The Employment Edit – Issue 10 – March 2025

Welcome to the tenth edition of The Employment Edit – a summary of the most important recent cases and news affecting employers in the UK. We hope you find this newsletter helpful and informative. In this edition we look at:

• the revised Employment Rights Bill;
• the right to take neonatal care leave and pay with effect from 6 April 2025;
• whether an employee’s dismissal for expressing controversial beliefs on Facebook was discriminatory;
• whether an award of compensation for ‘injury to feelings’ for failing to deal with a grievance could be overturned because it was excessive; and
• potential claims against employers for loss of permanent health insurance (PHI) benefits when an employee on long term sickness absence is dismissed.

The Employment Rights Bill

We attach a link to a briefing paper on the latest draft of the Employment Rights Bill, which summarises the key proposals which will affect private sector employers. This is the most significant programme of employment law reform in the UK for many years and will significantly affect all employers, in particular the removal of the two-year qualifying period for unfair dismissal, the increased time limit for bringing Employment Tribunal claims, limits on the ability to fire and rehire or replace staff on revised terms, and increased protections and entitlements around family-related leave. Although the changes set out in the Bill are not due to come into force until 2026 at the earliest, and much of the detail remains to be decided and set out in supplementary regulations and guidance, employers will need to keep on top of the proposals as they develop, and make sure that that they are well prepared to update contracts, policies and working practices as the various proposals are finalised and come into force.

Neonatal Care Leave and Pay in force from 6 April 2025

The Government has published further draft regulations to bring new rights to take Neonatal Care Leave and pay into force from 6 April 2025, subject to final parliamentary approval:

• The Neonatal Care Leave and Miscellaneous Amendments Regulations 2025 (the Regulations) 
• The Statutory Neonatal Care Pay (General) Regulations 2025

As we previously reported the Neonatal Care (Leave and Pay) Act 2023  received Royal Assent on 24 May 2023 but further regulations were required to bring the new rights into force.

Eligible employees will be entitled to one week of neonatal care leave (NCL) for each complete week their child spends in neonatal care, up to a maximum of 12 weeks. It is a ‘day one’ right i.e. there is no minimum service requirement for this right to apply. NCL must be taken in blocks of complete weeks, and the employee must comply with certain notice requirements (unless the employer and employee agree to waive these).

In order to be eligible for NCL, neonatal care must begin with 28 days of the child's birth and last for an uninterrupted period of at least seven days. NCL must be taken within 68 weeks of the child's birth and may be taken together with other types of statutory family leave.

Eligible employees with 26 weeks' continuous service at the relevant date will also be entitled to neonatal care pay (NCP), which is calculated in broadly the same way and paid at the same rate (£187.18 per week from 6 April 2025) as statutory pay for other types of family related leave e.g. maternity pay.

For the purposes of the entitlement to NCL, neonatal care means:

• medical care received in a hospital.
• medical care received in any other place where:
  • the child was an inpatient in hospital and the care is received upon that child leaving hospital;
  • the care is under the direction of a consultant; and
  • the care includes ongoing monitoring by, and visits to the child from, healthcare professionals arranged by the hospital where the child was previously an inpatient.
• palliative or end of life care.

To be eligible for NCL, the employee in question must have a qualifying parental relationship with the relevant child and must be taking the leave to care for that child. In addition to birth cases, NCL may be taken where a child is adopted, including in overseas adoptions and surrogacy cases. NCL will be available to any employee who at the time of the birth is a parent or intended parent who has, or is expected to have, responsibility for the child’s upbringing. The entitlement to NCL extends to the partner of the child’s mother or primary adopter who has, or expects to have, the main responsibility for the upbringing of the child together with the mother or primary adopter.

The Regulations provide for ‘tier 1’ and ‘tier 2’ periods of NCL as follows:

• the tier 1 period begins the day the child starts receiving neonatal care and ends the seventh day after the child stops receiving such care. NCL taken during the tier 1 period can be taken in non-continuous blocks of one week each;
• a tier 2 period means a period which is not a tier 1 period but where an employee is entitled to take NCL. NCL taken during the tier 2 period must be taken in one continuous block.

Tier 1 NCL therefore covers a scenario where a child begins receiving care shortly after birth before another period of family leave has started. This scenario is likely to be relatively rare because the child’s mother or primary adopter is likely to be on maternity or adoption leave at that time. It is most likely to be relevant in a situation where the employee in question is not entitled to take another type of family leave on birth or placement for adoption such as where a partner does not have the requisite qualifying service to take paternity leave.

