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In the News
AI COMPLAINTS: NAVIGATING THE NEW WORLD
According to news reports, the increase in reliance on AI has led to a new condition called "AI psychosis" – where delusional thoughts are triggered or worsened by intense engagement with chatbots. This is playing out in the employment law world too, with reports of AI chatbots validating or amplifying unrealistic expectations in employment claims.
We are increasingly seeing employees use AI to draft grievances, as well as claims and submissions in Employment Tribunals. This can be problematic for a variety of reasons. In some cases, employees do not scrutinise the output generated, resulting in excessively long documents which contain errors, inconsistencies or irrelevant arguments. However, employers must still review and respond to each argument, without prejudging the issues. This adds to the costs and time spent on employment disputes. It can also lead to delays in the Tribunal process, with Tribunals having to wade through extensive correspondence. In addition, resolving disputes can become more difficult where an employee's position has been validated or amplified, without challenge, by a chatbot.
The issue also raises confidentiality concerns, with employees potentially inputting commercially sensitive information into public AI platforms to generate their arguments.
While staff cannot be prevented from using AI altogether, employers may wish to consider updating their policies and providing additional training for HR. Staff should be alerted to the dangers of over-reliance on chatbots and reminded of the need to ensure confidentiality and avoid sensitive information being shared on public platforms.
Immigration Radar
VISA PROCESSING TIMES
The Home Office has introduced a new online "check your visa processing time" service. Applicants can use this service to check the estimated processing time for their visa application. The service covers work, study and visitor visa applications, and is available for applications submitted both inside and outside the UK. It can be notoriously difficult to get information on visa processing times, so it is hoped that this service will help employers and employees better estimate timescales.
Case Watch
RACE DISCRIMINATION: DEFENDING CLAIMS
A recent Court of Appeal ruling highlights some of the challenges employers can face in defending discrimination claims.
The employee in this case was a British national of Indian origin. She was employed as a head of service by Leicester City Council. Following disputes and complaints between different service areas, she was temporarily transferred to another position and subjected to a disciplinary investigation for misconduct. The disciplinary process was eventually dropped but the employee brought a direct race discrimination claim, arguing she had been treated differently because of her ethnicity.
The employee won her case. The Employment Tribunal ruled that the employee had been treated less favourably than white employees. In cases involving similar allegations, white colleagues were offered mediation or informal resolution, without a formal disciplinary process being instigated. While two BAME senior managers had been subjected to disciplinary proceedings in the last five years, no white senior managers had been disciplined. In the Tribunal, the Council also failed to disclose notes of witness interviews which led to the decision to drop the disciplinary investigation against the employee. All of this led the Tribunal to infer race played a part and the Council could not adequately explain the difference in treatment. This led to a finding of race discrimination which was upheld by the Court of Appeal.
This case highlights the importance of having a clear paper trail and ensuring consistency of treatment in a disciplinary process. While conscious or unconscious bias may have played a role in this case, the key problem was that the employer could not explain why it had treated employees of different ethnicities differently. In a discrimination claim, the employee only needs to establish facts from which a Tribunal could infer discrimination. The onus is then on the employer to prove it had a non-discriminatory reason for any difference in treatment. An employer will struggle to do so where it has not documented its rationale, and as a result could face an adverse finding of discrimination.
LEICESTER CITY COUNCIL V PARMAR
WHISTLEBLOWING: HOW FAR DOES THE PROTECTION GO?
A recent Employment Appeal Tribunal (EAT) ruling has confirmed that protection from whistleblowing detriment can continue after employment has ended.
The employee in this case was a junior doctor at an NHS Trust from 2013 until 2014. During his employment, he made a number of disclosures about patient safety at the hospital in which he worked. In 2014, he brought a whistleblowing detriment claim but the claim was settled in 2018. The following year, the employee brought another claim arguing that he had suffered further detriment because of some allegedly defamatory statements made by the Trust around the time of settlement of the original claim. An Employment Tribunal ruled that the subsequent claim could not succeed as the alleged detriments occurred after the employee's employment had ended.
On appeal, the EAT disagreed. The EAT ruled that the alleged detriment was closely connected to the employee's employment. The Trust's statements were made in the context of Tribunal proceedings about whistleblowing disclosures made by the employee during employment. However, in making the statements, the Trust was motivated by the media scrutiny around the original claim and a desire to put its side of the story, not by the employee's whistleblowing disclosures. The employee therefore lost his claim.
Employees who blow the whistle during employment are protected from suffering detriment at the hands of the employer or colleagues. This case confirms that the protection from whistleblowing detriment can continue even after employment has ended. Employers should therefore be careful in any statements made about a former employee (e.g. in a reference) who has blown the whistle. In contrast, a former employee who blows the whistle after employment had ended would not have the same protection. In any event, as this case shows, whistleblowing claims are often won or lost on causation – an employer can defend such claims by showing it had a reason other than the whistleblowing for its actions.
