Preparing For The Employment Rights Act: What Hospitality And Leisure Employers Should Be Doing Now

By Rebecca Hughes, Associate Solicitor, employment team, Birketts LLP

The Employment Rights Act introduces a wide range of reforms which will come into force in stages throughout 2026 and 2027.

For employers in the hospitality and leisure sector, these changes arrive against the backdrop of an already challenging employment landscape, characterised by high staff turnover, casual working arrangements and increasing tribunal risk.

Research by Birketts highlights that hospitality and leisure businesses face higher-than-average exposure to employment tribunal claims, with HR professionals in the sector surveyed reporting an average of 44.53 tribunal claims over the preceding two years – around 12% higher than the cross-sector average. Early preparation for the Employment Rights Act will therefore be critical to managing risk, controlling costs and maintaining workforce stability.

The reforms are being introduced on a phased basis. This gives employers a valuable opportunity to review current practices, update policies and train managers ahead of each change taking effect.

What is changing?

The Employment Rights Act introduces a number of enhanced employment rights, several of which are particularly relevant to hospitality and leisure employers, including:
• enhanced protection against unfair dismissal
• new rights to guaranteed hours and more predictable working patterns
• restrictions on the use of zero-hours and low-hours contracts
• strengthened flexible working rights, including a new reasonableness requirement
• expanded family-friendly and sick pay entitlements
• strengthened trade union and collective rights
• increased enforcement through a new Fair Work Agency

Many of these reforms will be implemented through secondary legislation, meaning that some detail is still awaited.

Unfair dismissal: earlier protection and uncapped compensation

One of the most significant changes for hospitality and leisure employers concerns unfair dismissal. While proposals for full day-one unfair dismissal rights were removed during the Bill’s passage, the Employment Rights Act will reduce the qualifying period from two years to six months from 1 January 2027.

At the same time, the statutory cap on unfair dismissal compensation will be removed, meaning awards will no longer be subject to a maximum limit.
This is a material shift for a sector which has traditionally relied on shorter service thresholds as a risk buffer. Birketts’ research indicates that, to date, ordinary and constructive unfair dismissal claims have been less common in the hospitality and leisure sector, likely due to the prevalence of short-term and seasonal contracts. That position is likely to change once employees can bring claims after six months’ service.

To prepare, hospitality and leisure employers should:

• review probationary policies and ensure they are meaningful and well-managed
• train managers to address performance and conduct issues promptly and fairly during the first six months
• improve documentation and consistency in early employment decisions

Zero-hours contracts and predictable working patterns

Workers on zero-hours or low-hours contracts will also gain the right to request guaranteed hours reflecting their actual working patterns. Employers will also face new obligations around reasonable notice of shifts and compensation for late cancellations.

Although the detail will be set out in secondary legislation, these reforms are likely to have a significant impact on hospitality and leisure businesses, where variable hours, short-notice rota changes and seasonal demand are common.

Careful workforce planning will be essential. Employers should consider:

• auditing current use of zero-hours, casual and agency staff
• analysing actual working patterns over time
• reviewing whether contracts genuinely reflect operational need
• modelling potential cost exposure if hours become guaranteed

Taking these steps now will help businesses respond once the final rules are confirmed.

Discrimination, grievances and tribunal risk

The report, The Birketts View: Employment Tribunals in the Hospitality and Leisure Sector Impact Report 2025, highlights a particular risk area for the sector: harassment. The most common tribunal claims brought against hospitality and leisure employers were harassment related to a protected characteristic, accounting for 15% of claims.

While hospitality and leisure businesses reported fewer grievances overall than the cross-sector average, a higher proportion of grievances escalated into tribunal claims, suggesting that internal processes are not always resolving issues effectively. Discrimination was also the most common type of grievance raised.

This underlines the importance of:
• robust grievance handling procedures
• early, well-managed interventions
• training managers to deal with complaints sensitively and lawfully

Flexible working

From 2027, employers will be required to demonstrate that they have acted reasonably when relying on statutory grounds to refuse a flexible working request.

Hospitality and leisure employers should expect an increase in requests for alternative shift patterns, fixed hours or more predictable schedules.

Employers should:

• review flexible working policies
• ensure managers understand how to assess requests
• clearly explain decisions in outcome letters, including why any refusal was reasonable

Conclusion

For hospitality and leisure employers, the Employment Rights Act represents a significant shift in employment risk at a time when tribunal exposure is already higher than average.

Early planning, robust processes and well-trained managers will be essential to managing compliance, controlling costs and protecting the business while continuing to deliver high-quality customer experiences.