Employment Rights Act 2025: January 2026 update
By January 2026, the Employment Rights Act 2025 was on the statute book, but most substantive reforms had not yet come into force and remained subject to commencement regulations, secondary legislation and statutory Codes.
Some clarity had emerged on changes due to take effect in early 2026. Parental rights reforms were confirmed ahead of commencement, including strengthened dismissal and detriment protections for pregnant workers and new parents, with changes scheduled to take effect from April 2026 and requiring advance policy and process updates.
April 2026 was also confirmed as a key implementation point for a number of employment law changes, including expanded statutory sick pay eligibility and related reforms, requiring payroll, absence management and contractual review well in advance.
Trade union law changes under the Employment Rights Act were confirmed to take effect from February 2026, materially altering the balance of industrial relations risk through enhanced union access to workplaces, reduced procedural barriers to industrial action and the repeal of minimum service level provisions.
February 2026 is expected to bring further regulatory clarity, with consultation outcomes, draft regulations and guidance anticipated as the first wave of Employment Rights Act reforms moves closer to commencement.
Employment Status
Maritime & Coastguard Agency v Groom
This Court of Appeal decision addresses employment status where individuals operate within a relationship described as voluntary but include paid activities. The judgment provides authoritative clarification on how worker status can arise on a task-by-task basis, even in the absence of any overarching contract.
Mr Groom worked as a Coastal Rescue Officer for the Maritime & Coastguard Agency. His role was governed by a volunteer handbook and associated documents that applied nationally to thousands of officers. These documents emphasised that the role was voluntary and denied any continuing mutuality of obligation. However, they also provided that officers could claim payment for specified activities if they submitted a claim.
Following his dismissal, Mr Groom asserted that he was a worker and therefore entitled to the statutory right to be accompanied at a disciplinary hearing. The Agency argued that he was a volunteer and that no contractual relationship existed.
The Court of Appeal held that a contract arose each time Mr Groom undertook an activity for which payment was promised. During those periods, there was a reciprocal exchange of work and remuneration. Mr Groom was required to comply with reasonable instructions while performing the activity, and the Agency was obliged to pay him if he claimed. The absence of an umbrella contract covering the full relationship did not prevent worker status arising during periods of paid work.
Employer takeaways
This decision confirms that employment status depends on how the relationship operates in practice rather than how it is labelled. Where individuals perform discrete paid tasks, worker status can arise even if the wider arrangement is framed as voluntary. Employers using volunteers should scrutinise any paid elements carefully, as statutory rights may apply during the performance of those paid activities alone.
Race Discrimination
London Ambulance Service NHS Trust v Sodola
This Employment Appeal Tribunal decision provides important clarification on the burden of proof in discrimination claims and reinforces the distinction between poor treatment and unlawful discrimination.
Mr Sodola brought two claims of direct race discrimination. He alleged that he should have been promoted and that his employer delayed in providing feedback following his unsuccessful application.
The employment tribunal rejected the promotion claim, finding that the successful candidate was better qualified. However, it upheld the feedback claim, concluding that the circumstances of the delay were sufficient to shift the burden of proof to the employer, which it found had not shown that race played no part.
The Employment Appeal Tribunal overturned that finding. It held that the tribunal’s conclusions that the delay was poor and that the feedback was brief were descriptions of the treatment complained of, not facts capable of supporting an inference of race discrimination. Without something more, the burden of proof did not shift.
Employer takeaways
The decision reinforces that poor management or inadequate communication does not, without more, amount to discrimination. Employers should still aim for timely and fair processes, but liability under discrimination law requires evidence capable of supporting an inference of unlawful motivation, not simply unsatisfactory treatment.
Settlement Agreements
Turner v Western Mortgage Services
This Employment Appeal Tribunal decision considers how settlement agreements are interpreted where appellate proceedings are already underway.
Mr Turner had previously brought tribunal claims relating to payments under a permanent health insurance scheme. Those claims were withdrawn and dismissed. He later issued fresh proceedings raising similar issues alongside pension and disability discrimination claims. The PHI claim was struck out on the basis of res judicata, and Mr Turner appealed.
While the appeal was pending, the parties entered into a COT3 agreement. The agreement provided for settlement of the identified claim number and included a broad clause settling all claims Mr Turner had or might have against the employer, subject to limited exceptions. The appeal was not expressly excluded.
The EAT held that the appeal had been settled. It found that the appellate proceedings arose directly from the underlying claim and that, viewed objectively, the settlement was intended to bring all related litigation to an end.
Employer takeaways
This case underlines the importance of settlement drafting and objective interpretation. Broad full and final settlement wording can extend to appeals even if not expressly mentioned. Employers seeking finality should ensure settlement language reflects a clear intention to conclude all related proceedings.
Unfair dismissal
Kesheva v Secure Frontline Services
This decision addresses the limits of reducing unfair dismissal compensation to nil based on alleged contributory conduct.
Ms Kesheva worked as a door supervisor. Following an argument at work, she left mid-shift and was dismissed for gross misconduct without any investigation or disciplinary procedure. The employment tribunal found that the dismissal was unfair.
Despite that finding, the tribunal reduced both the basic and compensatory awards to zero, concluding that Ms Kesheva’s failure to telephone her employer after leaving amounted to gross misconduct.
The Employment Appeal Tribunal held that the tribunal had erred. On its own findings, Ms Kesheva had informed her team leader that she was leaving, and there was no policy requiring additional telephone contact. In those circumstances, the conduct relied upon could not amount to gross misconduct.
Employer takeaways
The decision confirms that compensation reductions depend on properly established misconduct. Employers cannot rely on undefined or inconsistent expectations to eliminate liability. Clear policies and proportionate assessment of conduct remain central to defending unfair dismissal claims.
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