Employment Rights Act 2025: What Changes for Restaurants

Picture a 60-cover independent on a Friday in November. At 4.40 in the afternoon the sous chef rings in sick. The manager moves a pot-washer to the pass, cancels a Saturday lunch shift for a casual waiter to save a few hours, and tells the closing waitress she will lock up alone. At 11 that night a table of regulars, well into their third bottle, makes remarks to her that she has heard before and does not repeat. Nobody writes any of it down. The rota is a photograph in a group chat, and the sick call is a text message.

Each of those decisions now has a legal edge it did not have a year ago. The sous chef is owed statutory sick pay from the first day he is off, with no waiting days. The casual waiter belongs to the group the government says is hit hardest by short-notice cancellations, and rules on paying for those cancellations are being written. The waitress closing alone is the picture the new harassment duty has in mind: from 30 October 2026 an employer must take "all reasonable steps" to prevent sexual harassment, and must not permit a customer to harass an employee. If she later brings a claim, the time limit is six months, not three.

All of it needs records, and most small restaurants do not hold them in one place. The government's own analysis says accommodation and food services, the sector that includes pubs and restaurants, has the highest proportion of employees expected to benefit from the Act, with over 90% coverage. It calls hospitality one of the most impacted sectors and cites Experian data suggesting it has the highest level of financial vulnerability of any.

This analysis goes through the Act measure by measure for an independent restaurant of 40 to 80 covers: what the law says, what it means on a Friday night, what to change and what is still uncertain. An invented 45-cover restaurant with 14 staff puts pounds on the measures in force and, separately labelled, on those whose rules are unwritten. Every date is checked against GOV.UK and legislation.gov.uk as published on 13 October 2026, with the statutory instrument number where one fixes the day.

Dates in this Act move because commencement comes in separate statutory instruments, six so far, and because parts of the policy are still being consulted on. GOV.UK warns on its own timeline: "All future dates remain subject to parliamentary processes and may change." The status words below keep one meaning throughout. In force since means the rule applies today. Fixed for means a statutory instrument names the day. Under consultation means the government has asked for views and has not published the final rule. No date announced means no instrument and no firm date exists.

Five measures already apply, and the oldest took effect six months ago. And the cost-heavy part of the Act, the zero-hours package, is the part with the least certainty.

Before April 2026 a worker had to earn at least the lower earnings limit to qualify for statutory sick pay, and the first three qualifying days of any absence were unpaid. The Act removed both tests: section 10 starts entitlement on the first qualifying day and section 11 drops the earnings limit. GOV.UK sets the rate in one sentence:

On a Friday night this means a kitchen porter on low hours, who earns less than the £129 a week shown as today's lower earnings limit figure, has the same day-one entitlement as the head chef, provided he was ill for at least one full working day. The daily rate depends on qualifying days: HMRC's table runs from £24.65 a day for five qualifying days to £41.08 for three and £123.25 for one. SSP is not recoverable from HMRC, so every pound is the restaurant's.

What to change is payroll and records: pay from the first qualifying day, apply the lower of £123.25 and 80% of average weekly earnings, and treat a casual exactly like a salaried worker. Mechanics are in this guide to day-one sick pay and casual staff. What remains uncertain is agency enforcement: the Fair Work Agency's power over statutory sick pay appears on legislation.gov.uk as prospective, with no in-force date on 12 October 2026, so the route today is a claim by the worker.

The Act inserts regulation 16B into the Working Time Regulations. An employer must keep records adequate to show it has complied with holiday entitlement and pay rules, and must:

The format is the employer's choice, and breach is a criminal offence under regulation 29 as extended by section 35.

The difficulty is the workforce. Workers are entitled to 5.6 weeks' paid holiday: 28 days for a five-day week, 16.8 days for a regular three-day week. People with irregular hours accrue leave from hours worked, so a worker averaging 14 hours a week accrues 78.4 hours a year. Each accrual, day taken and payment needs an entry, and a leaver's record must still exist six years after it was made. A restaurant with 14 workers holds 84 worker-years of holiday data in steady state, more if staff turn over.

