New Employment Rights Bill Unveiled

a blog by Patricia Colden of Colden HR

What has the Government said?

The Government has now unveiled what it promises to be the biggest overhaul of workers’ rights in a generation.  Ministers say the new Employments’ Rights Bill will raise living standards, support workers and all while remaining pro-business. However, some companies are less sure, fearing they’ll pay the price for planned reforms which will now go to consultation.

Angela Raynor insists the Government has struck the right balance, stating the packages are “pro-business and pro-worker” whilst also acknowledging some of the challenges around the huge reform packages!

The Government has indicated that it intends to begin consultation on the reforms in 2025, with the majority of reforms taking effect no earlier than 2026.

Changes to Zero Hours Contracts

The changes in the Bill include day one rights for all workers, increased eligibility for sick pay and greater rights to flexible working, will affect all industries.  However, the biggest change for the hospitality industry will arise from the planned changes to Zero Hours contracts – used extensively in this sector.

The Government made a manifesto commitment to end “exploitative” zero-hours contracts.  This Bill now addresses that.  While the details will be debated and agreed over what looks to be a long consultation period, the main changes proposed are:

• Employees will have a right to a guaranteed-hours contract if they work regular hours over a 12-week reference period, or different review periods if hours become regular over a longer period of time.
• Workers on zero and low hours contracts will need to be given ‘reasonable notice’ of changes in shifts or working time, with compensation for shifts cancelled or shortened at short notice.

What does this Mean for the Hospitality Industry?

The proposed changes to zero-hours contracts under the Bill are likely to have a significant impact on the hospitality industry, which relies heavily on a flexible, ‘on demand’ workforce.

On the negative side,

Increased Costs:

Hospitality businesses may face higher staff costs as they will be required to offer guaranteed hours after a 12-week period. This could increase payroll expenses, especially during off-peak seasons when demand for staff naturally fluctuates.

In addition, the proposed requirement to pay workers for cancelled or shortened shifts may increase costs in an industry where customer footfall can vary unexpectedly due to external factors like weather or events.

Operational Flexibility:

The changes could reduce the flexibility that hospitality businesses have relied on to manage staff levels to respond to fluctuating or seasonal demand. Employers may need to adjust scheduling practices and plan more cautiously to avoid having to offer guaranteed hours or pay compensation for last-minute changes​

Recruitment Challenges:

With greater job security and guaranteed hours required after the reference period, employers will need to be more selective and robust in their hiring practices to ensure they find candidates who are likely to stay longer or perform consistently well. This will require more rigorous recruitment processes and possibly fewer job opportunities for transient workers like students.

On a More Positive Note

While the upcoming changes to zero-hours contracts will undoubtedly present challenges for the hospitality industry, there are potential advantages as well.

Improved Staff Retention:

Offering guaranteed hours and financial compensation for cancelled shifts can lead to greater job satisfaction among employees. This could reduce high staff turnover, a common issue in hospitality, where inconsistent work hours often push workers to seek more stable employment elsewhere​

Better Productivity and Service:

With more secure employment conditions, workers may feel more motivated and engaged, resulting in better service and increased productivity. Satisfied employees who know they will have guaranteed hours are more likely to perform consistently, which could improve customer satisfaction in service-heavy sectors like hospitality

Attracting Talent:

The changes could make hospitality roles more attractive, particularly to those who might have avoided the industry due to the instability of zero-hours contracts. By offering more predictable working conditions, businesses may draw from a wider, more experienced pool of labour.

Long-Term Planning:

While initially challenging, the new requirements might push hospitality businesses to improve their long-term workforce planning. This could lead to more efficient staffing, better financial forecasting, and more effective business operations as companies adapt to maintaining a more stable workforce​

These advantages could ultimately help hospitality businesses create a more loyal, motivated, and productive workforce despite the initial adjustments required.

Final Comment

There is no doubt that the Bill introduces the biggest changes to employment law, some which will affect the hospitality industry significantly. However, there could be some longer-term benefits.  Furthermore, employers will have a long time to prepare for the changes, and the ability to influence how they will operate in practice by contributing to the consultation process. You are encouraged to use your voice, and collaborate with NCASS, in helping to shape the detail of this legislation.

Find out more about how Colden HR can support you here.

Click this link for more information on the Employment Rights Bill.