What the Employment Rights Bill UK means for hospitality managers

Since the Autumn Budget of 2024 and its increase to wages and NI contributions, hospitality has seen a significant climb in labour costs, including an additional £2,500 a year to employ a full-time member of staff. 

While the Employment Rights Bill in the UK is set to bring the most significant changes to employment law in a generation, the hospitality sector faces yet another rise in costs, with its margins already extremely tight.

In such a constant, fast-paced sector, managers like you already juggle staff shortages, compliance with labour laws, and the ever-looming seasonal demand – and all the stress that comes with it. 

So, upcoming changes will naturally feel daunting. But preparing early (and using the right digital tools) can make the transition far smoother, help you cut operational costs, and even strengthen how your team work.

What is the Employment Rights Bill (and why does it matter)?

The Employment Rights Bill 2025 is the first phase of the government’s plan to ‘Make Work Pay’, aiming to create fairer, more stable jobs for workers.

The Bill will introduce amendments like changes to zero-hour contracts, stronger sick pay and protection for unfair dismissal, plus flexible working and updates to tipping laws, all to increase employee rights and secure their pay.

For hospitality businesses, this means reviewing how you schedule shifts, how contracts are written, and how quickly staff have access to their rights. These updates won’t just affect your payroll and budgets. They’ll reshape how you manage your team day-to-day. A change that won’t come overnight.

Parts of the Employment Rights Bill are expected to become law from Autumn 2025 and into 2027 to ease in the measures. However, these new employment rights and their timeline are still subject to change until they become law.

What the Employment Rights Bill UK means for hospitality

Hospitality is already a sector with a high staff turnover rate of 67%. This has dropped from 75% in the past year, but remains far above the 15% national average of what’s considered a high turnover.

When recruiting can cost around £6,215 for one employee, higher costs on the horizon are hardly a welcome change when retention is already a struggle.

However, with mental health and financial concerns ranking among the top three challenges hospitality workers expect to face in the next 12 months, these new employment laws hope to lighten these challenges and, in turn, improve retention rates.

Key Employment Rights Bill amendments that hospitality needs to prepare for

The main Employment Rights Bill amendments aim to end ‘one-sided’ flexibility from the business’s side. It’s to ensure workers are provided a baseline of security in their jobs, down to guaranteed hours, pay, and day-one rights.

Changes to zero-hour contracts

Hospitality often greatly relies on student and seasonal workers, where zero-hour (or casual) contracts have been useful due to their flexibility. However, the Employment Rights Bill aims to restrict their use.

While zero-contract hours aren’t being entirely banned, the ‘exploitative’ ones are planned to be in 2027, putting an end to staff finding themselves without a guaranteed income or being forced into working long hours. 

Employers will be required to:

• Offer contracts with regular (and guaranteed) hours
• Provide reasonable notice for shifts
• Fund compensation for last-minute changes 

While this aims to reduce the unpredictability of hours and instead offer more stability to staff, it complicates things for hospitality managers. It won’t just be consistent wages you’ll be paying more on – it’ll be the compensation, too, if you don’t adapt sooner.

Instead of cutting shifts short and sending staff home when finding yourself overstaffed or lengthening the hours they’re used to when it’s busier, you’ll need to plan further in advance. 

It may seem like more admin, but having digital tools in place to forecast busy spells and labour costs removes that burden, while significantly increasing your visibility and control of your schedules. 

Without forecasting, you could find yourself in the weeds with both unbalanced staffing levels and overbudgeting. Adjusting now means fewer last-minute cancellations, happier staff, and less risk of failing compliance.

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Day-one rights for staff

There are three key day-one rights from the Employment Rights Bill UK to take note of:

• Unfair dismissal claims will be able to be made from an employee’s first day, removing the current two-year qualifying period (from 2027).
• Statutory Sick Pay (SSP) will be payable from the first day of illness, removing the three-day waiting period, and will no longer exclude the lowest-paid workers (from April 2026).
• Paternity Leave and Unpaid Parental Leave will be available from the first day of employment to increase well-being and job security for new parents (from April 2026).

This will no doubt heighten your pressure in tracking attendance and reviewing (and tightening) your onboarding process. There’ll be more metrics to track to ensure you’re compliant with employment laws. 