In most cases, it is likely that NCL will be taken in the tier 2 period and will begin at the end of another period of family leave such as maternity leave. In effect, the entitlement to NCL will give parents whose baby is in neonatal care during the first part of their maternity or paternity leave some additional leave before they return to work.

The Regulations apply in respect of multiple births where more than one child requires neonatal care. However, the maximum leave which can be taken by each parent remains at 12 weeks.

Employees taking NCL will be entitled to similar protections as other employees taking statutory family-related leave. This will include:

• entitlement to the benefit of the terms and conditions of their employment which would have applied had they not been on leave, except for those relating to remuneration; 
• the right to return to the same or another suitable role at the end of their leave;
• protection from redundancy during and for a period after taking NCL; and
• protection from detriment and unfair dismissal.

Where an employee has a separate contractual right to take leave where a child is receiving neonatal care, they may not take both their contractual and statutory NCL but may take the leave which is most beneficial to them.

Takeaway: after waiting many months for the detail of these new statutory rights, employers now have a relatively short period in which to understand and put in place policies to cover this relatively complex new regime of NCL and NCP. If you need assistance with putting a Neonatal Care Leave and Pay policy in place, please speak to your usual contact in the London Employment team.

Dismissal for expressing controversial views on Facebook was discriminatory

In Higgs v Farmor’s School, the Court of Appeal (CA) found that the dismissal of an employee for expressing controversial beliefs on Facebook constituted unlawful discrimination on the grounds of religion or belief.

In summary, under the Equality Act 2010 (EqA), the dismissal of an employee because they have expressed a religious or other protected belief (in this case ‘gender critical’ beliefs) will constitute unlawful direct religion or belief discrimination. However, in some cases an employer may be motivated to dismiss the employee not because of the belief itself, but because the employee has expressed or manifested their belief in a way which the employer finds objectionable. In such a case the dismissal may be lawful but only if the employer can show that dismissal was a proportionate response to the objectionable conduct, or in other words that it was ‘objectively justified.’

Mrs Higgs was employed by a school as its pastoral administrator and work experience manager. She posted content on Facebook (mainly written by other people) objecting to Relationships education in primary schools because it equated same-sex marriage with marriage between a man and a woman, and because it promoted gender fluidity. A parent at the school complained that the content was homophobic and prejudiced against the LGBT community. Following a disciplinary process, Mrs Higgs was dismissed for gross misconduct. She brought a claim for direct discrimination and harassment related to religion or belief, alleging that she had been dismissed because of her beliefs, namely her lack of belief in gender fluidity, and her religious objections to same sex marriage.

Following previous case law, there was no dispute that Mrs Higgs’ beliefs were protected under the EqA. However, the employer argued that she had been dismissed not because she held those beliefs, but because of the way in which she had expressed them – in language which it described as ‘inflammatory and quite extreme.’ The school believed that the posts could damage its reputation. However, there was no evidence that the school’s reputation had in fact been harmed. The posts were on Mrs Higgs’ personal Facebook page, using a previous name, and did not mention the school. It was unlikely that anyone reading the posts would consider that these were the views of the school. Whilst the CA agreed with the employer that the language of the posts was objectionable, it was not grossly offensive and was not intended to incite hatred or disgust. Mrs Higgs had not discussed her beliefs or displayed any discriminatory behaviour at work. She was a long serving employee and no complaints had been made about her work. The CA concluded that, although the employer was entitled to object to Mrs Higgs’ posts, its decision to dismiss Mrs Higgs was unquestionably disproportionate.

Takeaway: employers often face challenges in balancing the protected beliefs of different groups especially where beliefs are controversial and potentially offensive to some. Where an employer’s concern relates to the way in which beliefs are expressed rather than the beliefs themselves, the employer may in some cases be able to take action if, for example its reputation will be damaged by an employee expressing controversial beliefs in a public forum, such as on social media. This case clarifies that while an employer may be able to take action in such cases, such action must be objectively proportionate.

£10,000 compensation for failing to deal with a grievance properly was ‘manifestly excessive’

In Eddie Stobart Ltd v Graham, the Employment Appeal Tribunal (EAT) found that an award of £10,000 for injury to feelings where an employer had made procedural errors in dealing with a grievance was ‘manifestly excessive.’ It substituted an award of £2,000.

Miss Graham was employed by Eddie Stobart for just over ten months as a planner. In October 2021 she informed her employer that she was pregnant. Separately, in March 2022 she was put at risk of redundancy as a result of a reorganisation. Miss Graham raised a grievance about way in which the redundancy process was handled, but due to IT system issues, her grievance was not addressed. In the Employment Tribunal (ET) she brought successful claims for pregnancy and maternity discrimination and detrimental treatment related to pregnancy, childbirth or maternity.

