Key employment and business immigration developments for employers.

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Artificial intelligence and the workplace

What are the employment law implications of using AI in the workplace? This issue has come under the spotlight recently, given the proliferation of AI technology and the growing conversation around its use in various contexts, including at work.

The House of Commons Library has recently published a research briefing on AI and employment law, which highlights common workplace uses and some of the employment law implications.

In the field of HR and people management, AI is increasingly being used in the following areas:

  • recruitment, e.g. CV screening, social media trawls, assessments, interviews and analysis;

  • performance management, e.g. monitoring activity and productivity and evaluating performance;

  • safety and security, e.g. facial recognition technology and applications which monitor hazards and unsafe behaviour;

  • work allocation, e.g. shift allocation algorithms.

One of the key risks associated with AI is the potential for bias, and therefore discrimination, in decision-making. Employers are on the hook for any discriminatory decisions they make, even where these are the result of using AI.

Where AI is involved in decisions around recruitment, performance management or work allocation, it may be more difficult to explain those decisions and therefore harder to defend any discrimination or unfair dismissal claims which arise. Excessive monitoring of staff through the use of AI tools could also breach the implied duty of trust and confidence as well as data protection law.

Data protection law also requires businesses to be transparent about when and how they are using AI to process personal data, as well as giving employees the right not to be subject to purely AI-driven decisions where the outcome has legal or similar effects – so employers will need to ensure that there is some human involvement in the process. Because of the risk to the rights of individuals, Data Protection Impact Assessments are likely to be required in many cases.

Given these issues, employers should take care to understand where AI is being used in the workplace and the risks involved. Employers may also wish to periodically review or audit the output of AI tools and interrogate providers of the technology as to other measures to minimise these risks.

It will also be important to see how regulatory developments in relation to AI unfold. As we outline in our briefing here, the regulatory approach which the UK proposes to take is very different from the approach currently proposed by the EU. The EU has identified many employment uses of AI as being "high-risk" systems to which a stringent set of obligations will apply. It remains to be seen if the UK will take a similar view – it is currently proposing to rely on existing regulation, rather than introducing AI-specific laws.

Immigration radar

Fines for illegal working

The Government has recently announced that fines will triple for employers who are found to employ illegal workers, a move that forms part of its wider initiative to deter illegal migration. Currently an employer can be issued a civil penalty of up to £15,000 for a first time offence of employing an illegal worker, even where the employer does so inadvertently. From the beginning of 2024, this will increase to a civil penalty of £45,000 per illegal worker for a first breach. Employers who have previously been fined for employing illegal workers will also be fined £60,000 for a second breach, increasing from the current fine of £20,000 in these circumstances. The employer's only defence will be to ensure it has carried out prescribed right to work checks on all employees.

Employers should continue to satisfy themselves that any individual they wish to engage is able to produce the necessary documentation to demonstrate that they have the correct permission to undertake the job in question. To minimise risk to their businesses, employers should ensure they carry out such checks on or before an individual starts work.

EU settlement scheme

The Government has announced that, from September 2023, people with pre-settled status under the EU Settlement Scheme (EUSS) will automatically have their status extended by two years before it expires. This will allow them to remain in the UK to qualify for settled status. In 2024, those with pre-settled status will start to be automatically upgraded to settled status if automated checks of government records indicate that they will qualify by virtue of having been in the UK for five years. (These changes follow a judgment from the High Court earlier this year which found that the requirement to make an application to convert pre-settled status to settled status breached the Withdrawal Agreement between the UK and the EU by failing to protect the residence rights of EU citizens.) The changes are helpful for employers, as they mean extending pre-settled status and applying for settled status under the EUSS should be much more straightforward for most EEA and Swiss national employees.

Increase in visa fees

The Government has also announced significant increases to the visa immigration fees and the immigration health surcharge. The immigration health surcharge will increase from £624 to £1,035 per year for all adults. The discounted rate for students, children and youth mobility visa holders will increase from £470 to £776 per year. The immigration health surcharge contributes towards the costs of the NHS and is payable for most visas of longer than six months, including Skilled Worker and Global Business Mobility visas. This means the costs of such visas will increase significantly. Other visa fees will also increase and it is expected that work and visit visas will rise by 15 percent, although it is not yet clear when the increases will come into effect.

