The Employment Rights Act: Everything hospitality operators need to know (September 2026 update)

The Employment Rights Act 2025 (previously known as the Employment Rights Bill during its passage through parliament) is a core piece of legislation that achieved Royal Assent in December 2025. The Act is bringing some of the biggest changes to UK employment law in a generation (as outlined in our previous report).

The first major changes came into effect in April 2026, including reforms to Statutory Sick Pay and new day-one rights to Paternity Leave and Unpaid Parental Leave. But for hospitality businesses, some of the most operationally significant changes are still to come. 

Over the remainder of 2026 and into 2027, employers will need to prepare for further changes covering tips, guaranteed hours and shift changes, and unfair dismissal. 

While some of the detail is still being finalised, there is enough information available for businesses to start considering how their current processes and working practices may need to change. 

Main updates for the hospitality industry 

The Implementation Roadmap includes information on the key measures. Some updates, such as changes to zero-hour contracts and whistleblower protections, won’t take effect until October 2026 or later in 2027. 

The key legislation introduced in the first wave in April 2026 relevant to hospitality operators included:

• Day-one employment rights: As of April 2026, employees are entitled to statutory benefits and protections, including paternity leave, unpaid parental leave, and bereavement leave from their first day of employment. 
• Statutory Sick Pay (SSP) enhancements: The Lower Earnings Limit for SSP eligibility has been removed, extending coverage to approximately 1.3 million low-paid workers. Additionally, SSP is now payable from the first day of sickness absence, eliminating the current three-day waiting period.
• The Fair Work Agency: A new Fair Work Agency was also launched in April 2026 to enforce employment rights under a single body, headed up by CEO Matthew Taylor. This body now serves as a regulatory authority to ensure compliance with the new laws. 
• Sexual Harassment Whistleblowing: As of April, anyone reporting sexual harassment (past or present) now receives automatic protection from unfair dismissal and prejudicial behaviors. Additional employer duties, such as preventing sexual harassment by third parties, will come into force on 30 October 2026.
  

What to expect throughout 2026 and into 2027

While April 2026 marked the first wave of changes under the Employment Rights Act, more legislative updates are due to be phased in between now and 2027. Hospitality employers should begin preparing now for the next phase of reforms, particularly those that will affect scheduling practices and contract structures.

Here’s what to keep on your radar:

• Extended deadline for Employment Tribunal: October 2026

From 1 October, employees will have six months to bring a claim to the Employment Tribunal, up from three currently.

• Sexual harassment measures: October 2026

Employers will have a duty to take ‘all reasonable steps’ to prevent sexual harassment in the workplace from 30 October 2026, including by third parties. 

• Strengthening tipping law: End of 2026

Initially expected in October 2026, measures to strengthen the Allocation of Tips Act 2023 have since been delayed after industry opposition to a draft Code of Practice, which the Government withdrew in July. 

The new measures will likely require a regular formal review of tipping policy in consultation with staff and, in cases of non-compliance with tipping law, the right for individuals to seek compensation (capped at £5000) via an Employment Tribunal. 

• Unfair dismissal: January 2027

While we initially expected employees to gain the right to claim unfair dismissal from day one of employment, the Government was forced to drop this after a series of defeats in the House of Lords. 

Instead, from January 2027, workers will be able to claim unfair dismissal after six months of employment, a shift from the current two-year qualifying period. The new protections will apply to anyone who has completed at least six months of service as of January 2027. 

The roadmap also confirms the removal of the statutory cap on compensatory awards, previously 52 weeks’ gross pay or a maximum of £118,223. 

• Abolition of ‘Fire and Rehire’ practices: January 2027

Employers will be prohibited from using ‘fire and rehire’ tactics – where an employer fires an employee and then immediately rehires them on more favourable terms for the employer. This change aims to protect workers from abrupt and unfavorable changes to their contracts. The ban is slated to come into effect in January 2027.

• Zero-Hours contract updates: Expected 2027

The Government are likely reviewing the results of the consultation which ended on 25th August on proposed reforms to end zero-hour contracts. Employers will be required to offer employees on zero-hours or unpredictable contracts a contract with guaranteed hours, based on the hours they’ve regularly worked over a reference period. Employees can choose not to accept this offer and remain on zero-hours or their original contracted hours. Employers will no longer be able to include exclusivity clauses in zero-hours contracts to prevent staff from taking on secondary employment.

Employers will also be required to give sufficient notice when scheduling shifts and avoid last-minute changes. If shifts are cancelled, shortened, or rescheduled without enough notice, they may need to compensate staff, though there are likely to be certain exceptional circumstances where this won’t apply. These shift management rights and payment protections will likely extend to agency workers as well.

What does this mean for hospitality operators? 

With a large, casual workforce and a heavy reliance on agency staff, the hospitality industry is very exposed to these changes. Operators need to prepare for increased administrative responsibilities, as well as the additional costs associated with expanded employee rights, such as covering leave.

To navigate these changes effectively, hospitality businesses should:

• Review employment contracts to ensure they comply with the new rights and accurately reflect working hours.
• Train managers to ensure they’re aware of the implications of the new laws and how to implement them.
• Understand scheduling patterns for employees, particularly around shift changes and contracted vs. actual hours worked.
• Review probation period policies and make sure all line managers understand the process and relevant deadlines.

Preparing for long-term change

The Employment Rights Act marks a major shift in the UK’s employment landscape. While a phased implementation approach gives employers time to prepare and adapt, ongoing Government consultations suggest some changes aren’t yet set in stone. For hospitality operators, who are particularly exposed to the changes, staying on top of incoming legislation will be critical. 

Need support navigating what’s ahead? Fourth’s expert HR and Payroll Bureau is here to help. Contact the team today.