Monthly Highlights – UK Employment Law – August 2025

In this month’s highlights, our team summarises the latest developments in UK employment law and their implications for employers.

1. In Chase v Northern Housing Consortium Ltd and another, the Employment Appeal Tribunal (“EAT”) ruled that disclosures made to an external investigator appointed by the employer can qualify as a protected disclosure.

What led to the dispute, and why is the outcome significant for employers?

• Mrs Chase was the Procurement Director at Northern Housing Consortium Ltd (“NHCL”), where she raised concerns about NHCL’s financial practices and the misuse of taxpayer money.
• NHCL commissioned external auditors to investigate the issue, but the auditors found no instances of wrongdoing. Mrs Chase claimed that evidence was withheld from the auditors during the investigation and subsequently resigned from her role.
• Mrs Chase brought a claim against NHCL, alleging that she was subjected to detriment and hostile treatment after raising concerns of wrongdoing. Mrs Chase claimed that she had been constructively dismissed on the basis that she made protected disclosures.
• The EAT considered whether such disclosures to an external investigator are protected, and ultimately overturned the Employment Tribunal’s judgment, finding that a disclosure to an external auditor did qualify for protection.
• In making its decision, the EAT commented that the whistleblowing protection regime would be undermined if employers could simply avoid it by externalising investigations into wrongdoing.

Takeaways

• A disclosure made to an external investigator can be protected depending on the circumstances.
• Disclosures made to a whistleblower hotline provided by the employer can also be protected.
• As external investigations become more popular, employers should be mindful of the need to protect individuals raising concerns from detriment or dismissal in the same way as they would for those who raise concerns internally.

2. The Government published its impact assessment on the cost of implementing a proposed ban on gagging clauses in discrimination and harassment cases.

Takeaways

• The assessment found that the non-monetised benefit of reduced harassment and discrimination – arising from more individuals being able to disclose allegations of wrongdoing – is likely to outweigh the costs faced by employers in implementing the policy.
• The assessment comments that the costs of Acas and employment tribunal services are likely to increase, since employers will be less willing to settle claims.

3. In Shawcross v SMG Europe Holdings Ltd and ors, the EAT held that correspondence between a former employer and its legal advisor could not be relied upon by a claimant under the “iniquity exception.”

What led to the dispute, and why is the outcome significant for employers?

• The claimant (“S”) was dismissed by SMG Europe Holdings Ltd (“SMGEH”). Two days earlier, S was copied into an email chain between SMGEH and its legal representative. The email chain included a draft dismissal letter.
• SMGEH claimed that these emails were subject to legal advice privilege, meaning that they were protected from being disclosed in court. However, S argued that these emails could be relied on in her claim because they fell within the “iniquity exception.”
• The “iniquity exception” overrides the usual protection against disclosure given to confidential communication between a lawyer and their client when the documents or communication were brought into existence to further a crime, fraud or other serious misconduct.
• S argued that these emails fell within the iniquity exception, alleging that they showed that her former employer had fabricated both the reason for her dismissal and the identity of the decision maker.
• The EAT dismissed S’s appeal and held that, objectively and read as a whole, the discussion between SMGEH and its lawyer was not about fabricating a false position or acting in an underhanded way.
• This outcome is significant because it reinforces that communications with legal advisors are subject to legal advice privilege, allowing employers to speak candidly with their legal advisers.

Takeaways

• Communications between an employer and its legal adviser are privileged communications that are confidential and cannot be disclosed without the employer’s consent. Employers should be able to speak openly with their legal advisors.
• The threshold for applying the “iniquity exception” is high. It will only be triggered when, taken as a whole, the communication or documents are in furtherance of an illegal act or some other serious misconduct.

4. In Haynes v The English Blackball Pool Association, the county court found that no discrimination had taken place after the pool association decided to exclude transgender women from the female category of the competition.

What led to the dispute, and why is the outcome significant for employers?

• The pool association decided to exclude transgender women from appearing in the female category of a pool competition.
• The claimant was a transgender woman with a Gender Recognition Certificate. The claimant alleged that the decision to exclude transgender women was direct gender reassignment discrimination.
• In the first decision dealing with transgender discrimination since For Women Scotland v Scottish Ministers (“FWS”), the claim was dismissed and the county court found that no discrimination had taken place.
• The court found that, in light of FWS, “sex” in the Equality Act refers to biological sex, rather than certified sex. On this basis, the correct comparator for the claimant was a man without the protected characteristic of gender reassignment. Given that a man would also have been excluded from the female competition, the court found that no discrimination had taken place.

Takeaways

• “Sex” in the Equality Act 2010 refers to biological sex rather than gender identity.
• However, employers should still ensure that they balance the rights of both trans people and non-trans people when deliberating on issues that affect both groups. Taking measures without due consideration for all those affected could still be deemed discriminatory. It is important to engage in open dialogue with those affected.