What to change: move holiday out of memory and the group chat into one dated place. What remains uncertain is the agency route: Schedule 7 lists these regulations for Fair Work Agency enforcement, but the paragraph is marked prospective with no in-force date.

Section 152 and Schedule 12 raise the time limit for most employment tribunal claims in Great Britain from three months to six. Statutory instrument 2026/954 fixed 1 October 2026, with a transitional rule keyed to the date of the act complained of:

A grievance about a rota, a deduction or a dismissal on or after that day can reach a tribunal for six months; earlier events keep three. In Scotland the change for breach of contract claims takes effect on 9 November 2026. The direct cost is small in the government's analysis, about £0.9 million a year across the economy. The practical cost is longer exposure: a decision made in a busy December can be challenged in June, so a dated rota, a signed warning and a written reason have to survive that long. More is in the guide to the tribunal claim window.

Statutory instrument 2026/1065, made on 1 October 2026, brings sections 20 to 22 into force on 30 October 2026. Section 20 changes the Equality Act 2010 duty so that an employer must take "all reasonable steps", not merely reasonable steps, to prevent sexual harassment of employees. Section 21 adds the third-party duty, in new subsection 40(1A):

A third party is anyone who is not the employer or an employee: guests, delivery drivers, suppliers and contractors. The employer "permits" harassment only if it happens in the course of the employee's employment and the employer failed to take all reasonable steps to prevent it. Section 22 lets ministers specify steps to be regarded as reasonable, with examples such as assessments, published plans or policies, and steps for reporting and handling complaints. No regulations under that power had been found on 13 October 2026.

On a Friday night this is the table of regulars, the driver who leers and the waitress locking up alone. The legal question after an incident is what the restaurant had done before it. One that can show a short written risk assessment of late service, a named person to take reports, a policy that a guest may be asked to leave, a briefing record for every team member and a log of incidents is better placed than one that can say only that the manager was kind. The government's cost estimates are small, about £2.9 million a year for the third-party duty and £1.6 million for "all reasonable steps" across the economy, which reflects how cheap the duty is to meet compared with a claim. A fuller treatment is in this guide to preventing harassment of staff.

What to change before 30 October is a one-page assessment, a briefing and a log. What remains uncertain is the standard itself: "all reasonable steps" is a high bar, no minister has specified what meets it, and no 2026 guidance on the new duty had been found beyond material dated 2024.

Section 25 replaces the two-year qualifying period for ordinary unfair dismissal with six months and omits section 124, the cap on the compensatory award. Statutory instrument 2026/559, made on 26 May 2026, fixes 1 January 2027. GOV.UK's timeline puts it in one line:

The detail that matters in a kitchen is the effective date of termination. Regulation 4 says the new rules apply where an employee is dismissed before 1 January 2027 but the effective date of termination falls on or after that day. A worker given notice in late December whose notice runs into January is therefore on the new rules. A commis who started around 1 July 2026 reaches six months' service around the new date; anyone who started later reaches it later. A restaurant that has treated the first two years as a free trial now has a six-month trial, and the evidence of how it went has to be written down.

The cap matters too. Under section 124 as it stands, a compensatory award is limited to the lower of £123,543 and 52 weeks' pay. For the hourly employee in the worked example below, on £405.00 a week, 52 weeks' pay is £21,060.00, the ceiling that would have applied. For dismissals under the new rules the cap is removed. The government's analysis assessed the earlier day-one version at about £42 million a year across the economy and expects the net direct cost now to be lower; its direct-cost table lists the six-month and cap change at £42.4 million a year. No source read gives a typical award for a hospitality worker, so none is stated here.

What to change: diary a review at three months and five months for every new hire, record concerns in writing at the time, and treat a December dismissal with notice as a January event. What remains uncertain is how tribunals will treat a six-month employee whose employer has no records. No decision under the new rules exists.

