Running a pub is already a tight-margin business, and the Employment Rights Bill, expected to receive Royal Assent in the coming weeks, is about to tighten the screws even further.
As Carroll Accounts’ director David Burr put it, ‘Hospitality is taking all the hits with this bill.’
Several changes will increase labour costs, limit staffing flexibility, and create new liabilities for employers. These include liabilities for behaviour you can’t always control, like the way customers treat your team. Plus, the creation of the Fair Work Agency means you’ll need even stronger compliance documentation.
Fortunately, not every measure in the Bill comes into force at the same time. The government is phasing in different parts of the legislation through 2026 and 2027. (Throughout this blog, we’ve noted the expected implementation dates using the timelines published by Acas.)
But that doesn’t mean you have time to sit around and wait. It means that now is the time to familiarise yourself with what’s coming so you can make the necessary changes to your HR policies and labour costs.
In this blog, we’ll explain the components of the Bill that will have the biggest impact on pubs and other hospitality businesses.
Important note: This blog reflects the content of the Bill as of November 2025. It is not legal advice. To ensure full compliance, speak to your HR professional and keep an eye on regulations as they’re released over the next two years.
Leave Policies
There’s no way around it: Paying for employees to take leave is expensive. And it’s about to get even more so.
Day-One Rights for Parental Leave (April 2026)
From April 2026, employees will be able to take statutory parental leave, including paternity leave, from their very first day of employment. Previously, employees needed one year of continuous service before qualifying.
For pubs, this removes a useful buffer. If you hire someone new and they immediately qualify for leave, you may need to bring in temporary staff or absorb gaps in the rota without warning. In an industry that often hires quickly to fill immediate needs, this creates more unpredictability.
Statutory Sick Pay From Day One (April 2026)
Currently, statutory sick pay (SSP) begins on day four of an employee’s illness. From April 2026, SSP will start on day one.
What will this cost pub owners? The 2025/26 SSP rate is £118.75 per week, and with a 5-day qualifying-day pattern, the daily rate is £23.75.
Under the current rules, the first three days are unpaid. Under the new rules, employers will now have to pay:
● Day 1: £23.75
● Day 2: £23.75
● Day 3: £23.75
That means that the additional cost per short-term sickness absence is £71.25 per employee.
If your pub typically sees around 10 short-term sickness absences per year, the cost becomes:
£71.25 × 10 = £712.50 in new annual costs
And that’s for a single pub. Multi-site operators will feel this even more sharply, particularly in hospitality, where short-duration absences are common and rotas are already tight.
Statutory Bereavement Leave (2027)
Most pubs are already compassionate employers who allow team members time off when they lose a family member. But from 2027 onward, this will be a hard requirement. Statutory leave must be given for a broader range of losses, including loss of a pregnancy.
As of November 2025, several provisions of this requirement are still under consideration, including:
● eligibility criteria
● length of leave
● types of pregnancy loss
● when and how bereavement leave can be taken.
Protection Against Harassment (October 2026)
If you’ve been in the pub industry for long, you know that harassment, particularly sexual harassment, is unfortunately quite common.
‘It happens a lot,’ says David. ‘People get drunk, they’re really rude and they bully the staff. I’ve seen it loads, and I’ve had to tell the customer myself to leave it alone or kick them out.’
Under the Bill, however, employers will have a duty to prevent ‘third parties’ (in this case, pubgoers) from harassing their staff. The exact regulations for harassment are expected to be released in October 2026.
Of course, a customer’s behavior is never 100% within your control.
‘If the owner’s not even onsite, he or she couldn’t do anything about it, but because it’s their business, they can get taken to tribunal for it and get fined,’ David says.
So what’s the solution for pub owners? You must take reasonable steps to prevent and address harassment, or a staff member may be able to take you to tribunal for compensation.
If you don’t already have a posted, zero-tolerance anti-harassment policy, now’s the time to implement one. But a policy isn’t any good if it isn’t enforced consistently. Train your managers on the proper procedures for identifying harassment and removing offenders. That way, when the policy takes effect, they’ll be prepared. And hopefully, your pub will develop a reputation for being a place where harassment isn’t welcome.
Tipping Policies (October 2026)
Pubs will face new legal duties around how tips are managed, distributed, and documented. The Employment Act 2023, or ‘Tipping Act’, has already mandated that employers create a transparent written policy regarding tips, among other provisions. It also allows workers to bring employers to the Employment Tribunal for failing to comply.
But two new stipulations will come into force in October 2026:
1. You must consult with your workers or their elected representatives about your tipping policy. You’ll still be free to set your own tipping policy, but you’ll no longer be allowed to impose it unilaterally.
2. You must update your policy every three years. This forces you to keep tipping arrangements transparent and up to date, especially as service charges, card-payment norms, and staff expectations continue to shift.
David explains that some pub owners continue to misuse tips. They may underhandedly use tips to pay extra to people in hard-to-fill positions, when those tips ought to be distributed according to a more transparent policy.
‘This one gets my vote,’ David says. ‘It’s taking away the ability to abuse tipping.’
Read more about setting your tipping policies.
Restrictions on Terminating Employment
Several provisions of the Bill will restrict employers’ ability to terminate employment.
Right to Claim Unfair Dismissal (2027)
Employees will gain the right to claim unfair dismissal after just six months, rather than two years as in the past.
For pub owners, this ramps up the importance of having well-documented HR policies as well as being particularly careful about who you hire.
To reduce risk, David recommends thorough reference checks. ‘If you recruit someone and it turns out they’re lazy, you’re opening yourself up to potential problems. Because you didn’t do your reference checks, you didn’t know, and now it’s harder to dismiss someone quite quickly.’
