The legislation introduces statutory sick pay from day one of absence, tighter rules around zero hours contracts and compensation for cancelled shifts, alongside earlier access to parental and bereavement leave.
It will also shorten the qualifying period for unfair dismissal protection from two years to six months from 2027 and introduce a new Fair Work Agency with powers to enforce employment rights.
For a sector employing more than 3.5m people and heavily reliant on flexible labour, operators say the reforms could significantly affect how hospitality businesses hire, schedule and manage staff.
Charley O’Toole, chief of staff at Chestnut, said the biggest impact would likely be felt during peak seasonal recruitment.
“I think the impact for us will be when our recruitment peaks for seasonality where we are at our busiest,” she said. “Having tighter regulations for employees is really important, however these changes won’t necessarily enhance the core of our workforce.”
O’Toole said businesses would need to invest more in training and management processes. “We have been practising structured probation periods for a while as we see the benefits of regular check ins that are documented and in line with employees’ job descriptions and KPIs. However, investment in training for managers will be required.”
Increased operational pressures
The move to day one sick pay and expanded leave rights could also increase operational pressures during busy trading periods.
“I think this will impact at peak and affect the core workforce,” O’Toole added. “With this will of course come an increase in cost with a potential detriment to morale.”
Lancaster Brewery managing director Matt Jackson said the scale of the reforms had come as a surprise to many operators.
“I didn’t fully appreciate the magnitude of what’s about to occur,” he said. “The phrase we’ve been using internally is ‘it’s all bad’. It’s all bad for us, not for employees. I get why they’re doing it, but there has to be a compromise because we can’t carry on like this.”
Jackson echoed O’Toole’s comments that operators are already dealing with multiple pressures. “Everything seems to be going against our industry. It feels like another one after another. It’s scary.”
He added that many businesses were only beginning to fully understand the implications of the reforms. “We’ve had our heads in the sand and were not sure what’s coming our way,” he said. “It blew my mind.”
‘Field of landmines’
Heath Ball, managing director of Frisco Pubs, said the changes could create additional complexity for operators already under pressure.
“I understand that we need to protect certain individuals in society from dubious operators who take advantage of people,” he said. “However, these new employment rights create a field of landmines for operators. Day one rights, for example, will require you to make sure you are really 150% on any new hires. You cannot afford to be relaxed about recruitment.”
Ball added the reforms would increase administrative and financial pressure.
“The additional time and cost this will take will add yet another straw to the proverbial camel’s back, and that camel is already buckling under the strain of a government that does not understand businesses.”
Owner of family-run business Barr & Barr Hospitality, Rob Barr, said the legislation could force operators to rethink traditional employment models within the sector.
“The act will be one of the most significant pieces of legislation in decades for employers,” he said.
“For hospitality there are considerable burdens to consider. With already narrow margins driven by rising food, beverage and energy costs, alongside national insurance and national living wage increases, businesses will have to invest more in HR.
“The traditional model of high turnover employment will have to be reconsidered and replaced with a more structured and manageable approach.”
Lawson Mountstevens, managing director at Star Pubs, said operators would need time to adapt.
“The changes contained within the legislation are of course a number of issues that we, our licensees and operators must manage over time, and where necessary adapt,” he said.
“There remains a significant burden of cost from both taxation and regulation on pub businesses. We will continue to work hard to persuade the Government to reduce this burden in the coming months.”
The reforms come as hospitality businesses are already facing rising labour costs following increases to wages and employer national insurance contributions.
While the immediate financial impact of the employment rights changes may be smaller, operators say the reforms are likely to be more complex operationally as they reshape how hospitality businesses manage flexible workforces.