The Act adds protections against dismissing staff to force through changed terms. GOV.UK lists "fire and rehire protections" among measures that will take effect in January 2027, but no instrument fixing the day was found. A restaurant planning to change hours, pay or tip arrangements by dismissal and re-engagement should treat January 2027 as the earliest date it may be caught, and take advice before changing terms by any route. Where changes are agreed with staff, the practical step is to document the consultation.

Tips are the one area where a restaurant already has an Act to follow. The Employment (Allocation of Tips) Act 2023 came fully into force on 1 October 2024 and makes it mandatory for all tips to be passed on to workers without deductions. A written policy and a fair split are the working requirements, and the compensatory award for failing to allocate tips fairly or to have a written policy is limited to £5,366 from 6 April 2026.

The 2025 Act adds a consultation duty in section 14: before the first version of its written tipping policy, an employer must consult workers or a recognised union, and must review the policy at least once in three years. Section 14 is marked prospective on legislation.gov.uk. The path around it has been untidy: the government had intended to strengthen the law from 1 October 2026; a revised code was reported withdrawn on 13 July 2026; GOV.UK confirmed on 29 July a new consultation; and that consultation ran from 19 August to 29 September 2026 and is closed. GOV.UK's timeline says "by the end of 2026", a period and not a date, and its guidance for the meantime is plain:

So keep the current policy and split, write down how the split works, and be ready to consult staff once the revised code is final. Background is in the 29 July 2026 tipping update. Uncertain: the start date, the final code, and how a team with no recognised union is expected to evidence consultation.

This is the package with the most money attached and the least certainty. The Act's first three sections create a right to guaranteed hours, a right to reasonable notice of shifts and a right to payment when a shift is cancelled, moved or curtailed at short notice. The duties have not started. The consultation ran from 2 June to 25 August 2026; on 13 October 2026 no response or draft regulations had been found. GOV.UK says what it was for:

Every number that would set a restaurant's cost is open. The government prefers an hours threshold between 8 and 20 a week and a 12-week initial reference period, and a worker could turn down an offer of guaranteed hours. Ministers may define short notice but not as more than seven days. The payment could be a percentage of the pay lost or of the minimum wage for the hours; the questionnaire listed 10%, 30%, 50%, 65%, 80% and "other", and the Act caps any payment at what the worker would have earned. For economy-wide modelling the government used a 16-hour guaranteed-hours threshold, a 28-hour threshold for notice and payments, a three-day short-notice period and a payment of 50% of the minimum wage. Those are modelling assumptions, not policy.

Why it matters on a Friday: the Department for Business and Trade says short-notice cancellations are more common among zero-hours workers (41%) and workers in hospitality (44%) than the average for workers in insecure work, and the government's covering note says most workers whose shifts changed at short notice (59%) did not typically receive compensation. About 1.21 million people, around 3.6% of those in employment, are on zero-hours contracts, and hospitality is among the sectors relying on them most.

What to change is the habit, not the contract. A payment for a late cancellation does not make a rota ruinous; it removes the free option of cutting shifts at the last minute. A restaurant that publishes the rota a week ahead and rarely changes it loses little, while one that rewrites the week on the afternoon of service pays for the habit. What remains uncertain is every rate, threshold and date. A plan built on a percentage that is not law is built on sand; a plan built on a record of how many shifts changed inside seven days, and each worker's average hours over 12 weeks, works under any outcome.

The Fair Work Agency began on 7 April 2026 as the single enforcement body for labour market law. It can serve a notice of underpayment with a six-year claim period, and the penalty is 200% of the sum due for each underpaid worker, never less than £100 and capped at £20,000 per worker. A hypothetical shows the mechanics: if a worker was underpaid £500 of minimum wage, the penalty is £1,000. An employer that pays the £500 and at least half the penalty, £500, within 14 days of the notice is treated as having paid the penalty in full, so the total is £1,000 instead of £1,500.