Flexible working as default

What has been known as a ‘nice to have’ looks set to become a right in 2027. While this focuses on offering hybrid and remote roles, it affects the shift world (particularly hospitality) too.

Employers will be expected to:

• Always consider flexible working from day one of employment
• Must justify reasons for denying requests
• Provide a reasonable notice period for shifts

While the Bill focuses on giving employees more choice, it can feel like flexibility is being taken away from managers. But with the right setup, both sides can benefit. Adopting digital tools helps migrate these new pressures.

With a digital workforce management system like RotaCloud, you allow staff to use self-service scheduling to set availability, submit shift swap requests, and instantly claim extra shifts when you need cover. You can also set up shift notifications for new shifts and changes, and shift acknowledgements, so you can always track the notice of hours and keep staff in the loop (and happy) without extra admin.

Tipping in the UK

Likely hitting hospitality employment law in October 2026 are changes to the UK tipping laws to improve the share of tips amongst the team and invite their input.

On top of having a written policy and it being illegal to withhold tips from staff, managers will be expected to consult staff before creating (or altering) their tipping policy, and update it every three years.

With fairer scheduling and fairer pay, the stronger your culture, your operations, and your compliance.

The risks of not preparing early

If these employment law changes catch you off guard, it could mean rushed policy changes, rota chaos, and unnecessary costs. That's too much to gamble.

• Compliance
  From fines to claims from employees to reputational harm, leaving these changes to a last-minute rush is more damaging than easing into them over time.
• Staff burnout & high turnover
  Delaying workers’ protections doesn’t just pile up the admin before they become legal requirements. Delaying it delays improving your team’s productivity, morale, and well-being, which all contribute to burnout and high turnover.
• Operations
  All the consistent rota redos and last-minute shift changes and cancellations don’t just impact staff – they affect you, too. If you delay making the necessary changes to your operations, the more you’re feeding the inefficient, time-consuming, and stress-inducing admin that lets mistakes slip through the cracks.

Siân Whelan, Managing Director of Norton Loxley, a HR Consultancy here in York, explains:

“It’s vital to ensure your current HR processes and workforce systems are robust enough to handle the changes, and if not, consider alternatives.

“Employers will need to review their probation, dismissal and sickness policies to ensure they are fair, consistently applied, documented and that managers are trained to follow them from day one.”

Taking small, steady steps now (like reviewing contracts and digitising rotas) will save stress and protect your business in the long run.

What should hospitality employers do now?

Other than the likelihood of admin increasing, the main takeaway you’re probably taking home is: more costs. Be it from providing staff with guaranteed hours, compensation for cancelled shifts, or immediate sick pay.

Siân offers some advice around cost pressures:

“The main advantage for employers who use zero-hour contracts is the flexibility to scale up or down resources. One obvious concern is additional costs to fund compensation for cancelled shifts and guaranteeing hours, which is inevitably likely to add to the wage bill and could put a strain on overall budgets. 

“So, working hours will need to be tracked and monitored closely over the reference period. This will require robust HR processes and reliable systems to track working hours and record-keeping ahead of time.”

So, what should you do?

A hospitality owner/manager’s checklist:

1. Review current contracts & HR processes
   Prepare to update contracts and HR policies covering shift cancellations, notice periods, flexible working requests, and how compensation will be calculated. Also, tighten your onboarding process for new employees with the upcoming new day-one rights.
2. Plan for peak periods
   Forecasting demand and labour costs will be your saviour for your busy seasons, helping you to schedule early and limit last-minute edits with compliance in mind.
3. Train managers
   With changes to guaranteed hours and flexible working, it’s important to train your managers on how onboarding will change and what will be considered reasonable before refusing a flexible working request.
4. Focus on forecasting
   Whether demand or labour costs, having an idea of how busy a period could be and how much it could cost will save you from under- and over-staffing, plus help you budget.
5. Engage with employees
   Consult them before creating your tipping policy, and determine whether they would prefer to remain on zero-hour contracts or not.
6. Start leaving manual admin behind
   Manual processes and managing rotas through spreadsheets and printouts are too risky with the new Employment Rights Bill amendments. With digital systems like RotaCloud, compliance is simple. Everything from staffing levels and working hours to time tracking and budgeting is constantly visible and recorded.
   