Case watch

Reasonable adjustments – how far does the duty go?

A recent case has considered how far employers must go in making reasonable adjustments for disabled job applicants.

The applicant in this case applied for a job which required candidates to complete a short online form, which could be accessed by creating a username and password. The applicant emailed the employer's HR department asking for an oral application due to his disability. He explained that he suffered from dyspraxia and also explained how dyspraxia affects people generally. A senior HR manager emailed him confirming that he was required to complete the online form but that assistance could be offered if he identified which areas he found difficult. He did not identify which aspects of the form he struggled with but reiterated that he would prefer to complete the online form over the phone. When this did not happen, he brought a disability discrimination claim arguing that the company had failed to make reasonable adjustments. The employer argued it could not make adjustments because it did not know the nature and extent of the employee's difficulties, despite asking him to provide this information.

The Employment Tribunal and Employment Appeal Tribunal ruled that the employer had failed to make reasonable adjustments. The requirement to register for an online account and complete the online form put the applicant at a disadvantage because of his dyspraxia. It would therefore have been a reasonable adjustment to allow the applicant to answer the questions over the phone. Given his difficulty with written communication, it was not reasonable to ask him to explain on email why he was having trouble with the online form. The employer should have phoned him to understand the difficulties he was facing. The applicant was awarded £2,000 for injury to feelings plus £700 in interest.


This case is a reminder that employers owe a duty to make reasonable adjustments for disabled job applicants, as well as disabled employees. Where any aspect of the application process puts a disabled candidate at a disadvantage compared to non-disabled candidates, the employer must take reasonable steps to avoid the disadvantage. The duty only applies where the employer knows, or ought to know, that the candidate is disabled and is likely to be at a disadvantage. However, as this case shows, the employer cannot necessarily leave it up to the applicant to explain exactly what impact their disability is having – where there is any uncertainty, the employer should make reasonable enquiries of the candidate. Many employers ask job applicants to state on application forms whether they are disabled and whether any adjustments are required. Even in these circumstances, the employer should follow up if it needs more information about the disability or how it affects the application process.

TUPE – what transfers?

Where there is a TUPE transfer, all rights and obligations arising under or in connection with the employment contract transfer. But what does this mean for discretionary benefits like employee share plans?

The employee in this case participated in an all-employee tax advantaged share incentive plan with his employer which allowed him to acquire shares in the employer's parent company. The plan was not mentioned in the employment contract and the plan itself stated that it was non-contractual. The employee's employment transferred under TUPE to a new employer. The new employer said that it was not going to provide an all-employee share incentive plan but that employees would instead receive a one-off payment as compensation. However, the employee applied to the Employment Tribunal for a ruling that he was entitled to participate in an equivalent share incentive plan with the new employer. The case was ultimately appealed to the Employment Appeal Tribunal and the Inner House Court of Session (the Scottish equivalent of the Court of Appeal).

The Inner House Court of Session has now ruled that the share incentive plan was part of the employee's overall financial package as an employee. Even though it was not part of the employment contract, it arose "in connection with" the employee's contract of employment and therefore transferred under TUPE. Accordingly, the new employer was required to put in place a share incentive scheme that was substantially equivalent to the old scheme.


This case shows that discretionary benefits like a share scheme can transfer under TUPE even if they are not part of the employment contract, as they could be considered as arising "in connection with" the employment contract. For share schemes, this creates real practical difficulties because employees can no longer participate in the old employer's scheme once they have transferred and the new employer might not be able to put in place an identical scheme. The obligation on the new employer is therefore to put in place a scheme which is "substantially equivalent" to the old scheme.

In many cases, the new employer should have the right to terminate a share scheme which transfers under TUPE. Where a share scheme transfers, it does so on its existing terms. If, as is usually the case, the terms of the plan gave the former employer the right to amend or withdraw it, then the same right would arguably apply to the new employer.

