Top ten upcoming employment law changes — how hospitality employers should prepare

Before the election, the Labour Party set out radical employment law changes designed to boost wages, make work more secure and improve living standards.

Now that our new Government is in place, experienced employment lawyer Lee Jefcott explains what the expected key changes are, when they’re likely to take effect and what action employers in the hospitality sector need to take to prepare.

1. Increase to National Living Wage

Next year — for the first time — the cost of living and expected inflation will be taken into account in setting the national living wage (NLW). This is the hourly rate that applies to workers aged 21 years and over. The lower bands — which apply to workers aged 18 to 20 — will ultimately be abolished, creating one single adult rate. Rates for workers under 18 and apprentices will be set as high as possible without damaging their employment prospects.

When: The new rates will apply from April 2025.

Action: Plan for pay rises. Expect pressure to increase pay from workers just above these rates to remove ‘bunching’. Build increased pay into financial budgets.

2. Allocation of Tips Act

It feels like it has been a long time coming but when the Allocation of Tips Act comes into force, 100% of tips and service charges received by the employer (or over which they exert control) must be paid to workers by the end of the month following receipt of payment. There must be a ‘fair allocation’ of the monies to such workers and workers will have the right to request a copy of their employer’s tipping records. A tipping policy must be made available to workers in writing. Claims can be made to employment tribunals if there are breaches.

When: From 1 October 2024.

Action: Check whether you’re affected — do you receive tips or service charges or exert control over them? Find out what’s required and ensure that you’ll be compliant with the new requirements.

3. Duty to protect workers from sexual harassment

Some high-profile hospitality brands have been on the receiving end of bad publicity as it has emerged that complaints of sexual harassment have been swept under the carpet and perpetrators allowed to quietly resign. Colleague behaviour and how employers deal with complaints has never been more under the spotlight. In October 2024, the law is being strengthened. Employers will be under a legal duty to take reasonable steps to prevent the sexual harassment of their workers. If claims are brought, employment tribunals will be able to increase compensation by up to 25% if there has been a breach of the new requirements.

When: From 26 October 2024.

Action: Revisit your policies and ensure that you can show effective training has been delivered to all workers and there’s a plan in place for regular follow-up training. Increase awareness of the do’s and don’ts. Create a culture where poor behaviour is called out. Ensure that staff know how to report concerns and you can demonstrate complaints have been dealt with effectively. The new requirements will cover sexual harassment from third parties (such as customers and suppliers), so consider zero tolerance warnings.

4. Day one rights — unfair dismissal

For many years, employees have generally required two years’ service to bring a claim of unfair dismissal. However, the Government has promised to give workers the right to claim unfair dismissal from day one of their employment (subject to probationary periods). 

When: An Employment Rights Bill is expected by mid-October 2024 but it may be some time before the new Bill is passed.

Action: This is the most far-reaching of the new changes and will increase the risk of unfair dismissal claims. How can you make your recruitment process more robust to reduce the need to dismiss staff?  Train your managers and support them to carry out robust probationary reviews. 

5. The banning of ‘exploitative’ zero hours contracts

While Labour has pledged to end insecure employment and contracts that provide for ‘one-sided’ flexibility, it has recognised that an outright ban on all zero hours contracts is unworkable as some workers enjoy the flexibility that this brings. It remains to be seen how these proposals will be brought in. One idea is that a worker will get the right to request a contract with guaranteed hours which reflects the actual hours worked in a 12-week reference period. There’s also likely to be compensation for shifts that are cancelled by the employer on a sliding scale by reference to the amount of notice provided to the worker.

When: An Employment Rights Bill is expected by mid-October 2024 but it may be some time before the new Bill is passed.

Action: Check whether you use zero hours contracts — for example, to cover peaks and troughs in demand — and look at how hours are allocated to workers. Where you can offer contracts with a minimum number of guaranteed hours, consider how you would reduce situations where staff work fluctuating hours in excess of these.

6. Flexible working by default from day one

This is different from the right to request flexible working, which has been in place for some time with employers being able to turn down such requests. Instead, the focus will change to an obligation to offer flexibility except where it isn’t ‘reasonably feasible’. The onus will therefore change to the employer to demonstrate that a particular working arrangement isn’t reasonably feasible, with an expected increased role for employment tribunals to decide whether this is the case.

When: An Employment Rights Bill is expected by mid-October 2024 but it may be some time before the new Bill is passed.

Action: Many hospitality businesses already offer a great deal of flexibility to front-of-house service staff in terms of shifts. However, the new rights will apply to all jobs. Consider the types of flexible working patterns you could offer across all roles — including hybrid working, compressed hours and rotating across different sites — as well as the business case where such working patterns are impossible.

7. Pay gap reporting extended for larger employers

Labour reports that progress to remove the gender pay gap has stalled and ethnic minority and disabled employees have borne the brunt of the cost-of-living crisis. It has therefore proposed that larger employers (250 staff or more) be required to develop, publish and implement action plans to close their gender pay gaps. This goes further than the current requirements to publish gender pay gap figures. In addition, the publication of ethnicity and disability pay gap figures will be required.

When: It’s unclear whether these requirements will be included in the Employment Rights Bill or whether separate regulations will be made. You can expect this to take some time. 

Action: If you’re a larger employer, consider your gender pay gap figures and think about which factors are driving your gender pay gap. Work up an action plan to tackle this. Consider how you’d be able to report on ethnicity and disability pay gaps and whether such data is collected.

8. Trade unions

Labour is committed to strengthening the role of trade unions in the workplace and making it easier for trade unions to seek formal recognition with employers. Gig workers and those in precarious work are to be given meaningful rights. All employers will have an obligation to inform employees of their right to join a trade union. The rights of trade union representatives will be improved.

When: It’s unclear whether these requirements will be included in the Employment Rights Bill or whether separate regulations will be made. You can expect this to take some time. 

Action: Start to develop an ‘employee voice’ plan. Consider setting up a mechanism for your workers to be consulted or involved in decisions that affect them. 

9. Enhanced redundancy rights

For employers that need to make redundancies, the law requires collective consultation with employee representatives when it’s proposed to dismiss 20 or more employees by reason of redundancy at one ‘establishment’ within a period of 90 days. Expensive claims can follow if this duty is breached. In the past, ‘establishment’ has been interpreted to mean at the particular site where the employee works — making it unlikely that the threshold would be reached. However, it’s now proposed that this will mean ‘across the whole business’. Therefore, the collective consultation trigger point will be much more easily reached leading to the risk of expensive claims if the requirements are not met.

When: It’s unclear whether these requirements will be included in the Employment Rights Bill or whether separate regulations will be made. You can expect this to take some time. 

Action: This will affect multi-site operators in the hospitality sector that must close sites or reduce their workforce. Reaching the ‘20 or more’ threshold will be more common if the numbers are counted across the business — thereby increasing the likelihood that collective consultation with employee representatives will be necessary. This is one to keep on your radar.

10. Safer workplaces

Labour’s ‘Make Work Pay’ document speaks of updating health and safety guidance to reflect modern workplaces. Specific reference is made to people working in places where the temperature is unacceptably high. Although there are no specific references to protecting staff from abuse from customers, this is becoming an increasing concern in hospitality workplaces. It wouldn’t be surprising if this area becomes subject to specific proposals.

When: Watch this space.

Action: Keep a watching brief on this. 

Talk to us

If you need advice on any of these areas, our experienced employment lawyers are on-hand to assist. 

Give us a call on 0333 004 4488, email us at hello@brabners.com or complete our contact form below