Welcome to June’s newsletter. 

In this edition, we bring together the latest employment law developments, recent case updates, and practical guidance for HR professionals. 

From the Government’s consultation on NDAs and the risks surrounding flexible working refusals to recent decisions on protected conversations and a host of other important topics, this edition provides the key insights and practical takeaways you need to stay informed.

1. EHRC publishes revised guidance on single-sex spaces – but employers are still waiting

On 21 May 2026, the Equality and Human Rights Commission’s (EHRC) updated draft Code of Practice for Services, Public Functions, and Organisations (the Draft Code) was laid before Parliament. 

It replaces the 2011 Code and incorporates the Supreme Court’s judgment in For Women Scotland Ltd v The Scottish Ministers, confirming that “sex”, “woman” and “man” in the Equality Act 2010 means biological sex and that a Gender Recognition Certificate does not change a person’s sex for the purposes of the Act.

So, what does this mean for employers?

The Draft Code covers service providers and service users and not employers yet. Workplace single-sex facilities are governed separately, under separate parts of Equality Act 2010 and the Workplace (Health, Safety, and Welfare) Regulations 1992. The EHRC has said it “will update its guidance for employers in due course” but has refused to commit to any timeframe.

What should HR teams do now?

Although “sex” is now legally defined as biological sex, trans employees continue to be fully protected under the Equality Act 2010 from discrimination, harassment and victimisation on the grounds of gender reassignment.

As it currently stands, it is ultimately a policy decision for employers, to determine how best to balance the rights of trans employees and other female employees.

2. Tesco Stores v Element & Ors: Defining “Work” and reshaping the evidential landscape in Equal Value claims

Employment disputes rarely escalate as high as the Court of Appeal, which makes the Court’s recent decision in Tesco Stores v Element 2026 worth reading carefully. Its clarification of what “work” means for equal pay purposes has real consequences for how these claims are litigated and prepared.

The legal framework

The bring an equal pay claim under the Equality Act 2010 the claimant must establish that they are engaged in “equal work” with a comparator of the opposite sex – either like work, work rated as equivalent, or work of equal value. Once equal work is established, the employer bears the burden of demonstrating a genuine material factor defence (a non-sex-based explanation for the pay differential). In practice, whether the ‘work’ involved is equal work is often the dominant and most resource-intensive battleground.

The central question

In Element, approximately 34,000 predominantly female retail employees claimed equal value with male comparators in Tesco’s distribution centres. At a 36-day fact-finding hearing, the employment tribunal declined to treat the parties’ witness evidence and bespoke job descriptions as determinative. Instead, it placed primary reliance on Tesco’s own training materials as the most reliable objective record of what each role required. The Court of Appeal was asked to determine whether that approach was legally sound.

The Court’s reasoning

The Court held that “work,” properly understood, is the product of the wage/work bargain: the duties the employer actually requires, not a reconstruction of what employees happen to do in practice. In highly regulated, prescription-heavy workplaces, documentary sources such as training manuals and SOPs provide the most reliable baseline evidence of job content. Critically, the tribunal had remained open to challenge – it did not treat those documents as conclusive, merely as the appropriate evidential starting point.

Implications for HR

For HR professionals handling equal pay risk:

• Conduct an early assessment of how prescriptive and documented the relevant roles are. High levels of regulation increase the evidential value of internal documentation.
• Review training materials and SOPs for consistency and accuracy before litigation commences.
• Where documentary evidence is robust, consider whether it can reduce or replace live witness evidence – a significant cost saving in extended proceedings.

3. Breaking the silence: Government consults on NDA safeguards

A Government consultation on proposals to prevent the misuse of non-disclosure agreements (NDAs) in workplace harassment and discrimination cases closes on 8 July 2026, with regulations expected in 2027. The consultation follows provisions introduced under the Employment Rights Act 2025, which will render void any agreement preventing workers from making allegations or disclosures about harassment or discrimination.

The proposed rules will apply broadly to employment contracts, settlement agreements and COT3 agreements brokered through Acas. However, the Government intends to create “excepted agreements” that can still contain confidentiality provisions if certain conditions are met.

One key proposal is that workers must receive independent legal advice in writing on the effect of the agreement before signing it, alongside providing written consent to enter into it. The consultation also proposes a mandatory cooling-off period, currently suggested at 14 calendar days, during which workers could withdraw from the agreement without penalty.

Importantly, even where an excepted agreement is in place, workers would still be permitted to discuss allegations of harassment or discrimination with specified individuals and bodies, including regulators, medical professionals, trade union representatives, lawyers and close family members. The Government is also seeking views on whether disclosures to prospective employers should be permitted.