The EAT acknowledged the difficulty of assessing of compensation for ‘injury to feelings’ as this involves a subjective assessment of feelings such as anxiety, mental distress or humiliation. Guidance is given to Tribunals by the so-called ‘Vento Bands’ which set out guideline levels of compensation depending on the seriousness of the case. Miss Graham had been awarded an amount which was in the middle Vento band.

The EAT noted that ideally a claimant should provide the ET with evidence of the injury suffered, which in this case had been ‘scant.’ When questioned by the ET, whilst Miss Graham said that she was ‘shocked and upset,’ the incident appeared to have had no lasting effect on her.

In the absence of sufficient direct evidence, the ET could draw inferences about the injury suffered, by considering the manner or seriousness of the discrimination concerned. Here, the discriminatory conduct on the part of the employer was limited in its scope and impact. It was an isolated procedural failing which related to a grievance which was ultimately found to have no merit. The EAT inferred some additional injury arising from the fact that Miss Graham was chasing up her grievance at a time when she should have been enjoying her maternity leave. However, this was not a case where an award in the middle Vento band was appropriate. The EAT substituted an award of £2,000 which was toward the lower end of the lower Vento Band.

Takeaway: this is a reminder of the way in which ETs should approach the assessment of compensation for injury to feelings in cases where an employee has suffered unlawful discrimination or detriment and highlights the appropriate range of compensation in such cases. In particular, in cases where discrimination has occurred but injury to feelings is limited, compensation payments will be correspondingly relatively low. The case also highlights the need for evidence of any injury to feelings which has arisen. Employers may wish to consider challenging employees’ claims where adequate supporting evidence has not been provided.

Claims for loss of PHI benefits where an employee on long term sick leave is dismissed

Ms McMahon was employed by AXA from January 2000 until her dismissal in September 2013. She was on sick leave from September 2010 until her dismissal. She brought a series of claims against her former employer which included claims in relation to the payment of benefits to her under a permanent health insurance (PHI) scheme offered by AXA to its staff.

On 25 June 2013, whilst she was still employed by AXA, Ms McMahon brought a successful claim for ‘unlawful deduction of wages’ based the failure by AXA to pay benefits to her under the PHI scheme. Initially the claim covered the three year period while she was on long term sick leave but still employed by AXA. However following her dismissal she sought to amend the claim to include a period of around nine years following her dismissal. She also challenged the way in which payments under the PHI scheme should be calculated. Both parties appealed to the EAT on a number of points. The EAT made the following key findings:

• Payments  made under a PHI scheme to an employee who is on long term sick leave fall within the definition of ‘wages’ in respect of which an employee may bring an ‘unlawful deduction from wages’ claim. However, following dismissal an employee cannot bring an ‘unlawful deduction from wages’ claim but should instead bring a breach of contract claim in relation to the lost PHI benefits. Ms McMahon had not brought a breach of contract claim and therefore she was only able to recover ‘unlawful deductions’ relating to the period when she was still employed.
• AXA’s obligation under the PHI scheme was not simply to maintain a policy of insurance that would pay out benefits to eligible employees. This was because the relevant documentation (including the employment contract, the contractual Employee Handbook, and a document from HR describing the PHI benefits) did not limit the employer’s obligations in this way. AXA’s appeal on this point was dismissed.
• In determining how the compensation due to Ms McMahon should be calculated, the EAT found that the way in which the PHI scheme had been described in the various documents provided to its staff by AXA meant that payments due to Ms McMahon under the PHI scheme should be calculated on the basis of her basic salary only. Payments should not include overtime, or salary increases that might have been received had she remained at work. She was, however, entitled to a 5% annual increase in the amount of benefit being paid under the scheme.

Takeaway: this case is a reminder that where an employer offers PHI benefits to its employees, any documents provided to employees which refer to the PHI benefit – such as employment contracts, employee handbooks (especially where they are stated to be contractual), and other communications from HR describing benefit packages offered to employees - must be carefully drafted to avoid creating unintended direct liabilities on the part of the employer. Typically employers will wish to assume an obligation only to maintain an appropriate insurance policy to provide such benefits to eligible employees. Employers may also wish to consider including in their employment contracts appropriate provisions permitting the dismissal of employees who are on long term sick leave even where this may deprive the employee of benefits under the PHI scheme.