The Employment Rights Bill and the Hospitality Sector 6
CLH DIGITAL
Issue 239
By Employment Rights Bill by Employment Partner, Sally Gwilliam.(https://harperjames.co.uk/our-people/sally-gwilliam/) The newly introduced Employment Rights Bill, unveiled by the Labour Government at the beginning of October, marks a pivotal shift in the UK's employment laws. The Bill, which includes 28 individual reforms, will deliver one of the most comprehensive overhauls in several decades, enhancing employee rights from dismissal protections to flexible working arrangements. While most of these changes are not likely to come into force until 2026 after a process of consultation, taking a considered and strategic approach to these changes means that you not only remain compliant but also build a more resilient and competitive operation. We consider the most significant changes for the hospitality sector below.
ZERO-HOURS CONTRACTS One of the most notable proposed changes for the hospitality sector are the additional protections for workers engaged on zero-hours contracts or low-hours contracts. These contracts are widely used in hospitality to manage fluctuating demand. While the government has committed to consult on the proposed reforms, there looks set to be two key changes. Firstly, as an employer, you will be required to offer zero hours workers a guaranteed number of hours that reflect the hours they worked over the previous reference period (which is currently suggested at 12 weeks). In practice, this means for each worker, you will need to calculate hours they have worked and make an offer of a guaranteed hours contract every 12 weeks until that worker is no longer considered to be a low-hours worker. This change is intended to provide workers with greater job stability and a predictable income, but it could also be a significant administrative and costly burden for employers. Secondly, there will be a duty on employers to give ‘reasonable notice’ of a new shift and of any shifts that have been changed or cancelled. Workers will have to be compensated where reasonable notice is not given. Employers may be concerned about added costs and increased administration in managing flexible workforces. It may not be practically possible for employers in sectors like hospitality to guarantee hours. Alternative staffing models, for example the use of fixed-term employment contracts, may need to be considered.
UNFAIR DISMISSAL: DAY ONE RIGHT Another significant change is the Bill’s proposal that unfair dismissal protection will become a right from the first day of employment. Currently, in most circumstances, employees need at least two years’ continuous service to qualify for this protection, giving employers flexibility to dismiss underperforming staff without the need for a fair reason or process.
This change will require employers to approach the dismissal of all employees from day one of their employment in the same way they currently approach dismissals of employees with over two years’ service. This is subject to a “lighter touch” dismissal process that will be allowed for employees within a proposed statutory probationary period of the first 9 months of employment. This reform could lead to an increased risk of employment tribunal claims and will undoubtedly lead to more cautious hiring decisions. Employers across all industries will need to put in place effective management and review processes for new starters during the statutory probationary period if they haven’t already done so.
PAY AND BENEFITS The Bill proposes the removal of the age threshold for the National Living Wage, ensuring all adult workers receive it regardless of age. This measure aligns with Labour’s pledge to improve living standards but could increase wage bills, especially in sectors employing younger staff. Statutory Sick Pay (SSP) is also set to be reformed, eliminating the three-day waiting period and earnings threshold for eligibility. SSP will become available from the first day of illness for all employees, likely leading to higher costs and administrative demands for employers.
THIRD PARTY HARASSMENT The Bill will reintroduce direct liability on employers for the harassment of its workers by third parties, a protection that was repealed over a decade ago. To do so, there will be a proactive duty on employers to take all reasonable steps to prevent a third party from harassing its employees in the course of their employment. This would cover any situation where an employee is being harassed by someone other than their employer or a work colleague in the course of their employment (for example by customers or suppliers). We recommend employers start taking steps to update their workplace harassment policies to include third-party harassment, educate employees about third-party harassment through workplace training programs and carry out risk assessments to identify areas of high risk and steps to take.
TIPPING The Employment (Allocations of Tips) Act 2023 came into effect on 1 October 2024 and aimed to rectify the long-term issue of employers deducting service charges from tips and gratuities. The Bill adds some additional requirements regarding tipping policies. Employers will be required to consult workers affected by the tipping policy and review the policy at least once every three years.