DAY V LEWISHAM AND GREENWICH NHS TRUST
New Law
FAILURE TO PREVENT FRAUD
On 1 September 2025, the new failure to prevent fraud offence under the Economic Crime and Corporate Transparency Act 2023 ("ECCTA") came into effect. The offence applies to large employers which satisfy two or more of the following conditions: (i) more than 250 employees; (ii) more than £36 million turnover; and/or (iii) assets of more than £18 million. Under the new law, employers are liable for fraud committed by an employee, agent or other associated person, which is intended to benefit the organisation or its clients, where the employer does not have reasonable fraud prevention procedures in place. With the offence now in force, in scope employers should ensure they have appropriate prevention procedures in place, which may include updating template employment contracts to reflect the offence. For more details, please see our briefing.
SETTLEMENT AGREEMENTS
From 1 October 2025, new rules on confidentiality provisions and non-disclosure agreements (NDAs) come into force under the Victims and Prisoners Act 2024. Under the Act, any confidentiality provision or NDA will be unenforceable to the extent that it prevents a victim of crime from reporting the crime to the police or seeking confidential advice and support. The new provisions will apply to agreements signed on or after 1 October 2025. Confidentiality provisions are common in settlement agreements, and these typically include carveouts which allow the employee to blow the whistle or report an offence to the police. However, employers may wish to update template settlement agreements to reflect the provisions of the Victims and Prisoners Act 2024.
EU PAY TRANSPARENCY RULES
A new EU pay transparency directive comes into force on 7 June 2026 which will introduce gender pay gap reporting obligations across Europe. It also introduces pay assessments, as well as other measures to increase pay transparency in recruitment and in the workplace. The directive applies to people working in the EU, irrespective of where their organisation is headquartered.
The Directive will initially require annual pay gap reporting for businesses with 250+ employees and reporting every three years for businesses with 150+ employees (dropping to businesses with 100+ employees after four years). Some EU countries are introducing lower thresholds for reporting (e.g. Ireland, Sweden).
Employers with EU operations should use the time ahead of implementation to prepare and address any anomalies in their pay structures. We have developed a number of resources to assist with preparation – please speak to your usual Employment department contact for more information.
Consultations
DEALING WITH DATA PROTECTION COMPLAINTS
The Information Commissioner's Office (ICO) has issued a public consultation on draft guidance on dealing with data protection complaints. From June 2026, all organisations must have a process for handling data protection complaints from anyone who is unhappy with how their personal data is handled. Such complaints could come from customers or clients but could also come from employees, for example, who are unhappy with the employer's response to a subject access request or with how the employer processes their data. Organisations will be required to acknowledge such complaints within 30 days and respond substantively without undue delay. The ICO's draft guidance aims to explain the obligation and how organisations can go about complying with it, such as having a complaints procedure and a complaints form that can be submitted online or via email or post. The consultation on the draft guidance is open until 19 October 2025.
CULTURE IN FINANCIAL SERVICES
As previously reported in Employment Update, the FCA has announced a new rule on non-financial misconduct for financial services firms. The new rule will make it clear that misconduct such as bullying, harassment and violence is an FCA conduct issue. The FCA has also run a consultation on draft guidance on the new rule and how firms should consider non-financial misconduct when assessing whether someone is fit and proper to work in financial services. The consultation on the draft guidance closed on 10 September 2025, with the FCA expected to report back in the coming months and the new rule coming into force on 1 September 2026. Please see our briefing for more detail.
PROPOSED OVERHAUL OF THE SMCR
The FCA has also launched a consultation on proposals to improve the efficiency of the Senior Managers and Certification regime in the financial services sector. The proposals are in two phases – phase one involves smaller scale changes aimed at reducing the regulatory burden for firms and phase two would involve more fundamental changes which would take longer to implement. The consultation closes on 7 October 2025. Please see our briefing on the proposals for more detail.
Watch this space
EMPLOYMENT RIGHTS BILL
The Employment Rights Bill is expected to become law in the coming weeks. The Bill paves the way for significant reforms of UK employment law. However, the majority of the changes will be phased in over 2026 and 2027, with changes to the unfair dismissal qualifying period expected to come into force in 2027. The Government plans to consult on the detail in several areas before implementation and some of the specifics will be set out in future regulations. We have summarised the key changes, implementation dates and actions points for employers in our briefing Employment Rights Bill – What does it mean for employers? Employment Update will continue to report developments.
Community Engagement
In recent weeks, our team has been involved in a variety of pro bono work for organisations such as Just Like Us, Tyre Collective, Foundervine, and Chatterbox.
Our Work
Since the last edition of Employment Update, our work has included:
- commissioning and advising on an independent investigation involving cross border questions
- presenting a workshop on whistleblowing and investigations for non-executive directors
- advising a leading global reinsurance broker on a team move and follow-on litigation across multiple jurisdictions
- advising on a cross-border TUPE and redundancy exercise
- advising on changes to an EWC agreement
- advising on employer of record arrangements
- advising and supporting a financial services client on a grievance relating to bullying against a senior member of staff
- advising and assisting an international company set up in the UK, including setting up employment and PAYE arrangements.
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.