The consultation further considers whether the protections should extend beyond direct employees to agency workers, secondees and individuals in wider employment related arrangements.

For HR professionals, the practical implications could be significant. Employers may become more cautious about entering into confidential settlement discussions where confidentiality cannot be guaranteed, potentially increasing the likelihood of litigation. Proposed cooling off periods may also complicate last minute settlements, particularly in the context of employment tribunal claims resolved via COT3 agreements.

4. Post-employment victimisation

A compensation award exceeding £260,000 in Ong v Aberystwyth University 2025 is a timely reminder that liability for discrimination does not stop after the employee leaves. “Irresponsible and retaliatory” references were costly for the employer. Understanding why requires a close look at two provisions that sit at the heart of post-employment victimisation claims.

The statutory framework

Section 27 of the Equality Act 2010 prohibits victimisation where a person subjects another person to a detriment because they have or may carried out a protected act. Protected acts include bringing or supporting tribunal proceedings, making allegations of discrimination, and doing anything else in connection with the Act. Critically, the claimant need not have been acting in good faith, provided the allegation was not made falsely.

Section 108 extends discrimination protection beyond the employment relationship itself. It applies where the conduct complained of arises out of and is closely connected to the former employment relationship. This provision codifies the principle established by the House of Lords in Rhys-Harper v Relaxion Group plc 2003, which confirmed that discriminatory or retaliatory conduct after termination remains actionable.

How liability arises in practice

In Ong, the university provided a reference that disclosed the existence of litigation and described itself as being “in dispute” with the Claimant. The Tribunal had no difficulty finding that this constituted a detriment caused by Ms Ong’s protected acts, and the resulting award reflected the substantial career loss she suffered.

The earlier House of Lords decision in St Helens Borough Council v Derbyshire 2007 illustrates that letters sent to employees warning of financial consequences if they pursued equal pay claims were held to constitute victimisation.

Takeaway: The practical consequence for HR is straightforward. Once a former employee has carried out a protected act, every subsequent interaction must be considered carefully as it can carry legal risk. Identifying that risk starts with understanding the statutory framework that creates it.

5. Flexible working refusals: statutory compliance is necessary but not sufficient to eliminate legal risk

The right to request flexible working is a day-one right under The Employment Relations (Flexible Working) Act 2023 since 06 April 2024. Importantly, it is a right to request and not a right that the request must be granted.  Employers can lawfully reject requests, but only if the decision is handled correctly, based on permitted statutory grounds, and supported by a reasonable process. Poorly handled refusals expose organisations to tribunal claims, discrimination risk, and long-term employee relations issues. 

Direct enforcement under the flexible working regime is correspondingly narrow and claims are confined to procedural failures, and compensation is limited to eight weeks’ pay, with a weekly cap currently set at £751.

Tribunals will not ordinarily substitute their judgment for that of the employer where the request has been genuinely considered and the refusal is grounded in evidence rather than unsupported assertion (see Morsing v Howden Joinery Group; Wilson v Financial Conduct Authority). 

A refusal must rely on one of eight permitted business reasons such as additional cost, inability to reorganise work, or detrimental impact on performance.

The more significant exposure of risk of refusal arises outside the flexible working regime entirely.

Indirect sex discrimination under section 19 of the Equality Act 2010 (EQA 2010) is the primary vehicle. Where a provision, criterion or practice, such as a requirement for full-time attendance, places women at a particular disadvantage, the employer must objectively justify it.

The burden of justification is not discharged by generic assertions of operational need. Section 19A further extends potential liability as an individual without the relevant protected characteristic may bring a claim where they suffer the same disadvantage, meaning a father with primary childcare responsibilities may be able to pursue an indirect sex discrimination claim.

Where a flexible working request has a disability dimension, the employer’s obligations under section 20 of the Equality Act 2010 to make reasonable adjustments may arise. Refusal of an adjustment that would remove or reduce a substantial disadvantage may give rise to a failure to make reasonable adjustments claim, with uncapped compensation and potential injury to feelings awards.

Constructive unfair dismissal remains a further risk where mishandling of a refusal is sufficiently serious to breach the implied duty of mutual trust and confidence.

In the case of Macdonald v Computershare Technology Services 2026 a request was refused on quality grounds and generated multiple discrimination claims, including indirect sex discrimination and disability discrimination by association. Both failed on the facts, but the litigation demonstrates the complexity and cost that a single refusal can produce.

Practitioners should advise clients that statutory compliance with the flexible working process establishes a floor, not a ceiling. 

