Brace for impact: how hospitality must prepare for the Employment Rights Bill

The government has set a phased timeline for rolling out changes under the Employment Rights Bill. The most complex reforms, including guaranteed hours and enhanced protections from unfair dismissal, will not take effect until 2027.

Before then, employers will face a series of earlier reforms. From April 2026, new rules on statutory sick pay (SSP), paternity and parental leave, and trade union recognition will come into force. In October 2026, new duties on tipping policies and the prevention of sexual harassment in the workplace will begin.

Kate Nicholls, chair of UKHospitality, welcomes the staggered rollout, saying, “There are substantial and expensive changes for businesses in the Employment Rights Bill and it’s right that the government is using appropriate implementation periods for the most complex issues for hospitality, to get the details right for both businesses and workers.”

According to Nicholls, the trade body has flagged early on that the changes to guaranteed hours and shift predictability would be the most difficult for hospitality businesses. “It’s important that the government has listened to our concerns and now uses this time to work closely with businesses on a proper policy framework and clear guidance,” she adds.

However, Nicholls also warned on the cost burden placed on businesses to adapt to the Bill’s requirements, stressing that the industry can’t carry yet more financial charges. “Businesses are understandably wary about the cost and complexity of the more immediate changes in the Bill,” she says. “Hospitality businesses have absolutely no more capacity to absorb additional costs. The government must not increase the sector’s cost burden once again.”

In light of the recently raised National Insurance contributions (NICs), employment costs and business rates, how will the hospitality industry adapt to the Employment Rights Bill phase by phase? 

One area that could become increasingly contentious is the legal distinction between “workers” and “employees.” The Employment Rights Bill strengthens protections for both categories, but many hospitality businesses use a mix of contracts.

Ian Hurst, employment solicitor at Duncan Lewis, agreed the reforms will hit hospitality and catering companies particularly hard due to their large, flexible and often seasonal workforce. 

Hurst outlined some key upcoming changes, saying, “From April 2026, unpaid parental leave and paternity leave will be available from day one of employment. Paid parental leave will still depend on length of service, but the unpaid element will not. This may cause staffing problems if new hires cannot start as expected.”

On statutory sick pay, Hurst explained: “Employees will become entitled to SSP from day one of illness, removing the current three-day waiting period. Also, the earnings threshold of £125 per week will be abolished, widening eligibility.” He emphasised that while SSP rates are set by the government, employers remain responsible for ensuring staff are paid correctly and on time. “Employers must keep accurate records of absences and payments and update payroll systems to reflect the new rules once implemented,” Hurst advises. 

Tipping laws will also change from October 2026. “The Employment (Allocation of Tips) Act 2023, effective from October 2024, aims to ensure fairness and transparency in how tips are distributed,” Hurst says. “Employers must consult with trade unions or elected worker representatives, or directly with staff if none exist, when developing tipping policies. Policies must be reviewed every three years, and anonymised summaries of employee feedback must be available at the workplace.” He warns that failure to consult properly could lead to tribunal claims and compensation of up to £5k.

The Bill also creates a new legal duty on employers to prevent sexual harassment, including from third parties such as customers. “This is particularly relevant in hospitality, where public-facing roles increase exposure to inappropriate behaviour,” Hurst says. 

One area that could become increasingly contentious is the legal distinction between “workers” and “employees.” The Employment Rights Bill strengthens protections for both categories, but many hospitality businesses use a mix of contracts, from casual and seasonal to freelance arrangements. With reforms touching on entitlements like SSP, predictable work, and day-one rights, determining employment status correctly will be more important than ever. Misclassification could lead to tribunal claims and backdated liabilities. Legal experts are calling for clearer guidance from HMRC and BEIS to help employers navigate the blurred lines between workers, employees, and self-employed contractors.

In order to prepare for the Bill, Hurst recommends risk assessments to identify where third-party harassment may occur, staff training on handling customer misconduct, updating workplace policies, displaying clear signage for customers about expected behaviour, and ensuring all complaints are taken seriously and addressed promptly.

Looking ahead, further reforms are expected in 2027. “These include enhanced protections from dismissal for pregnant employees and new mothers, statutory bereavement leave, and unfair dismissal protections from day one of employment, removing the current qualifying period,” Hurst says. “There will also be improvements to flexible working rights, making it easier for employees to request working arrangements that suit them. The government plans to curb misuse of zero-hours contracts, helping to ensure greater job security and predictability.”

Given the scale of these changes, Hurst advises employers to review contracts, policies and staff handbooks well in advance.

