Top 5 recent workplace developments – May 2026

Stay informed with our roundup of the latest employment law developments.

1. Employee benefits: Unlawful deduction from wages
2. Contract: Withdrawal of conditional job offer
3. Settlement: “Protected conversations”
4. Disability discrimination: Reasonable adjustments
5. Data protection: New complaints process

1. Employee benefits: Unlawful deduction from wages

A recent Court of Session decision illustrates the dangers of failing to implement contractual employee benefits.

Ms McMahon’s employment began in January 2000. Her employment contract included a PHI scheme under which, after 26 weeks’ absence due to ill health, she would receive 75% of her salary until recovery or age 65. Although the contract stated that these benefits would be secured by an insurance policy funded by the employer, this was not put in place. Ms McMahon became eligible for PHI benefits in May 2011 but received no payments and was dismissed in September 2013 on the grounds of long term incapacity.

Ms McMahon brought a claim for unauthorised deductions from wages, initially seeking payment of PHI benefits for the period prior to her dismissal. She later sought to extend the claim to cover PHI payments following dismissal, arguing that an implied term prevented her employer from dismissing her while she was incapacitated, and her dismissal did not remove her entitlement to PHI benefits. The Employment Tribunal allowed the claim in relation to the pre dismissal loss but refused to permit the claim for post dismissal loss to proceed. The EAT upheld that decision, concluding that the post dismissal sums were not “wages” and that her remedy lay in breach of contract.

However, the higher appeal court in Scotland, the Court of Session, allowed Ms McMahon’s appeal. Although her employer had failed to take out the PHI policy, this did not extinguish Ms McMahon’s rights, and it was liable to make the payments. It held that PHI payments can fall within the legal definition of “wages” and that her claim for post-dismissal losses was not restricted. The Court also accepted that her employer’s liability to pay PHI benefits could survive dismissal, a conclusion which could be supported in two different ways (either because it was a collateral contractual obligation or because an implied term prevented dismissal for the purpose of avoiding PHI liability). The case was returned to the Tribunal. 

Practical point

Employers should carefully review PHI arrangements to ensure promised benefits are fully covered by insurance and properly implemented. Where they are not, employers may be exposed to ongoing payment obligations even after employment ends and employers should be cautious about dismissing employees simply to avoid accruing further liability. 

Court of Session decision

2. Contract: Withdrawal of conditional job offer

The EAT has ruled that withdrawing a conditional job offer without notice, shortly before the prospective employee’s start date and for reasons unrelated to the conditions, amounted to a breach of contract.

Mr Kankanalapalli was offered a project manager role subject to three conditions: satisfactory references, a right to work check and successful completion of a six month probationary period. The offer letter set out key contractual terms (including start date, pay, hours, holiday, bonus and pension) but did not include a notice provision. He accepted the offer and provided the requested onboarding documentation, including referee details and right to work evidence (with originals to be produced on his first day). Loesche Energy Systems (LES) subsequently withdrew the offer, citing project delays.

The Tribunal dismissed the claim, finding there was no binding contract because the offer remained conditional at the point of withdrawal. 

The EAT overturned that decision. It held that the stated conditions were properly characterised as conditions subsequent (operating after the contract had been formed), rather than conditions precedent (which had to be fulfilled before the contract was binding). This was because the conditions were grouped together without distinction and successful completion of a probationary period can only occur after employment has commenced.

Accordingly, a binding contract had been created. LES was therefore in breach by terminating that contract without notice. As the contract did not specify a notice period, the EAT implied a term of reasonable notice, which was assessed at three months in light of Mr Kankanalapalli’s seniority, the length of the recruitment process, the international relocation, and LES’s suggestion that he should enter into a 12 month tenancy.

Practical points

This case highlights the importance of precise drafting and the careful handling of conditional offers.

Offer letters should clearly state whether pre-employment requirements are conditions precedent (preventing a contract from arising) or conditions subsequent (allowing termination if unmet). 

Kankanalapalli v Loesche Energy Systems Ltd

3. Settlement: “Protected conversations”

A recent EAT decision highlights the scope of protection afforded by “protected conversations” and when that protection may be lost.  

Pre-termination negotiations with an employee can be treated as confidential “protected conversations”, meaning they are generally inadmissible as evidence in ordinary unfair dismissal claims (but not, for example, automatic unfair dismissal or other statutory claims), provided there is no “improper behaviour”.

Mr Tarbuc was invited to a meeting by the managing director, described as a “protected conversation”, at which a settlement offer was made. He declined the offer and was subsequently dismissed. He brought claims for unfair dismissal, unlawful deductions from wages and less favourable treatment as a part-time worker. He alleged that the meeting was arranged without notice, that he was not given the opportunity to be accompanied, and that he was threatened with redundancy if he refused the offer.