6. Protected conversations and Section 111A ERA 1996

Overview: Pre-termination negotiations under section 111A of the Employment Rights Act 1996 (ERA 1996) allow employers to have an “off the record” discussion with an employee it wants to exit the business without risk of those discussions being referred to in ordinary unfair dismissal proceedings. Often the desire for termination arises from disciplinary, capability or redundancy issues and putting forward a settlement offer can be the quickest, cleanest solution for all parties. 

Unlike “without prejudice” conversations, there doesn’t need to be an existing dispute. The benefit of having a protected conversation is that it will be inadmissible as evidence if an unfair dismissal claim is brought against you by the employee. 

Note, however, that this applies only to claims for ordinary unfair dismissal.  These conversations do not benefit from the same protections where the dismissal is for automatically unfair reasons including claims for discrimination . 

Furthermore, if anything said or done is deemed improper by the tribunal, for example using offensive language, aggressive behaviour or putting undue pressure on the employee (for example by saying they will be dismissed if a settlement proposal is rejected), the pre-termination negotiations will be deemed admissible even if they would otherwise benefit form protection. 

Case 1

Facts: In Gallagher v McKinnon Auto and Tyres 2024, the Employment Appeal Tribunal (EAT) considered if the employer’s behaviour during a discussion was improper under section 111A(4) of the ERA 1996, which would mean that the pre-termination negotiations could be referred to and used as evidence in an unfair dismissal claim.

In 2022, Mr Gallagher caught COVID and then unfortunately broke his foot and was off sick for a few months. His empoyer covered his work during his sickness absence and decided that they could continue without a branch manager.

Mr Gallagher was invited to an “off the record” meeting to discuss his return to work and proposed an exit package, which involved terminating his employment for redundancy and paying him £10,000. 

Mr Gallagher was told he would have 48 hours to consider the offer and that if he accepted the offer then the parties would enter into a binding settlement agreement but if he rejected it, then the redundancy process would start. After the meeting he requested a breakdown of the settlement payment, which was quickly provided. Mr Gallagher didn’t accept the offer and was later dismissed for redundancy. 

Outcome: Mr Gallagher brought a claim for unfair dismissal and sought to rely on the meeting that took place as evidence of the unfairness of his dismissal. At a preliminary hearing, the tribunal held that the discussions were protected conversations under section 111A and were therefore inadmissible. The tribunal said the meeting had been conducted in a calm and measured way, where the offer of compensation and reference to redundancy wasn’t unreasonable, and it wasn’t necessarily a foregone conclusion that Mr Gallagher would be made redundant.

Appeal: Mr Gallagher appealed to the EAT on perversity grounds, arguing that the following behaviours were improper and put him under undue pressure:

1. Being told if he didn’t accept the offer a redundancy process would begin amounted to a statement that he would be dismissed;
2. Setting up the meeting under false pretences as a return to work discussion; and
3. Giving him only 48 hours to respond to the offer.

The EAT dismissed his appeal, rejecting all of his objections:

1. Mr Gallagher had been told that his duties could be covered by other staff but this didn’t mean that he would be dismissed if he rejected the settlement proposal. A redundancy process would have begun and Mr Gallagher could have been offered alternative employment so he might not have been dismissed.
2. The EAT said it might not have been fair for the employer to use a discussion about Mr Gallagher’s return to work as a pretext for offering him a package but this didn’t constitute impropriety. Mr Gallagher was quickly provided with a breakdown of the offer and he was given time to discuss it with his family.
3. The period of 48 hours only related to whether Mr Gallagher would accept a verbal offer. If he’d accepted it, then pre-termination negotiations would have continued and it was likely that he would have been given a settlement agreement to consider. The EAT agreed with the tribunal’s conclusion that the 48 hour timescale didn’t subject Mr Gallagher to undue pressure.

Key takeaways

This decision reminds employers that they can engage in a discussion with an employee about a potential settlement if it’s presented as an option with a genuine and lawful alternative. If the choice in this case had been between the settlement offer and being dismissed as redundant, it’s unlikely that the tribunal or the EAT would have said that the negotiations were a protected conversation.

The tribunal and the EAT made a distinction between the verbal offer that was made to Mr Gallagher and a situation where a draft written settlement agreement is provided to an employee. The Acas Code of Practice on settlement agreements suggests employees should be given 10 days to consider the terms of a written offer. This allows an employer to give a short deadline for an employee to consider a verbal offer before they provide a settlement agreement that sets out all of the details.