Gender reassignment discrimination

A recent case has considered whether the use of a gendered swearword amounted to discrimination on the grounds of gender reassignment. The employee in this case was a trans woman who worked as a bus driver. She claimed that a colleague had called her a "wanker", which was a gendered swearword used to refer to men, and that this amounted to gender reassignment discrimination. The Employment Tribunal found on the facts that the word had not been used, but went on to say that if it had been, then this would have been discriminatory on the grounds of gender reassignment. The Tribunal also observed that although the employer had taken some steps to prevent gender reassignment discrimination, there were additional steps which could have been taken, including:

  • keeping its equal opportunities and harassment policies up to date (they had not been updated for over 15 years);
  • focussing on "inclusion" as well as equality in its policies;
  • giving staff regular and refreshed training on equality, diversity and inclusion;
    setting up employee representative groups for example an LGBTQ+ group;
  • raising awareness of equal opportunities generally especially transgender awareness;
  • training staff on inclusive language and communications.

The Tribunal decided that these were all steps which it would have been reasonable for the employer to take in the circumstances.


Although these recommendations by the Tribunal are not binding (because they were observations rather than being part of the legal ruling), it is a helpful indication of the sorts of actions which Tribunals may expect employers to take. It is common for a Tribunal to recommend updating equal opportunities policies and regular refreshed diversity training, and all employers should ensure they implement these measures. However, it is interesting to see specific recommendations around inclusion and inclusive language, and this case demonstrates how inappropriate language can give rise to a claim, even just a single word or remark. Raising awareness of diversity issues, including transgender awareness, amongst managers and staff is essential, and training is a key part of this. We regularly advise on diversity policies and deliver diversity training for HR and managers – if you would like to discuss your policies or training programme please get in touch with your usual employment department contact.

New law

Flexible working

The Government has passed legislation that will make changes to the right to request flexible working. When the legislation comes into force:

  • there will be a new requirement on employers to consult with employees before rejecting a flexible working request;
  • employees will be entitled to make up to two flexible working requests in any 12-month period (instead of the current limit of one request per 12 months);
  • the deadline for an employer to make a decision will be reduced from three to two months from receipt of the request; and
  • employees will no longer need to explain what effect their request would have on the business when making a request.

The Government has also said that it will introduce regulations making the right to request flexible working a 'day one' right – currently employees need at least 26 weeks' service to make a request under the statutory regime. There is no implementation date yet but the Government has indicated these changes would come into force around July 2024, in order to give employers time to prepare. Employers will therefore need to update their flexible working policies to reflect these changes in advance of the July 2024 implementation.


The Government has passed legislation that will enable it to set minimum service levels during strikes in certain sectors, namely health, transport, education, fire and rescue, border control, and nuclear decommissioning and radioactive waste management services. Regulations are required to implement such minimum service levels and the Government so far has said it would do this in the passenger rail, ambulance and fire and rescue services (there is no indication yet as to when these regulations are likely to be published). Where minimum service levels apply, the employer will be able to require certain workers to work during the strike where they are reasonably necessary to maintain a minimum level of service. Trade unions will have an obligation to take reasonable steps to ensure any union members comply with such a requirement to work. To that end, the Government has also published for consultation a draft Code of Practice on the reasonable steps trade unions must take in these circumstances. The draft Code is open for consultation until 6 October 2023.

Tips and gratuities

The Government has passed the Employment (Allocation of Tips) Act 2023. The Act will require employers that handle tips and other gratuities to ensure they fairly allocate them to workers and pay them to workers in full within a month of receipt from the customer. A statutory code of practice will be published which sets out what the fair allocation of tips, gratuities and service charges looks like. Employers whose staff regularly receive tips will be required to have a written policy on how such tips are dealt with. These provisions are expected to be in force from May 2024, with the Government to confirm the precise date in due course.

Community Engagement

In recent weeks, our team has been involved in a variety of pro bono work for organisations such as Ukrainian Action, Charity: Water, Blue Nose Technologies, PulpaTronics and Chatterbox.

Our work

Since the last Employment Update, our work has included:

  • supporting a client facing strike action
  • advising on collective redundancy processes in multiple jurisdictions
  • advising clients on the enforcement of post-termination restrictions in the context of employee team moves
  • carrying out a number of workplace investigations into bullying and harassment allegations against managers
  • advising a client on the employment implications of the separation of a business from the seller in circumstances where the seller business may be insolvent
  • advising on a complex board dispute
  • considering the implications of a criminal offence taking place outside work in the context of ongoing employment
  • advising on balloting and notification processes for industrial action
  • analysis of position on IR35 amongst a contractor population
  • advising on TUPE provisions for incoming contractor on material outsourcing contract.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.