Martello Piling Limited argued that the discussion was a “protected conversation” and should be excluded from the tribunal proceedings. The Tribunal agreed and excluded all references to the meeting across all claims.

The EAT allowed the appeal in part, holding that: 

• Scope of protection: Pre-termination negotiations are only confidential in ordinary unfair dismissal claims - they should not have been excluded from his other claims. 
• Improper behaviour: When determining whether protection is lost, Tribunals must assess the full circumstances, not just the content or tone of the discussion. The Tribunal failed to consider properly allegations that Mr Tarbuc had been “ambushed” and denied the opportunity to bring a companion. 

The case will now be re-considered by a differently constituted Tribunal.

Practical point

This decision serves as a reminder that, while “protected conversations” are a useful tool for employers, their protection is limited as they only apply in ordinary unfair dismissal claims. 

To minimise the risk of the protection being challenged, employers should ensure that such conversations are conducted fairly and transparently - in particular:

• Give reasonable advance notice of the meeting
• Permit a companion to attend where appropriate
• Allow sufficient time for the employee to consider any offer

Tarbuc v Martello Piling Limited

4. Disability discrimination: Reasonable adjustments

A recent EAT case highlights the importance of a well drafted policy on medical exemptions in safety-critical roles. 

Mr Truman, a long serving rail worker with genetic haemochromatosis, was prescribed medical cannabis for chronic pain. He applied for an office based role, which fell within Network Rail’s safety critical regime and required a drugs and alcohol test. Network Rail’s policy allowed positive drugs results to be treated as a “pass” where there was a legitimate medical need.

Despite explaining his prescription, the testing company, Express Medicals, recorded his test result as a “fail”, the job offer was withdrawn, and Network Rail imposed a five year ban on Mr Truman carrying out safety critical work. After his grievances were not upheld, Mr Truman brought claims for disability discrimination.

The Employment Tribunal accepted the drugs test result should have been recorded as a “pass” but dismissed Mr Truman’s discrimination claims, comparing him with a non-disabled person who had failed a drugs test and finding that the disadvantage from the failure to make reasonable adjustments was not significant.

The EAT held this was the wrong comparator. The correct comparison was with an employee who would have passed the drugs test under the policy’s medical exemption, had it been applied correctly. Further, as the Tribunal had already found that Mr Truman’s result should have been recorded as a pass, it could not properly conclude that the disadvantage he suffered was insignificant. That issue was therefore remitted to the Tribunal for reconsideration.

Practical points

Employers may find this decision challenging given the importance of safety considerations. However, the EAT’s concern was not with the way safety was prioritised, but with the way Network Rail’s drugs and alcohol policy was applied.

A key lesson is to review / re-consider any drugs policy that always allows a positive test result to be treated as a “pass” where there is a medical exemption and perhaps go for something a little more nuanced.  

Either way, medical exemptions should be supported by clear medical evidence and robust comparator analysis, to reduce the risk of disability discrimination.

Truman v SPL Powerlines UK Ltd & Ors

5. Data protection: New complaints process 

From 19 June 2026, there is a new requirement for organisations to have a data protection complaints process in place, introduced by the Data (Use and Access) Act 2025.

The Information Commissioner’s Office (ICO) guidance sets out how organisations should handle data protection complaints. 

A data protection complaint arises where an individual believes their personal data has been mishandled (e.g. in relation to how their personal data have been collected, used or stored, or to the organisation’s response to their subject access request). 

Employers must ensure they have a complaints process which is easily accessible for staff and includes:

• Acknowledging receipt within 30 days: Complaints must be acknowledged within 30 days of receipt (starting the day after receipt). The ICO does not prescribe a specific method - in practice, this can be done via the same channel used by the complainant unless requested otherwise. 
• Investigating the complaint without undue delay: Investigations should begin when the complaint is received and must be conducted without “unjustifiable or excessive delay”. Enquiries should be appropriate to the circumstances and capable of justification. Timescales will vary depending on complexity and any ongoing impact on the complainant.
• Providing an outcome to the complainant without undue delay: The outcome must be communicated clearly, explaining the findings and any action taken. If the complainant is unhappy with the outcome, consider providing more detail or clarifying the decision. It is also good practice to provide details about how to complain to the ICO.
• Record-keeping: Maintain clear records of how complaints are dealt with, including the dates the complaint was received and acknowledged, and details of the investigation steps and outcomes. 

Practical point

Having a well managed complaints process will be critical to compliance and to reducing the risk of escalation to the ICO.

Employers should also: 

• Update privacy notices so staff are aware of their right to make a complaint
• Train staff to identify and triage data protection complaints appropriately
• Ensure complaints are handled consistently