Mr Gallagher believed he’d been lured to the meeting under false pretences but both the tribunal and the EAT said that this was acceptable because an employer might need to find a reason to get an employee to attend a meeting so that they can have a protected conversation. 

Case 2

In Tarbuc v Martello Piling Ltd 2026, Mr Tarbuc worked for MP Ltd from February 2018 until his dismissal, purportedly for redundancy. Before dismissal, the managing director, held a meeting with Mr Tarbuc to discuss the redundancy proposal. Mr Tarbuc complained that he was threatened with redundancy if he refused a settlement offer, that the meeting had been sprung on him without notice or the opportunity to bring a companion, and that he was only given five days to consider the offer.

Following his dismissal, Mr Tarbuc brought claims of unfair dismissal, unauthorised deductions from wages and part-time worker discrimination. Resisting the claim, MP Ltd relied on s.111A of the Employment Rights Act 1996.

Outcome: The tribunal rejected Mr Tarbuc’s argument and held that s. 111A applied. It directed that the fact and content of the protected conversation were inadmissible, that documents relevant to it need not be disclosed and all references to the meeting were to be excluded from the proceedings as a whole. Mr Tarbuc appealed to the EAT.

Appeal: The EAT allowed the appeal and sent it back to a different tribunal to reconsider.

First, the tribunal had simply got the law wrong on s. 111A. The section applies only to ordinary unfair dismissal claims. It therefore had no application to Mr Tarbuc’s claims for unauthorised deductions or less favourable treatment as a part-time worker.

Secondly, when looking at whether protection is excluded due to improper behaviour, the tribunal needs to consider all the points of impropriety raised. The tribunal had focused only on what was said during the meeting and how it was expressed. It failed to consider the wider context, including Mr Tarbuc’s allegation that he had been taken by surprise, not given the opportunity to be accompanied, and effectively ‘ambushed’. By failing to engage with these elements of Mr Tarbuc’s case, the tribunal had erred in law.

Takeaway: The EAT confirmed that the improper conduct assessment is fact-specific and holistic. The tribunal’s failure to consider the circumstances in which the meeting was convened including the absence of prior notice and the denial of accompaniment, rendered its analysis incomplete. The outcome in Gallagher does not establish a general threshold; each case turns on its own facts.

Practitioners should ensure that section 111A conversations are conducted with procedural rigour, and should advise clients that protection does not extend to the full range of claims that commonly accompany unfair dismissal proceedings.

7. Implied terms by fact and by law: What HR needs to know

Within an employment relationship there can be both express contractual terms (i.e. those written down in an employment contract) and implied terms (implied into the contract either by fact, law, statue or custom and practice). 

Terms implied by fact

Terms implied by fact are inserted to reflect what the parties must have intended, even though it was not expressly stated. The courts will only imply such terms where it is necessary to give the contract business efficacy or where the term is so obvious that it goes without saying. These are known as the “business efficacy” and “officious bystander” tests.

The threshold is deliberately high. A term will not be implied simply because it appears reasonable. It must be necessary. For example, where an employee is engaged as an area sales manager and is provided with a company car, a requirement to hold a valid driving licence is likely to be implied. 

Terms implied by law

By contrast, terms implied by law arise automatically as a necessary incident of the employment relationship or by statute. These terms apply regardless of the parties’ intentions and cannot be excluded by agreement.

Paying the national minimum wage is a good example of a contractual term implied by law.

The most significant example is the implied duty of mutual trust and confidence, which requires both employer and employee not to act, without reasonable and proper cause, in a way likely to destroy or seriously damage the relationship between them. Other examples include the employee’s duty of fidelity, obligations relating to health and safety, and statutory rights such as National Minimum wage.

The HR takeaway

For HR professionals, the key distinction is that terms implied by fact are context-specific and depend on the particular contract, whereas terms implied by law are universal and non-negotiable.

A reminder that:

• Legal duties apply whether or not they are written into the contract
• Attempting to exclude or ignore terms implied by law is unlikely to be effective and may increase legal risk.

A clear understanding of both categories helps ensure that contractual arrangements are both robust and compliant.

8. Approved Mileage Allowance Payment (AMAP) rate revision 2026: What Changed, What It Means, and What You Should Check

For 14 years, the Approved Mileage Allowance Payment (“AMAP”) rate’s prolonged stagnation at 45p per mile had, by any measure, ceased to reflect the actual cost burden borne by employees using their own vehicles for business purposes. The Government’s April 2026 increase to 55p per mile for the first 10,000 business miles corrects that position, but in doing so it creates a series of compliance, payroll and policy obligations requiring prompt attention from HR practitioners.

