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.

Increase in employment tribunal awards and statutory payments from April 2026

Key figures and changes for employers and employees

Beginning April 2026, new statutory limits for Employment Tribunal awards and payments will come into effect. These annual increases act to keep payments and compensation in line with inflation and changes in the retail prices index, ensuring that they remain fair and reflective of economic realities.

Updated tribunal award limits

One of the most notable changes is to the maximum compensatory award for unfair dismissal claims.

The Employment Rights (Increase of Limits) Order 2026 (SI 2026/310) provides that, from April 2026, this maximum compensatory award is expected to increase from £118,223 to £123,543. This adjustment provides greater financial protection for employees who are found to have been unfairly dismissed.

The Order also includes the following revised figures:

Other key statutory payments

The Social Security Benefits Up-rating Order 2026 (SI 2026/148) implements the following increases:

Next steps

Employers should review contracts, policies, and payroll systems to ensure compliance with these new statutory figures.

Employees are encouraged to be aware of their rights and the enhanced compensation available under the updated limits. These annual adjustments underline the government’s commitment to protecting workers and adapting employment law to economic trends.

The government's position on unpaid internships

The government has published its response to their 'Making Work Pay: Call for Evidence on Unpaid Internships' report. With 358 responses received from employers, workers, and sector stakeholders, the government’s findings reflect a broad and detailed picture of current practices.

Current legal position

Under current UK law, there is no statutory definition of an “intern”, and many roles described as internships may, in reality, meet the legal test for worker status. Where an individual qualifies as a worker, they are entitled to the National Minimum Wage (NMW), regardless of what the role is called.

Only limited exceptions exist. These include: students undertaking accredited educational placements, certain volunteering roles, and specific charity-based positions. Genuine work shadowing (where an individual observes but does not perform productive work) is generally lawful and unpaid. However, concerns remain that some employers incorrectly categorise individuals as volunteers or work-shadowers to circumvent NMW obligations.

The government’s call for evidence revealed concerns across several areas:

The evidence also highlighted that many interns, especially those from lower-income backgrounds, are effectively excluded from unpaid opportunities because they cannot afford to work for free. This creates a barrier to entry for certain industries that rely heavily on internships, contributing to inequality and limiting social mobility.

Government response

In response to the findings, the government has announced several significant steps:

Practical steps for employers

Employers should take proactive steps now to ensure compliance and prepare for upcoming changes:

Defining whether an individual is a worker or not can be a complicated legal question. If you are unsure whether your interns meet the legal test for worker status, do not hesitate to reach out to our Employment team at Michelmores.

Nestlé loses vaping dismissal case: Mr L Billings v Nestlé UK Ltd

An employee who triggered a fire alarm by vaping in the toilets has won an unfair dismissal case against Nestlé. The Employment Tribunal ruled that a failure to apologise is not a reasonable reason for dismissal. Nestlé was ordered to pay £22,216.72 in compensatory awards.

Background

Mr Billings worked for Nestlé from 2012 to 2023, when he was dismissed. Prior to the incident, Mr Billings had been off sick for over a year due to depression. He was on a phased return to work when the incident occurred.

In October 2023, the fire alarm went off in a Nestlé production factory, causing a full staff evacuation and the cessation of production until it was deemed safe to return. Despite initially denying that he vaped at all, an investigation uncovered that Mr Billings’ act of vaping in the toilet had triggered the alarm.

Nestlé dismissed Mr Billings on the grounds of misconduct, namely:

The Claimant’s internal appeal was dismissed.

The claim

Mr Billings claimed Unfair Dismissal, Direct Discrimination, and Discrimination Arising from Disability.

To support his claim, Mr Billings relied on a recent comparable situation involving a different employee storing his washbag of clothing in a place that posed a health and safety risk. The employee admitted his mistake and apologised. As a result, he remained in employment, albeit with a final written warning.

In the Tribunal, the disciplinary manager admitted that if Mr Billings had accepted his mistake and apologised, like his comparator, he would have kept his job.

Judgment

The Tribunal found that Mr Billings' lack of apology had been the determining factor behind the dismissal. It was found that Nestlé had treated Mr Billings less favourably than his comparator.

This less favourable treatment was not related to his disability, and so, the claims of direct discrimination and discrimination arising from disability were dismissed.

When it came to unfair dismissal, the Tribunal found that the decision to dismiss fell outside the range of reasonable responses. Their judgment hinged on the fact that “Failing to apologise or to accept responsibility is not misconduct.” Additionally, there was no clear rule or warning that smoking or vaping in the toilets would amount to an act of gross misconduct. The Tribunal stipulated that a reasonable employer would have made that clear.

Remedies

The total compensation was £44,433.40, however, the Tribunal held Mr Billings' conduct contributed to his dismissal. Accordingly, the compensatory award was reduced by 50% and Nestlé was ordered to pay Mr Billings £22,216.72.

What employers can learn from Nestlé’s mistakes

With the Employment Rights Act 2025 reducing the qualifying service requirement to bring an unfair dismissal claim, and removing the statutory cap on compensation, employers are likely to be exposed to more Tribunal claims with higher financial risk. This case reminds employers to ensure policies explicitly state that actions such as smoking or vaping in prohibited areas constitute gross misconduct.

Additionally, it tells employers that a failure to apologise, or a refusal to admit wrongdoing, is not in itself misconduct.

Q: In a grievance process, can the person investigating the grievance also chair the grievance hearing?

A: Yes, the roles of investigator and decision-maker may be combined, unlike in disciplinary matters where different people should carry out the investigation and hearing. The key consideration is that the chair is impartial and is not involved in the issues that have led to the employee's grievance.