equality Act 2010 and in Northern Ireland by separate predecessor acts. Employees and workers are protected against discrimination because of sex, race, disability, age, religion and belief, pregnancy and maternity, marriage and civil partnership, gender reassignment and sexual orientation. There are also additional provisions setting out the right to equal pay.

Discrimination can take several different forms. It may be direct – treating someone less favourably than others because of one of the above characteristics; or indirect – putting rules or arrangements in place that apply to everyone but that put people with a certain characteristic at a particular disadvantage. It can be lawful to have those rules or arrangements in place, provided they can be justified by the employer. This means the employer has to show that they are pursuing a legitimate aim proportionately.

Other forms of discrimination are harassment (unwanted behaviour linked to a protected characteristic that violates someone's dignity or creates an offensive environment for them) and victimisation (treating someone unfairly because they have complained about discrimination or harassment). There are also additional forms of discrimination specific to disability, such as the obligation to make reasonable adjustments. Disability is defined as a “physical or mental impairment which has a long term adverse effect on an individual’s ability to carry out normal day to day activities”. This confers wide-ranging protection incorporating many physical and mental health conditions, including neurodiverse conditions such as autism and dyslexia.

Burden of Proof

A two-stage approach to the burden of proof applies in discrimination claims; first, can the individual show the tribunal facts from which the tribunal could infer, without any other explanation from the employer, that discrimination took place? If not, the claim fails. If yes, the burden shifts to the employer to explain to the tribunal that it did not in fact discriminate.


Where an individual succeeds in a discrimination claim, the tribunal may give a declaration of the rights of the individual, make a recommendation to the employer aimed at reducing the adverse effect of the discrimination on the individual and/or order compensation. Unlike unfair dismissal, compensation in discrimination claims is uncapped, which can lead to significantly higher awards. Compensation in discrimination claims can cover a claimant's financial loss (for example, loss of salary) but may also include an amount to compensate for injury to feelings. The level of injury to feelings compensation falls into three bands.

  • A lower band of GBP900 to GBP9,000 (for less serious cases, such as an isolated or one-off occurrence).
  • A middle band of GBP9,000 to GBP27,000 (for more serious cases that do not merit an award in the upper band).
  • An upper band of GBP27,000 to GBP45,000 (for the most severe cases, such as where there has been a lengthy campaign of discriminatory harassment on the ground of sex or race). In exceptional circumstances, awards can exceed GBP45,000.


Aggravated damages

Aggravated damages can also be awarded in the most serious discrimination cases where the behaviour of the respondent employer has aggravated the claimant's injury. They are additional to any amount the tribunal may award under the injury to feelings bands set out above. They can be awarded where the employer has acted in a "high-handed, malicious, insulting or oppressive manner". This can be, for example, in the manner in which they conduct internal proceedings while the claimant is still employed, or post dismissal if they were to conduct the legal proceedings in a manner designed to intimidate the claimant.

Punitive damages

Punitive damages are permitted in discrimination claims but are rarely awarded. They are only available in a very limited set of cases, where the compensation itself is insufficient punishment. They are applicable where the employer is a "servant of the government", such as a public authority, and the conduct is oppressive, arbitrary or unconstitutional action; or where the employer's actions are calculated to make a profit that could exceed the compensation otherwise payable to the claimant.

Punitive damages are unlikely to be awarded in Scotland, and while English tribunals can make a separate award of aggravated damages in respect of an act of discrimination, this rule does not apply in Scotland. Despite this, damages for injury to feelings in Scotland may include such an element to reflect the way in which the claimant was treated.

Most legal disputes arising from employment are heard in employment tribunals.

There are specialised employment tribunal forms: to start a claim, the claimant must complete and submit an ET1 form; if the employer wishes to submit a response to defend the claim, it would use an ET3 form.

It is possible to have class actions and test cases in the employment tribunal. Two or more claimants can use the same claim form if their claims are based on the same set of facts. In this situation, representatives often act on behalf of a number of different claimants. In recent years this has been common in holiday pay cases, worker status cases and equal pay claims.

Employment tribunals are less formal than civil courts. Parties can be represented by solicitors, barristers, trade union representatives or a non-legally qualified friend or family member – or can represent themselves. Tribunal panels comprise three members: a legally qualified employment judge who runs the proceedings and two lay members – one who represents employer organisations and one who represents employee organisations. Some types of cases (such as unfair dismissal) can be heard by an employment judge sitting alone whereas discrimination claims will be heard by a panel.

Tribunals during COVID-19

Since re-opening after the COVID-19 crisis the employment tribunals have started to operate remote hearings, as well as hybrid hearings which combine in person and remote aspects. Longer, and more complex hearings are still likely to be heard in person.

At a full hearing the party who has the burden of proof will present their evidence first. The panel will look at documentary evidence and hear witness evidence, including that of the claimant. At the end of the hearing they will give their judgment orally or will reserve judgment and subsequently issue a written judgment. Any appeal from the employment tribunal will be to the Employment Appeal Tribunal (EAT), and possibly onwards to the Court of Appeal and Supreme Court.


Before making a claim to the employment tribunal, a claimant must notify ACAS that they intend to bring a claim. They will then be offered the chance to try to settle the dispute using ACAS early conciliation. Parties are not obliged to engage with early conciliation but if they do, the time limit for bridging an employment tribunal claim is extended by the period of early conciliation.

Once the early conciliation period ends, ACAS issues an EC certificate. The EC certificate will give the claimant a unique reference number that they have to include on their ET1 should they go on to present a claim.

Since the COVID-19 crisis began the employment tribunals have been more active in encouraging parties to explore settlement.


Arbitration is possible in employment disputes, but historically it has not often been used. A pre-dispute arbitration agreement would generally not be enforceable as it is likely to fall foul of the restrictions on contracting out of statutory employment rights. However, parties could enter into a settlement agreement compliant with the statutory requirements once a dispute has arisen, whereby they agree that the employee's statutory claims are submitted to arbitration.

Although it is possible in the employment tribunal for a judge to make a costs order that the losing party pays the winning party, this is relatively rare. Unlike in the UK's civil courts, each party usually bears its own cost irrespective of who wins the case.

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DAC Beachcroft LLP is a leading international legal business with more than 2,500 people across Europe, Asia Pacific and Latin America. The broad-based commercial firm is a recognised leader in insurance, health and real estate. The Employment, Pensions and Immigration group combines 96 lawyers, including 18 partners based in London, Bristol, Manchester, Leeds, Newcastle and Dublin. The London team comprises eight partners and 16 lawyers. The firm has a proven global network of partner firms: it is regularly the central point for delivering multi-jurisdictional employment law advice; for example, on global restructuring exercises. It also advises on employment data privacy, business immigration and pensions issues for employers. The London team works for five investment banks, global insurers, international insurance brokers and FTSE 100 companies, including household-name corporates such as Unilever plc and Intel. The firm is also one of the largest full-service private and public health legal teams in the UK.

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