The 2027 reforms will also introduce a new statutory right for workers on atypical or zero-hours contracts to request more predictable working patterns. While the right to request does not impose a hard guarantee, employers will be required to respond formally and justify any refusal – echoing the current process for flexible working requests. For many hospitality employers, particularly those reliant on just-in-time staffing models, this will mean rethinking how rotas are built and how much advance notice is possible. The legislation is aimed at reducing so-called “one-sided flexibility,” but the burden of adjustment – both operationally and administratively – will sit with employers.

Given the scale of these changes, Hurst advises employers to review contracts, policies and staff handbooks well in advance, saying that “early action will support compliance and help maintain a fair, legally sound working environment.”

Meanwhile, Samantha O’Sullivan, head of policy at the Chartered Institute of Payroll Professionals (CIPP), believes the changes will hit hospitality’s payroll teams hard as well. She points to the SSP changes, effective April 2026, as one of the first major challenges. “Waiting days for SSP will be removed, so it will be payable from day one of absence,” she explains. “The lower earnings limit will no longer apply, meaning all workers will be eligible for SSP at 80% of their average weekly earnings if that is less than the standard SSP rate.”

That said, O’Sullivan notes a silver lining: “The more complex matters, like zero-hours contract reforms and day one unfair dismissal protections, won’t come in until 2027. This gives employers time for consultation and preparation.”

Vanina Principi, founder of culinary and operational consultancy VP7, warned small hospitality businesses face serious difficulties adapting. “On paper, stronger worker protections sound great. But hospitality is built on flexibility for workers and employers alike,” she says. “Rigid rules on guaranteed hours, extended redundancy procedures and stricter hiring add bureaucracy many independents can’t afford. Without quick adaptation, we risk losing smaller venues unable to cope with rising costs and legal obligations.”

All experts’ advice follows a theme: act early. And Principi’s is no different. “Don’t wait until deadlines hit. Review contracts, rethink workforce strategies, and invest in technology to automate admin and boost staff retention,” she urges. “These reforms could bring positive change but only for businesses ready to evolve.”

Experts also warn that technology readiness will be a critical success factor in implementing the Bill. For operators still relying on manual scheduling or outdated payroll systems, tracking leave, sick pay, and working hours under the new rules could prove overwhelming. “Businesses that haven’t yet digitised rotas, contracts or payroll should treat this as a wake-up call,” says Principi. Investing in integrated workforce management tools could not only help ensure compliance, but also improve team communication and retention by giving staff better visibility and control over their schedules.

While many see the reforms as an operational challenge, others see an opportunity to tackle hospitality’s long-standing recruitment crisis.

For people already in the industry, the upcoming reforms are pushing them beyond legal duty toward principle. Gemma De Vyea, head of people at Genuine Restaurants Group, says, “Hospitality is about looking after people, guests and our team. While the legislative timeline creates challenges in scheduling and costs, the bigger pressure is delivering these changes fairly and consistently with our culture.”

She adds that the delay to predictable hours is helpful but no excuse for complacency.

“The delay offers breathing space, but we don’t wait for compliance deadlines to do the right thing. We design rotas for stability and predictability because every team member deserves that certainty.”

De Vyea sees the reforms as a long-overdue chance to improve working conditions. “These align with the workplace we want – where people are protected, valued, and treated with dignity.”

While many see the reforms as an operational challenge, others see an opportunity to tackle hospitality’s long-standing recruitment crisis. Greater transparency, predictability and protections could help improve the sector’s image as an employer and attract a broader talent pool – especially among older workers, parents, and career changers. “If done right, this could help reshape hospitality’s reputation and position it as a more stable, professional career path,” De Vyea notes. But she cautions that positive messaging must be backed up with tangible improvements on the ground.

Although she has an optimistic view of the upcoming Bill, she too calls on the government to provide practical guidance. “Preparation isn’t about ticking boxes; it’s about embedding positive practices reflecting our business values. Clarity is essential to turn good intentions into fair, workable day-to-day practices.”

UKH has warned that statutory sick pay changes risk adding strain, while the CIPP echoes concerns about the need for time and guidance to prepare systems. The Employment Rights Bill brings big changes to hospitality. Though its phased timeline may offer some breathing space, action on the part of businesses is still a requirement. Operators face rising costs and administrative burdens, but with clear guidance and early preparation they will come through at the end of the tunnel.

As Ian Hurst puts it, “The phased rollout leaves no excuse not to prepare. Hospitality’s large, flexible, seasonal workforce means employers must act now.”

Kate Nicholls agrees, but says support must follow because “the time now is to work with businesses on an appropriate policy framework and clear guidance.”

With deadlines set and details emerging, the sector faces one of its most significant people-policy overhauls in a generation. How it responds, and how the government supports that response, will shape hospitality’s employment landscape for years to come.