To minimise risk, pubs should maintain well-documented performance and conduct policies. And David suggests bringing in an HR professional if you don’t already have one.
Strengthened Protections for Pregnant Workers (2027)
The Bill makes it even harder to dismiss pregnant workers or those returning from maternity leave. The protected period is extended until 6 months after the employee returns to work, and the standard for a fair dismissal in these cases may become stricter.
In practice for pubs, this means that managing performance issues, restructuring, or redundancy involving a returning mother will require especially careful documentation. You’ll need stronger justification and a rigorous process to reduce risk of an employment tribunal claim.
Restricting ‘Fire and Rehire’ (October 2026)
From October 2026, you may only use fire-and-rehire when there is genuinely no other way to keep the business operational.
In the pub world, fire-and-rehire often happens after redundancies. Owners rehire staff into different roles, or lower-cost roles, to maintain service. The Bill makes it riskier to rely on this strategy: you’ll need to demonstrate that you’ve explored alternatives and that any rehire is a last-resort measure.
Increased Penalties for Failing to Consult on Large Redundancies (April 2026)
Under the new Bill, the penalty for failing to consult employee representatives when proposing 20 or more redundancies will double: from 90 days’ pay to 180 days’ pay. But for most pubs, this change may not bite, because only very large operations hit the 20-redundancy threshold.
Fortunately, only the largest pub groups are likely to be exposed to this particular risk. Single-site or small chain pubs are unlikely to hit the 20-redundancy threshold for triggering this provision.
Changes to Zero-Hours Contracts (2027)
In one of the biggest changes for pub owners, the Employment Rights Bill is set to reshape how zero-hours contracts work. The aim is to give workers more predictability and to stop employers from using zero-hours arrangements in ways that create unwanted instability or last-minute losses of income.
The impact on pubs will be significant. According to the Office of National Statistics (ONS), hospitality is one of the sectors that relies on these contracts the most.
David explains: ‘You could give an employee no hours one week, then 10 hours the next week. Then you’re not busy the following week, so they get no hours. The government think that the employee wants protection against that and that you have to give them fixed hours.’
Workers Will Gain the Right to Request Guaranteed Hours
Zero-hours staff will be able to request a contract that reflects their actual average hours. In other words, if someone routinely works 20 hours a week, they’ll be entitled to ask for a 20-hour contract.
This doesn’t mean zero-hours contracts disappear. It means workers can opt into stability when it suits them, but those who prefer true flexibility will still be able to keep it.
David explains that many people, including students, often like zero-hours contracts. ‘It works both ways, right?’ he says. ‘They can say, “I don’t want to work next week, I’ve got to study, or I’ve got a party to go to.” And they’re allowed to do it because they’re on a zero-hours contract.’
Students or people picking up extra shifts often like zero-hours work. The Bill doesn’t stop them choosing that.
Compensation for Cancelled, Moved, or Shortened Shifts
In another sizeable shift for pubs, if an employer cancels a shift at short notice, moves it, or cuts it short, the worker will be entitled to compensation. The exact rates will be set in regulations, but the principle is clear: You can’t schedule people ‘just in case’ and drop them last minute.
What This Means for Pub Owners
● Less rota flexibility: You’ll need to schedule only when you genuinely need the hours.
● No more speculative shifts: Last-minute cancellations will come with a cost.
● Possibly higher (but more predictable) labour costs: Guaranteed-hours requests will lock in a baseline of hours.
● Manager training is essential: Anyone responsible for scheduling needs to understand the new rules to avoid accidental breaches.
Establishment of the Fair Work Agency (April 2026)
All of these new regulations will need to be enforced. That’s why the Bill creates the Fair Work Agency, which will merge several existing enforcement bodies, including the National Minimum Wage enforcement team of HMRC. The goal is to create a single enforcement body with significantly stronger powers. But for small pub owners, this means more scrutiny, more paperwork, and more risk.
The Agency will have ‘inspection powers’ and can require undertakings to force employers to comply. Significantly, David explains, ‘there are criminal level offences, so they could get taken to court criminally.’ That’s a major escalation compared to today’s system, where most wage-related issues are resolved through civil routes.
What should worry pub owners most is how quickly a routine issue could escalate. Right now, an employee must take a claim to the tribunal themselves. Under the new system, enforcement officers could trigger legal action, even if the staff members don’t choose to file a claim.
For pubs, this centralised enforcement body means much tighter expectations around record-keeping, staff training, and compliance. Even honest mistakes could become expensive.
The FWA may inspect pubs for compliance with issues such as:
● National Minimum Wage compliance
● Accurate recording of hours worked
● Holiday pay calculations
● Statutory Sick Pay compliance
● Tipping and service charge distribution
● Right-to-work documentation
● Employment status and contracts
● Fair dismissal processes
● Record-keeping and payroll administration
● Health & safety obligations
Read more about your options for compliant holiday pay.
Our Recommendations
The next two years are going to reshape the way pubs manage staff, pay, rotas, and HR risk. Some of these changes will increase your labour costs. Others will add new liabilities. And several, especially the Fair Work Agency and the new dismissal rules, will expose pubs to penalties for mistakes that would previously have gone unnoticed.
If you don’t already work with an HR consultant, now is the time to consider it. The days of informal processes, verbal warnings, and loose documentation are over. You’re going to need clear and consistent procedures with written records that can stand up to scrutiny.
There’s also the financial side to consider:
- Increased labour costs
- Cashflow impacts
- Staffing model shifts
- Tipping arrangements
Carroll Accountants can help you forecast the impact, budget for it, and put systems in place so these reforms don’t catch you out.
The Employment Rights Bill will demand more from employers. But with the right support, you can stay compliant and avoid the financial and legal risks of getting it wrong.