Employment in the news | May 2025

Chapter 1 Disciplinary investigation caused psychiatric injury

Employers have a duty to take reasonable care to prevent or reduce harm to an employee if the risk of injury is reasonably foreseeable. In Woodhead v WTTV Ltd, the High court found that an employer’s handling of a harassment complaint breached its duty of care to the accused employee.

Mr Woodhead’s employer invited him to a lengthy investigation meeting to discuss harassment allegations against him. He was not told the purpose of the meeting in advance, or given a copy of the complaint. Mr Woodhead subsequently experienced a recurrence of a serious depressive illness. He argued that the employer’s subsequent actions, including attempts to progress the investigation while he was on sick leave, breached its duty of care and caused him psychiatric injury.

The Court found that it was reasonably foreseeable that Mr Woodhead was at risk of psychiatric injury because of his medical history. Once the employer knew about that, aspects of how it approached the continuing disciplinary investigation were a breach of its duty of care. These included putting undue pressure on Mr Woodhead to provide a rapid written response to the allegations; not telling him that some of the original complaints were not being pursued; attempting to continue the disciplinary process during his absence when he was not fit to participate; and trying to require him to see an occupational health adviser when the potential benefits were limited and the employer already had sufficient medical evidence.

Next steps

• Harm was not reasonably foreseeable when the employer first began the investigation – risk of psychiatric injury is not inherent in a disciplinary procedure.
• However, the position changed once the employer knew about the employee’s psychiatric history.

Employers in this situation need to balance a desire to investigate harassment complaints promptly against their obligations to an employee accused of misconduct.

Chapter 2 TUPE didn’t transfer employer’s vicarious liability to a third party

Several recent claims have argued for an expansive approach to the employment-related liabilities that transfer under TUPE. In the latest decision, ABC V Huntercombe (No. 12) Ltd, the High Court confirmed that an employer’s vicarious liability for the acts of a transferring employee did not transfer.

Although the facts of the claim are not entirely clear, it appeared to relate to medical negligence in connection with treatment the claimant received at a hospital owned by Huntercombe. She argued that Huntercombe was vicariously liable for the acts of two of its employees. Huntercombe subsequently sold the business to an organisation called Active Young People (AYP) and the relevant employees transferred under TUPE. The Court had to decide whether any liability to the claimant remained with Huntercombe or transferred to AYP under TUPE.

The Court found that liability remained with Huntercombe. Although TUPE operates to transfer rights, powers, duties or liabilities “under or in connection with” any contract of employment, vicarious liability to a third party does not arise in connection with the transferring contracts of employment. The purpose of TUPE is to safeguard the rights of employees. For liability to transfer, there has to be a close connection between the liability in question and the employment relationship. A personal injury claim from a third party has a completely different character and is not fundamental to the employment relationship. Although liability would not have arisen “but for” the employment contract, this was not sufficient for liability to transfer.

Next steps

• The decision confirms that there are limits to the circumstances in which a liability will arise “in connection with” a contract of employment.
• TUPE transfers liabilities the transferor has to an employee, and any vested rights the employer has against a third party (eg an insurer) that are contingent upon such a liability.
• Vicarious liability to a third party is too remote to pass given TUPE’s purpose.

Chapter 3 Nothing compares to you – outsourcing pay discrimination claim fails

In Djalo v Secretary of State for Justice, the claimants were a group of outsourced workers engaged by a facilities manager that provided services to the Ministry of Justice (MoJ). The workers brought an indirect race discrimination claim against the MoJ, trying to compare their pay with that of MoJ employees. They argued that the MoJ applied a provision, criterion or practice of paying direct employees and outsourced employees different rates and that this put outsourced employees, who were disproportionately black or other minority ethnicity, at a disadvantage.

The claim failed. The EAT applied the earlier Court of Appeal decision in The Royal Parks Ltd v Boohene, which held that the Equality Act does not allow contract workers to bring a pay related discrimination claim against the client in an outsourcing arrangement. There was nothing on the facts of the case that allowed it to be distinguished from Boohene so the Court of Appeal decision was fatal to the claimants’ case.

An argument that because it would be possible to bring a sex related equal pay claim, it was a breach of the claimants’ human rights not to allow them to bring an indirect race discrimination claim, was flawed. The claimants would not have been able to bring an equal pay claim against the MoJ as there was no “single source” that was responsible for any pay inequality. The MoJ and the facilities manager decided the pay of their own employees.

Next steps

• The claimants have indicated that they intend to pursue their claims further. However, the Supreme Court has refused to hear an appeal in Boohene.
• One of the questions in the government’s equality law call for evidence is whether outsourced employees should be able to use a client’s employee as a comparator in an equal pay claim, including potentially in relation to race and disability as well as sex.

This would be a significant change to the existing legal position.