   But there’s more...

• Automated shift tracking & reporting supports sick pay & helps maintain accurate audit trails
• Instant shift notifications keep everyone in the loop to reduce that last-minute scheduling stress & cover chaos
• Availability & shift flexibility give staff more autonomy with minimal admin
• Digital forecasting provides insight for demand and expected costs for your busy periods, allowing you to balance the right staffing levels and stick to a budget
• Real-time visibility of hours & costs reduces reliance on casual staffing & instead guarantees contracted hours
• Visibility of multiple teams & locations helps you oversee staffing levels & their associated costs, showing you if you’re on or over budget
• Built-in UK labour laws mean immediate compliance with Working Time Regulations & automatic audit trails

Wrap-up

The Employment Rights Bill UK is set to bring many changes in hospitality employment law, meaning many changes for employers and managers to make. It certainly can’t be run from, and a head-in-the-sand approach to avoid it until you need to won’t ease the pressure. The ‘need to’ is now, not just when the amendments become law.

But the change can be manageable with the right preparation – and, with the right preparation, your life can be a whole lot easier.

Siân perfectly sums it up:

“Whilst the Employment Rights Bill is still under consultation, the direction of travel the Government is looking to take is clear. It’s therefore sensible for employers to get ahead and prepare by reviewing their workforce contracts now, as well as considering what digital tools they need to implement to effectively manage working time, rosters, and other key HR data to help them remain compliant with any new employment law changes that come into force.”

Hospitality thrives on flexibility. So, while these new changes to hospitality employment law seem to take the flexibility from you, the manager, the right digital tools make compliance and flexibility work together effortlessly. 

While digital transformation certainly makes things smoother, easier, and more efficient, it’s now about protecting your staff, improving morale and your service, and future-proofing your business. 

After all, you should be focusing on service, not admin.

Frequently asked questions

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Thank you to Siân Whelan, Managing Director of Norton Loxley HR Consultancy, for her insight on this topic and her help with this article.

When will the Employment Rights Bill come into effect?

The Bill is expected to become law in Autumn 2025, with some measures rolling out through 2026 and beyond. Hospitality employers should start preparing now to avoid disruption during busy seasons.

What changes from the Employment Rights Bill are expected in April 2026?

From April 2026, the first wave of the Employment Rights Bill will start to take effect, including:

• Parental leave from day one of employment.
• Statutory Sick Pay is available immediately, removing both the waiting period and minimum earnings threshold.
• The launch of a new Fair Work Agency, designed to uphold fairness and consistency in workplaces across the UK.
• Stronger protections for whistleblowers, ensuring staff can raise concerns safely.

What will change under the Employment Rights Bill in October 2026?

Further measures are expected to roll out from October 2026, introducing:

• A ban on unfair “fire and rehire” practices.
• A new Fair Pay Agreement — initially focused on the adult social care sector, but expected to influence other industries, including hospitality.
• Clearer duties for employers to prevent third-party harassment (e.g. from customers or suppliers).
• A new legal requirement to take “all reasonable steps” to stop sexual harassment and create safer workplaces.

What new rights are planned for 2027?

In 2027, several additional worker protections are due to be introduced in the Employment Rights Bill UK:

• Stronger job security for pregnant employees and new parents.
• A day-one right to claim unfair dismissal.
• The introduction of statutory bereavement leave.
• A formal end to exploitative zero-hour contracts.
• Expanded flexible working rights, making it easier for employees to adjust hours and patterns to suit their needs.

When is the Employment Rights Bill expected to become law?

The Bill is expected to receive Royal Assent in Autumn 2025, which is when it officially becomes law.

Until then, some details may still change. But hospitality businesses are being encouraged to prepare early to avoid last-minute compliance challenges when the changes begin rolling out in 2026.

What’s next for workplace laws in hospitality after 2025?

Following the Employment Rights Bill, further updates around fair pay, tipping, and working hours are expected in 2026. Keeping systems digital and compliant now will make it easier to adapt when future changes come into play.