The UK hospitality sector plays a vital in the national economy. Upcoming changes to employment law in 2025 are expected to affect the hospitality industry more significantly than other sectors, due to the industry's high staff turnover rates and prevalence of shift work. We have highlighted below some important changes that our clients within this sector should look out for.
National Minimum Wage Increases
From April 1st, 2025, the National Minimum Wage (NMW) and National Living Wage (NLW) rates will see significant increases:
- NLW (21+ years): £12.21 (up from £11.44)
- NMW (18-20 years): £10.00 (up from £8.60)
- NMW (16-17 years & Apprentices under 19): £7.55 (up from £6.40)
Considerations for Employers:
- These increases will impact operational costs. Employers should review pricing strategies and budget for these additional wage expenses.
- Businesses should be aware that employees earning slightly above the new rates may expect pay raises and this should be factored into budgeting for the upcoming financial year.
Day One Unfair Dismissal Right
The Employment Rights Bill ('the Bill') proposes to remove the two-year qualifying period for unfair dismissal claims, allowing employees to claim unfair dismissal from their first day of employment. It is anticipated that employers will be allowed to operate a probationary period to provide flexibility greater to terminate newly hired employees. The Government has indicted a preference that the maximum probationary period be up to nine months, though this is subject to consultation.
Considerations for Employers:
- In the hospitality sector, employees tend to change jobs more frequently. To mitigate the risk of unfair dismissal claims and to reduce turnover, hospitality employers should prioritise hiring suitable candidates and strengthen their recruitment processes in preparation for the Bill coming into force.
- Maintaining clear and comprehensive dismissal policies and procedures is crucial to avoid costly tribunal claims.
The Employment Rights Bill proposed to change zero-hour contracts, requiring employers to offer staff a contract with guaranteed hours based on hours worked during an initial reference period and provide reasonable notice of their shifts. This change aims to offer workers more stability and reduce unpredictability.
Considerations for Employers:
- Hospitality employers using zero-hour contracts should assess their staffing models and find ways to guarantee hours while retaining flexibility.
- The changes will increase administrative tasks, including tracking hours worked, issuing updated contracts, and managing shift expectations.
- Although these changes won't take effect until 2026, hospitality employers should start planning for the impact on their staffing structures.
The Employment Rights Bill is looking to make flexible working the default position for all employees. Employers must consider flexible working requests from day one of employment and employers will need to justify their reasons for rejecting the requests.
Considerations for Employers:
- Hospitality employers should assess how flexible working options, such as varied shifts or hybrid models, can be implemented across different roles.
- For positions where flexible working is not feasible (e.g., frontline service roles), employers should ensure they have a clear rationale for refusal and communicate this effectively.
For more information on the Employment Rights Bill, see our blog that is linked here.
Duty to Prevent Sexual Harassment
The duty to prevent sexual harassment has been in force since 26 October 2024. This duty applies to harassment by employees and also third parties, and requires employers to take reasonable steps to prevent sexual harassment in the workplace.
Considerations for Employers:
- For employers in the hospitality sector, it can be difficult to control that acts of others, particularly with their staff constantly interacting with third parties. Employers should ensure that they have clear policies on workplace behaviour and harassment, consider conducting regular training for employees and ensure that all complaints of this nature are handled appropriately in line with the Company's named policy.
For more information on sexual harassment in the workplace, see our blog that is linked here.
With multiple regulatory changes on the horizon for 2025, the hospitality industry must adapt proactively. From the removal of the two-year qualifying period for unfair dismissal to the adjustments in wage structures, employers need to reassess their operational practices. By staying compliant with the new legislation, hospitality businesses can strengthen their workforce, improve employee morale, and maintain a competitive edge.
