The Employment Rights Bill and What it means for Your Business (18 November 2024)

The recently introduced Employment Rights Bill (ERB) is just one of many significant challenges – along with increased National Contributions - facing all employers in the year ahead, but particularly by those in the hospitality sector. The Bill promises major reforms to employment law that will have a profound impact on workforce and recruitment.

While the effects of this Bill will not be felt until 2025, and some provisions reliant on secondary legislation likely to come into force even later, it is important for employers to be aware of changes in the pipeline that may affect their codes of conduct and hiring and firing policies.

Of particular note is the ERB’s attempt to end what it calls ‘exploitative’ zero hours contracts, as these are now commonplace in the hospitality sector, and changes to the law on reasonable shift notice, tip allocation and sexual harassment will also be relevant to readers of CLH.

What follows is an overview of the main issues employers in hospitality sector need to be aware of in order to plan for the coming year and beyond.

Zero Hours Contracts:

The ERB aims to reform zero hour’s contracts. Under this Bill, employees on zero hours or low-hours contracts will be entitled to a contract offer that guarantees a minimum number of working hours, which will be determined by the hours worked during a designated reference period. Employees can choose to accept or decline this offer. However, even if an employee declines the offer, a new contract must be presented after each subsequent reference period.

This right is not automatic. The Bill states the hours worked in the reference period must fit conditions ‘as to number regularity or otherwise’. It is yet to be determined what the specifics of these conditions will be and how long the reference period will be set as, so it is likely that secondary legislation will confirm these details. Employers may also limit the guaranteed hours they offer if the employees work is limited to a specific task, event or secondary need.

To prepare for the duty to offer guaranteed hours, hospitality employers will need to consider the implications of zero-hour contracts. The sector’s seasonal and fluctuating demand could mean that reference periods used to calculate guaranteed hours may coincide with busier times, potentially requiring higher guaranteed hours than usual. Employers will need to carefully assess their reliance on zero-hour contracts and review the hours provided to employees, deciding whether such contracts remain a practical choice in light of the proposed requirements.

Notice of Shifts

The Bill promises to give employees the right to ‘reasonable’ notice of when their shifts are, and any changes or cancellations to these shifts. If a shift is changed or cancelled at short notice, the employer will be obligated to remunerate their employee. Many of the details of this right, such as the minimum notice length and how much the employee is owed, should a shift be changed or cancelled at short notice, have been left to secondary legislation. Hospitality employers will have to take extra care in ensuring their shift rotas are organised well in advance of the shift dates in order to avoid financial penalties for adjusting shifts at short notice.

Tip Allocation

Changes to employment rights recently ensured that employees are entitled to the entirety of tips and service charges at their place of work, also that employers have a duty to make sure these tips are fairly allocated by way of a written policy. The ERB will extend this so that the written policy must be made with consultation from a trade union or worker representative and must be reviewed every three years. Most business in the hospitality sector see their workers receive some form of tips, so employers will have to make sure they keep on top of their written policies.

Sexual Harassment

The Bill proposes significant changes to how sexual harassment in the workplace is protected by statute. Employers will be require to take reasonable steps to protect their employees from third party sexual harassment. This would include customers, so employers in hospitality will need to be especially aware of the risks to their public-facing employees and take steps to ensure they are safe from sexual harassment. The details on what constitutes ‘reasonable steps’ will be, particularly in the context of workplaces that are highly public-facing, such as hospitality.

The ERB and recent budget changes signal significant shifts for the hospitality sector, requiring employers prepare for what are major reforms. As these provisions unfold, employers will need to adjust hiring practices, employee protections, and policy management to meet new legal obligations, particularly as many specifics await secondary legislation. Planning will help businesses navigate these challenges, ensuring compliance and smooth adaptation to the evolving employment landscape.

About the author

Alex Morgan is caseworker in the Employment Department at Duncan Lewis Solicitors, providing comprehensive support to a team of solicitors, assisting with a wide range of employment cases, including drafting and advising on settlement agreements, employment contracts, and staff handbooks, ensuring clients receive thorough guidance on employment law requirements.

For assistance on an employment matter, contact Alex via email at AlexM@duncanlewis.com, or by telephone at 02072752845.

Duncan Lewis Employment Team

Duncan Lewis employment team act on behalf of claimants and respondents in all employment tribunal related matters in a variety of areas including unfair dismissal, redundancy, breach of contract, equal pay, maternity and paternity/adoption rights, whistleblowing and minimum wage.  Our employment law specialists can represent all types of employers, large and small – as well as individual employees and groups of employees

Duncan Lewis Solicitors

Duncan Lewis is an award winning law firm mostly recently crowned the Lexis Nexis Law Firm of the Year 2024, and recognised for its commitment to diversity and inclusion by the Modern Law awards in 2023. Rated top tier by the prestigious Chambers and Legal 500 legal guides is ranked as one of the top 250 law firms in the country by the Times and Sunday Times.