Welcome to Employment Today,

Here's our latest Employment newsletter, we hope you will find it useful. If you have any feedback, please send it through by replying to this email.

Proactive preparation for the incoming unfair dismissal reform

In December 2025, the Employment Rights Act 2025 (the Act) received Royal Assent. Since then, employers have been preparing for, and responding to, the phased implementation of incoming reforms. A key change is the reduction in qualifying service requirements for unfair dismissal claims. This article walks through the changes, the impact of the same, and preparatory steps employers should be taking.

Current law and incoming reform

As the law stands today, employees cannot bring an unfair dismissal claim unless they have been employed for a minimum of two years. Additionally, the compensatory award is capped at 52 weeks' gross pay or £118,223, whichever is lower.

Since it came into force in 2012, the two-year prerequisite has acted to protect employers against excessive litigation and mitigate financial risk. On 1 January 2027, however, this period will be reduced from two years to six months and the cap on any compensatory award will be removed.

In practice, any employees hired on or before 1 July 2026 will be able to access these new protections and claim unfair dismissal if they are dismissed after 1 January 2027. Therefore, though the legal change will be felt by employers in January, the practical change comes far sooner.

The government estimates that Employment Tribunal claims will increase by 17% with impact assessments estimating an increase of extra 6,900 cases being heard.

How employers can prepare for the changes

Strong recruitment processes and new starter programmes will be key for employers to mitigate the risk of extra claims and, therein, added exposure to financial risk.

To proactively prepare for the change, employers should:

Cunningham v BBC: when does an employer "know" enough to trigger disability duties?

The EAT’s decision in Cunningham v British Broadcasting Corporation [2026] EAT 92, is a useful reminder that employers cannot avoid disability discrimination duties simply because occupational health advice is unclear or because an employee’s condition has not been formally accepted as a disability. If the employer knows enough to be put on enquiry, it may be expected to ask further questions. The case is also a practical warning that employers must engage with the specific adjustment proposed.

Facts

The Claimant had worked for the BBC since 1987 as a television presentation announcer/director for BBC Scotland. Her role involved controlling broadcast content and making continuity announcements. The team worked an eight-week rota, including early shifts, day shifts and late shifts, some of which ended after midnight.

In March 2023, the Claimant told her manager that she had been diagnosed with type 2 diabetes and was experiencing fatigue. She was referred to occupational health (“OH”) and was signed off work for a period. She later asked for an accommodation while adjusting to her diagnosis, expressly referring to type 2 diabetes as being “classed as a disability”. She explained that shift work caused difficulties because of the lack of routine, disruption to sleep and irregular meal breaks.

The BBC made some adjustments, removing her from early shifts and the BBC One Late shift, which could finish at 3am. However, she continued working the BBC Scotland Late shift, which finished at 12.30am. OH later confirmed that she should not work shifts ending on or after midnight.

On 7 June 2023, while working an evening shift, the Claimant made a broadcast error by going “into circuit” late for a live news broadcast. This led to a formal disciplinary process, although no formal action was ultimately taken.

The Claimant brought claims for discrimination arising from disability and failure to make reasonable adjustments. The Tribunal dismissed the claims, but the EAT allowed the appeal on knowledge and reasonable adjustments, substituted a finding that the BBC had knowledge of disability, and remitted the reasonable adjustments claim to a fresh tribunal.

The EAT's decision

The EAT allowed the appeal on the issues of knowledge and reasonable adjustments:

The EAT did, however, reject the challenge to the Tribunal’s finding that the broadcast error was not caused by exhaustion arising from disability. Disability may be relevant to how employers investigate performance or conduct concerns, but it does not automatically prevent an employer from investigating an error where there is a legitimate reason and the process is proportionate.

Practical takeaways for employers

This case is a useful reminder that disability knowledge and reasonable adjustments are practical, evidence-based assessments, not purely formal exercises. In summary:

The practical message is that employers should be proactive. Where an employee discloses a long-term condition, explains how it affects their work, and OH refers to adjustments, employers should actively interrogate what they know, what they still need to ask, and whether the adjustments in place genuinely remove the disadvantage.

Costco Wholesale UK Ltd v Nash

This case concerned Costco’s application for an extension of time to file its ET3 response, which was submitted around ten months late.

Background

Mr Nash was employed by Costco as a Member Services Assistant at its Chingford warehouse from 27 July to 30 September 2022, when he was dismissed for allegedly failing his probation. He complained to the warehouse General Manager about his treatment and alleged race discrimination.

He presented his ET1 on 27 December 2022, bringing complaints of direct race discrimination and race-related harassment. The ET1 gave the correct address for the Chingford warehouse, which was able to receive post.

Costco filed its ET3 on 22 December 2023, around ten months late, and applied for an extension of time. It said it had only become aware of the claim on 19 December 2023, when a preliminary hearing record was sent to head office. The Tribunal rejected that explanation. It found that four items of Tribunal correspondence had been received at the warehouse and ignored. It also found that six emails about the claim had been received by the General Manager and actively deleted, rather than diverted to spam.

The Tribunal therefore found Costco’s explanation for the delay to be untrue and refused the extension, limiting Costco’s participation in the liability hearing to submissions on the law.

EAT decision

The EAT dismissed Costco’s appeal and upheld the refusal to grant an extension of time.

The EAT confirmed that the familiar Kwik Save factors are not rigid threshold tests. They are factors to be weighed in the round, against the overriding objective.

The explanation for the delay was critical. The longer the delay, the more important it is for the employer to provide a full, honest and satisfactory explanation. Here, the delay was very substantial and the explanation was rejected as untrue.

The EAT also rejected Costco’s argument that the Tribunal had approached prejudice incorrectly. The Tribunal did not have to decide which party would suffer greater prejudice as a separate, binary question. It was entitled to consider the prejudice to both parties as part of its overall assessment.

The fact that Costco would be prevented from defending a race discrimination claim was plainly serious, but it was not decisive. The Tribunal was entitled to take into account that Costco’s prejudice was caused by its own default.

On the merits, the EAT confirmed that showing a defence has 'some merit' does not automatically mean an extension should be granted. The Tribunal was entitled to conclude that Costco’s draft response was not strong enough to outweigh the seriousness of the delay, particularly where it lacked detail and was unsupported by substantive witness evidence.

What this means for employers

This decision is a sharp reminder that Tribunal correspondence must be treated seriously and escalated immediately. Employers should ensure that there are clear processes for dealing with post and emails received at operational sites, not just head office. Ignoring or deleting correspondence can have significant consequences, including losing the ability to defend a claim on liability.

Where an extension of time is needed, the application should be detailed and supported by evidence. An honest explanation for what went wrong is likely to be far more persuasive than an explanation which seeks to avoid responsibility but cannot withstand scrutiny.

Employers should also ensure that any draft ET3 is properly particularised. If the employer wants to rely on the strength of its defence, it needs to explain that defence clearly and, where appropriate, support it with witness evidence.

Q: In a disciplinary process, can the investigator also chair the hearing?

A: Unless your business is particularly small or the accused is particularly senior and there is no-one else to do it, no. The ACAS code states that ‘where practicable, different people should carry out the investigation and disciplinary hearing’.