What changed on 6 April 2026?

AMAP rates are established by HMRC and define the ceiling at which employers may reimburse employees for business mileage driven in a privately owned vehicle without triggering an income tax or National Insurance liability. Where reimbursement is made at or below the approved rate, the payment falls outside the scope of income tax under the Income Tax (Earnings and Pensions) Act 2003 and attracts no employer or employee National Insurance contributions. The revised rate of 55p per mile, effective from April 2026, replaces the 45p rate that had applied since 2011. 

Three Situations Worth Reviewing

i. You Are Currently Paying 45p Per Mile

If you have not yet updated your mileage rate to reflect the AMAP rate 2026 increase, your employees are being reimbursed below the current approved rate. They may be entitled to claim Mileage Allowance Relief on the shortfall, which is the difference between what you paid and the approved 55p rate.

Employees claim this through Self Assessment if they file a return, or through a P87 form if they do not. For someone driving 8,000 business miles reimbursed at 45p, the shortfall is 10p per mile, £800 in unclaimed relief. At the basic rate of income tax, that is £160, they could claim back.

ii. You Have Already Updated to 55p Per Mile

Your employees are being reimbursed at the approved rate, so there is no income tax or P11D issue on the mileage payments themselves. But as noted above, review the National Insurance Contributions position with your adviser before assuming the picture is entirely clean.

Also, check whether the change needs to be applied from 6 April 2026. Still, workers who drove business long hauls before in the time at the old rate may be owed a top- up for those peregrinations, if you streamlined your policy part- way through the duty time. 

iii. You Pay a Car Allowance and a Low Mileage Rate

Some employers pay a monthly car allowance as part of salary, then reimburse mileage at a rate below the AMAP rate, for example, 20p or 30p per mile. The car allowance is treated as earnings for PAYE and NIC purposes.

In this type of arrangement, employees may be able to claim Mileage Allowance Relief on the gap between what they received in mileage payments and the approved AMAP rate. The tax treatment of the car allowance itself is a separate question. If you run this kind of structure, it is worth a proper review to make sure both the employer and employee positions are correct.

This is not tax advice, and we urge you seek independent specialist tax advice in relation to these matters. 

9. Holiday Pay and The Fair Work Agency

The Fair Work Agency (FWA) officially launched on 7 April 2026, bringing together several existing employment enforcement bodies under one umbrella. Since its arrival, it has generated concern among HR teams about increased inspections, tougher penalties and greater scrutiny. The rules have not changed regarding holiday pay but from 2027, the FWA is expected to gain direct enforcement powers.

Why holiday pay is such a risk?

Holiday pay errors are common because calculations can quickly become complicated where employers have:

• overtime
• commission
• variable pay
• irregular hours workers
• part-year workers 

Many employers assume payroll systems are handling this correctly but that is not always the case.

The enforcement landscape is changing

Historically, holiday pay disputes largely depended on employees bringing tribunal claims themselves.

The FWA is expected to have powers to:

• investigate employers
• require records
• recover underpayments
• issue penalties
• potentially bring tribunal claims on workers’ behalf 

That significantly increases the potential exposure for employers with historic problems.

Record-keeping matters more than ever

From 6 April 2026, employers must keep adequate annual leave and holiday pay records for at least six years. 

Importantly, compliance is not just about paying correctly. Employers must also be able to evidence:

• leave taken
• carry-over arrangements
• how calculations were reached
• termination payments 

Failure to keep adequate records could itself become a criminal issue.

Common HR danger areas

In practice, the highest-risk scenarios often include:

• rolled-up assumptions about overtime
• inconsistent treatment of casual workers
• manual payroll overrides
• outdated holiday formulas
• disconnects between contracts and actual working patterns 

Practical takeaway

This transitional year before the FWA’s holiday pay powers become fully operational is a valuable opportunity for employers to carry out a meaningful audit, check policies and test the calculations where possible.

Holiday pay has long been one of the most litigated and one of the more complex areas of employment law. The arrival of the FWA may finally move it from being a tribunal issue to an enforcement issue. View our ‘Keeping Holiday Records’ factsheet here.

And finally, after ‘quiet quitting’, ‘coffee badging’ and ‘mouse jiggling’ we now have a new trending buzz phrase in HR – ‘loo lurking’. An AI career tool company Kickresume explains that the phrase refers to employees hiding in toilets for a few moments of peace when they feel overwhelmed, anxious or emotionally drained at work. According to Kickresume’s recent research, 44% of workers admitted taking what they described as ‘bathroom breaks for peace’.