FLEXIBLE WORKING AND FAMILY FRIENDLY Since 6 April 2024, employees already have a day one right to make a flexible working request. Under the Bill, employers can still turn down a flexible working request on one of eight statutory grounds (e.g. burden of additional costs, inability to meet customer demand), but the Bill makes it more difficult to do so by introducing an additional requirement for the refusal to be reasonable. We expect the number of flexible working requests to increase as a result, with potentially an increase in disputes about the reasonableness of an employer’s refusal to allow flexible working. Family-friendly reforms include extending protections against dismissal for pregnant employees and new mothers, as well as aligning paternity, parental, and bereavement leave with day-one rights. These changes aim to foster a more inclusive workplace but will require employers to update their leave policies and potentially adjust workforce planning to
accommodate these enhanced rights.
REDUNDANCIES The Bill introduces changes around when collective redundancy consultation is triggered in large-scale redundancy situations. Currently, if an employer proposes 20 or more redundancies at one establishment (site) within a 90-day period, it must consult with employee representatives or trade unions on how to avoid or limit the impact of redundancies. This has typically allowed employers to avoid collective consultation where staff are dispersed across multiple sites and the overall number of affected workers at each site is below the threshold of 20. Changes under the Bill mean that collective consultation will be triggered where that threshold is reached across the business as a whole, rather than at a single establishment. This change will have a significant impact on how employers approach redundancies where the workforce is spread across different sites. Overall, the Employment Rights Bill represents a significant change in the employer-employee relationship in the UK. Businesses will face increased regulatory obligations and potential costs but will also gain a clearer framework for ensuring fair and equitable treatment of their workforce. As the Bill progresses through Parliament, companies should stay informed and consider proactive measures, such as reviewing contracts and updating HR policies, to navigate this evolving legal landscape.
WHAT SHOULD YOU DO NOW? As we have already mentioned, many of the new regulations won’t come into place until 2026, so don’t panic. However, if you start to prepare now, you can adapt to new ways of working on your timeline rather than having to make significant changes over a shorter period. To comply with the new regulations, you should consider reviewing your employment contracts and shift management systems. It would be worth auditing your payroll systems to ensure you can accommodate changes in wage structures, particularly the new requirements for the National Living Wage and think about sick pay policies and budget for increased SSP obligations. Training for management staff will also be crucial. Your managers must understand the new legal framework to avoid inadvertent breaches, particularly in handling dismissals, shift allocations, and flexible working requests. To help manage your budget while adapting to these reforms, you may need to explore creative staffing solutions. One approach is to shift towards a core staff model, supplemented by a pool of part-time or seasonal workers whose hours align more predictably with demand. This would reduce reliance on zero-hours contracts and help control costs. Investment in technology can also be a game-changer. Advanced scheduling software can optimise shift planning, ensuring compliance with the new notice requirements while minimising labour costs. Automated systems can also streamline payroll adjustments, particularly for varying pay rates and SSP calculations. Employment Partner at Harper James, Sally Gwilliam, says: “The Employment Rights Bill marks a seismic shift in the landscape of UK employment law. While it aims to create a fairer, more inclusive workplace, it also imposes significant new responsibilities on employers. Preparing early is not just prudent—it’s essential. Employers must adapt to these changes, not only to avoid legal pitfalls but to foster a more engaged and secure workforce.”
Hale Events’ Sales Manager Celebrates 25 Years! Paul Thomas joined Axbridge based exhibition organisers, Hale Events, in 1999. He has sold stands at Hale’s portfolio of South West trade shows ever since then. “What an asset to the company” enthused MD Mike Anderson. “Paul has brought fun, hard work and great skill to his role, progressing from stand sales to managing and driving our sales department”. In today’s fast-moving world, where people often move around, the Hale Events team feel very lucky to have such long standing employees, like Paul, who bring trust, knowl-
edge, and integrity to their role. “I’m not sure I’ll manage another 25 years” joked Paul “But I hope to be here for a good few more.” Hale Events organise specialist exhibitions and trade shows across the South West. Currently they organise Giving & Living, the Source trade show, and Expowest Cornwall. They also deliver the bi-weekly South West hospitality & catering enewsletter, Rise & Shine. For more details, visit www.hale-events.com.