Employment law updates for the hospitality sector
The coming years will bring a wealth of employment law updates in hospitality. These are not just routine changes. The changes are numerous, complex, and represent a shift to a more worker-friendly employment law world, which of course means heightened risk for the hospitality sector. Failure to comply could result in severe penalties, legal disputes, and damage to employers’ reputations, so hospitality employers should take these changes seriously, ensuring they are fully prepared to meet the new standards and protect their workforce. This article summarises the key employment law updates the hospitality sector should be aware of.
Prevention of sexual harassment
From October 26, 2024, the Worker Protection (Amendment of Equality Act 2010) Act 2023 introduces a new duty for employers to take “reasonable steps” to prevent sexual harassment at work.
This proactive duty requires employers to anticipate and mitigate risks of sexual harassment, including by third parties such as customers and clients.
For the hospitality sector, this means implementing comprehensive training programs, clear policies, and effective reporting mechanisms and making clear to customers and visitors that harassment of staff will not be tolerated, in order to create a safe working environment for all employees.
The government intends to make this law even tougher by making it a duty to take ‘all reasonable steps’ to prevent sexual harassment and re-inserting a duty to prevent harassment by third parties on the basis of any protected characteristic into the Equality Act 2010.
National Minimum Wage
Effective from 1 April 2025, the National Minimum Wage (NMW) and National Living Wage (NLW) rates will increase. The NLW for workers aged 21 and over will rise to £12.21 per hour. There will be larger increases for those in the younger age brackets as the government moves towards its goal of eliminating the wage bands and having one rate for all.
Hospitality businesses must ensure compliance with these new rates to avoid penalties and maintain fair pay practices. This could lead to upward pressure on pay expectations from more senior staff at a time when employment costs are already increasing due to NICs and further pressure to accede to employee expectations to retain experienced employees.
Neonatal leave and pay
Starting April 6, 2025, the Neonatal Care (Leave and Pay) Act 2023 grants parents of babies in neonatal care up to 12 weeks of paid leave, one week for each uninterrupted week of neonatal care, which can be taken up to 68 weeks from the birth. The leave is available from day one of employment and is in addition to other parental leave entitlements, whilst the pay is available for people with over 26 weeks of continuous service. Pay is at the same statutory rate as other family friendly leave such as maternity, paternity and shared parental leave.
The rules are complex and nuanced and rights not to be dismissed or treated unfavourably as a result of exercising this right. Hospitality employers must ensure that they update their leave policies and payroll systems to accommodate this new right, communicate the new rights to staff and train managers in how to deal with requests for the leave and pay at a difficult time for employees.
The Employment Rights Bill
The Employment Rights Bill, containing 28 changes to employment law, was introduced to parliament in October 2024. A summary of the changes, most of which will not be coming in until 2026, is as follows:
- Extension to tribunal time limits
The Employment Rights Bill proposes extending the time limits for bringing claims to the Employment Tribunal from three months to six months. This change gives employees more time to seek justice, potentially increasing the number of claims hospitality employers may face. - Day one unfair dismissal rights
The Bill introduces the right to claim unfair dismissal from the first day of employment, subject to employers’ ability to use a fair and transparent probationary period to assess the suitability of new hires, including clearly defined goals and reviews and rights to appeal decisions made during probation.This change enhances job security for hospitality workers, who often face high turnover rates, but creates additional claims risks for employers in the sector. Recruiting and retaining the best staff and ensuring that probationary periods are managed effectively can greatly reduce the risk of claims, so now might be a good time for hospitality employers to review their recruitment and reward packages and how they manage probationary periods. - Day one family rights
Day one rights for family-related leave, including paternity, parental, and bereavement leave, will be established. Hospitality employers should update their policies to reflect these changes, providing support to employees from the start of their employment. - Statutory Sick Pay (SSP)
The Bill removes the lower earnings limit for SSP eligibility and eliminates the waiting period before SSP begins. This change ensures that all hospitality workers, regardless of their earnings, receive sick pay from day one of illness. Employers must adjust their payroll systems to comply with these new requirements. - Flexible working
Hospitality businesses, known for their varied schedules, will only be able to reject flexible working applications if they can show that it would not be reasonably practical to accommodate the request for prescribed reasons. They will have to include flexible working options in job adverts unless flexible working is not viable for the role being advertised. Hospitality businesses should consider how to accommodate flexible working requests while maintaining operational efficiency. This may involve offering part-time roles, job sharing, or flexible shift patterns. - Trade unions
The Bill strengthens the role of trade unions, including enhanced protections for union representatives. Hospitality employers may now start to see increased trade union activity and demands for recognition within the workplace and need to plan for the possibility of having to deal with this as well as more collective bargaining. - Collective redundancy consultation
The 20-employee threshold for collective redundancy consultation will change so that it is counted across a whole business rather than by each workplace location. - Ban on exploitative zero-hours contracts
While workers can stay on zero-hour contracts if they prefer, those who work regular hours over a defined period will have the right to a guaranteed hours contract based on average hours worked over a reference period (it is believed this will be 12 weeks) as well as compensation for shifts altered or cancelled without reasonable notice. This change provides greater job security for hospitality workers, but decreased flexibility for hospitality employers, as well as heightened claims risks and the need to ensure that work schedules are managed well to avoid potentially having to pay compensation for late cancellations or changes. - Fire and rehire
The Bill seeks to end exploitative fire and rehire practices. Hospitality employers must avoid using these tactics and instead engage in fair negotiations with employees regarding contract changes. - Equality initiatives
Equality initiatives include requirements for larger employers to publish equality and menopause action plans to show what they are doing to enhance diversity and inclusion and reduce pay gaps and a potential expansion of the pay gap reporting duty to include disability and ethnicity.
Changes outside of the Employment Rights Bill
Outside of the Employment Rights Bill, the government is examining a right to disconnect outside of working hours, a review of employment status with a view to merging the two statuses of worker and employee into one ‘worker’ status, and promising to review many other legal areas.
Right to disconnect is a particularly relevant one for the hospitality industry as it may be necessary to contact staff to arrange cover for shifts or to deal with emergencies. The government is currently investigating what this will look like, but is understood to be interested in the Belgian or Irish models, which would mean that this would not be a blanket ban on outside hours contact and that there would be scope for emergency contact with a focus on ensure that outside hours contact does not become routine.
Conclusion
Hospitality employers should review their policies and practices to ensure compliance with the new requirements as they come in, promoting a fair and supportive workplace.
These updates reflect significant changes in employment law, aimed at improving working conditions and providing greater protections for employees in the hospitality sector.
Although the Employment Rights Bill is not coming in until 2026, hospitality employers should stay informed about the progress of the Bill, analyse their workforce and the potential impact of the changes upon it, and be as proactive as possible in preparing to implement these changes once the final details become known. Hospitality employers should also consider taking part in any relevant open consultations being held by the government if they have any strong views they would like to share.
If you have any specific questions or need further details on any of these employment law updates in hospitality, feel free to contact us.
