Employment Law Coffee Break: AI in Employment Tribunals, managing litigation and the ERA reforms, and GDPR for HR

AI Employment Tribunal spotlight  

Our new spotlight series with Associate Director, Carla O'Neill, addresses the growing use of AI in legal proceedings, to help business navigate these challenges. 

It will cover topics including:

• where litigants in person are using AI and the impact this is having on employers, as well as the tribunals;
• the opportunities and risks posed by using AI in legal proceedings;
• interesting legal questions, such as disclosability of AI prompts, legal privilege, data protection, confidentiality and witness statements; 
• what AI guidance currently exists within the context of tribunals and updates on this rapidly evolving area; and
• practical tips and market insight.

The numbers do not lie: tribunal statistics for the quarter October to December 2025 show that single tribunal claims increased by 54% compared to the same period only a year before. Between July 2023 and September 2025, Acas has seen individual early conciliation cases increased by 40%.

In addition, the UK government's Economic Analysis on the Employment Rights Act 2025 (ERA) estimates a 17% increase in the volume of cases which Acas and the Employment Tribunals will deal with as a result of the new legislation. 

Osborne Clarke is advising clients on the impact of these changes, supporting them with employment tribunal claims affected by claimant use of AI, together with increasingly high value and complex claims. 

EAT decisions highlight the ongoing need for careful management of tribunal claims

The government is continuing to push forward with its implementation of reforms under the Employment Rights Act. It is currently anticipated that:

• the extension of the limitation period for most employment tribunal claims from three months to six months will come into force from 1 October 2026; and
• the removal of the compensation cap (alongside a reduction in the qualifying period) for unfair dismissal claims will come into force from 1 January 2027.

These changes will inevitably drive a higher volume of claims and the potential for increased compensation awards. They will also exacerbate the existing practical challenges of securing and preserving reliable witness evidence and testing whether a claimant has genuinely mitigated their loss. The longer the gap between the underlying events, the filing of a claim and a final hearing, a timeframe that is already being stretched by tribunal backlogs, the more acute these difficulties become.

The Employment Appeal Tribunal (EAT) has recently upheld a tribunal's decision to strike out a claim due to the significant delays between the events giving rise to the claim and the hearing, and the resulting impact on witness availability. 

The claimant had brought claims of race and religion or belief discrimination and unfair dismissal following their dismissal in 2019. The proceedings were delayed by the Covid-19 pandemic and the employer's entry into an insolvency process. By the time of a preliminary hearing in 2023, 22 individuals had left the business, of whom 17 were either uncontactable or unwilling to co-operate. The tribunal struck out all of the discrimination claims: the prejudice to the employer in defending itself without those witnesses outweighed the prejudice to the claimant in losing his claims. The EAT dismissed the claimant's appeal in full.

In a separate decision, the EAT considered the duty on a claimant to take reasonable steps to reduce their losses, for example by seeking alternative employment, following a finding of unfair dismissal. The employer had argued that the claimant had failed to mitigate their losses adequately from a date in 2021 (rather than 2022, as found by the tribunal) meaning that part of their compensation award should be further reduced to reflect their contributory fault. 

The EAT found no error of law. The tribunal had assessed what alternative income could realistically have been taken up by the claimant, allowing them a reasonable period to fulfil existing commitments (the claimant had promised to remain in a specific role for a minimum of one year) and take proper account of caring responsibilities for their elderly parents. The EAT emphasised that pre-existing commitments (albeit providing a lower income than other opportunities may have provided) and caring commitments are not absolute bars to a finding that a claimant has failed to reasonably mitigate their losses. They cannot simply be dismissed and require careful analysis.

What does this mean for employers?

The combined effect of longer limitation periods, uncapped unfair dismissal compensation and continuing tribunal delays means that employers face the prospect of claims that are brought later, run longer and carry greater financial exposure. These recent EAT decisions highlight the practical consequences of delay, difficulties in securing witness evidence and the difficulty of testing a claimant's efforts to mitigate their losses over extended time periods, all of which will be an increasingly important consideration in how claims are managed and defended.

While any strike out decision will inevitably turn on its facts, the decision highlights the difficulties that can arise and the importance of protecting the employer's position from the earliest stage of any dispute, whether that ultimately leads to a full hearing or an application to strike out the claim. 

HR teams should be taking proactive steps to preserve the employer's evidential position from the outset of any dispute, on the assumption that a final hearing could well be several years away. That means ensuring contemporaneous records are created and retained, maintaining a clear internal record of who may need to give evidence and, where those individuals leave the business, whether they remain contactable; and where contact cannot be maintained, keeping written records of all steps taken to trace them. It will be important for employers to be able to demonstrate that genuine efforts have been made where they seek to argue that a witness's unavailability is insurmountable. Where delay has caused real prejudice, a strike-out application should be kept actively under review.

Employers should also consider whether it is appropriate to seek the agreement of employees to assist with any litigation following their departure, for example as part of the terms of any settlement agreement. For senior employees it may also be appropriate to consider including a contractual obligation in the terms of employment; however, employers will need to remain realistic about the prospect that the cost of enforcing these provisions may outweigh the benefit.

Employers should also remember that in respect of the claimant's duty to mitigate, the burden of proof rests on the employer. It will not be sufficient to assert that a claimant should have found work sooner without specific evidence such as details of available suitable roles, salary ranges and working patterns reflecting the claimant's skills and experience. Employers should also consider carefully any personal circumstances a claimant may raise, such as caring responsibilities, health issues or other commitments, so that any arguments around when alternative income could have reasonably commenced are framed appropriately, and having regard to market conditions in the relevant sector.

It will be important for employers to ensure that they are addressing the issue of mitigation early on, as this may form an important part of any settlement strategy, as well as providing a solid evidential foundation should the claim ultimately proceed to a full hearing.

Details of the reforms and other changes introduced by the Employment Rights Act 2025 are set out on our dedicated microsite. 

Latest developments from our GDPR for HR team

Our GDPR for HR team have published their latest Coffee Break update, looking at important recent decisions from the ICO and Court of Appeal as well the data protection implications of the new duty on employers under the ERA, from 6 April 2026, to keep records relating to holiday entitlement and pay. While good record-keeping has always been best practice, breach of the new rules carry serious consequences: inadequate records are a criminal offence carrying unlimited fines, and the newly created Fair Work Agency can investigate underpayments going back six years.

If you would like to sign up for these regular updates, please contact your usual Osborne Clarke contact or register here.