Minimum wage provisions are in force for the agency. The holiday-record and sick pay provisions in Schedule 7 are marked prospective on the record read on 12 October 2026. On 13 October the agency's GOV.UK page listed no notice of underpayment, penalty or hospitality case, and none was found elsewhere. The risk looks forward: with a six-year look-back, records kept from 2026 are the records read in 2030.

Collective redundancy consultation applies where an employer proposes to dismiss 20 or more employees at one establishment, so a restaurant of 14 is below the test. The mandatory equality action plans are aimed at large employers. Both are listed in the Act and neither needs a plan here.

The restaurant below is invented. It has 45 covers, opens six evenings and weekend lunches, and employs 14 people. Nothing here is a customer result, an industry average or a prediction. Rates are real 2026 to 2027 figures; staffing, hours and absence are stated assumptions that an owner can change.

Group A is three salaried managers, assumed at £800 a week and five qualifying days. Group B is four regular hourly staff on 30 hours at an assumed £13.50, so £405.00 a week, five qualifying days. Group C is three part-timers on a fixed 16 hours at the April 2026 National Living Wage of £12.71, so £203.36 a week, three qualifying days. Group D is three zero-hours staff averaging 14 hours, £177.94 a week, three qualifying days. Group E is one zero-hours worker averaging eight hours, £101.68 a week, two qualifying days.

Weekly statutory sick pay is the lower of £123.25 and 80% of earnings. Groups A to D hit the £123.25 ceiling; for group B, 80% of £405.00 is £324.00, which is higher. Group E earns £101.68, so 80% is £81.34 and that lower figure applies. The daily rate is the weekly rate over qualifying days: £123.25 over five days is £24.65, over three days £41.08, and group E's £81.344 over two days £40.67. Group E earns less than the £129 lower earnings limit figure HMRC shows for 2026 to 2027, so is the clearest case of someone the old rule left out.

For absence the example uses the ONS finding that sickness absence in 2025 averaged 4.4 days lost per worker. That is an all-economy average, not a hospitality rate, so it is an illustration, halved and doubled below. At 4.4 days each the annual cost is headcount times 4.4 times the daily rate: group A, 13.2 days at £24.65, is £325.38; group B, 17.6 days, £433.84; groups C and D, 13.2 days at £41.08, £542.30 each; group E, 4.4 days at £40.67, £178.96. The total is 61.6 days and £2,022.78. At 2.2 days a worker it is £1,011.39, and at 8.8 days £4,045.55.

How much is new depends on how absences fall. If every absence is a short spell of one to three days, all £2,022.78 is new, because the old rule paid nothing for those days. If each worker's 4.4 days is one continuous spell, the first three days used to be unpaid for groups A to D, so only 3 of the 4.4 days is new for them, and all of group E's is new: (£325.38 + £433.84 + £542.30 + £542.30) times 3 over 4.4 is £1,257.15, plus £178.96, makes £1,436.11. If the three managers already get full contractual sick pay, statutory pay is a floor, not an extra, and removing group A leaves £1,697.40 on the short-spell basis. The base case is about £1,400 to £2,000 a year, before contractual schemes and shift cover. Employer National Insurance is left out: HMRC shows employer contributions at 15% above £5,000 a year and an Employment Allowance of £10,500, but whether statutory sick pay attracts contributions was not confirmed in the sources read.

At 14 workers and six years the archive is 84 worker-years. If a manager spends ten minutes per worker per month logging accrual, leave and pay, that is 14 times 12 times 10 over 60, or 28.0 hours a year; priced at £12.71 as a floor, £355.88. At five minutes it is 14.0 hours and £177.94, and at 15 minutes 42.0 hours and £533.82. A zero-hours worker averaging 14 hours accrues 14 times 5.6, or 78.4 hours of paid leave, which at £12.71 is £996.46 of holiday pay a year. The point is the archive, not the price of the minutes.

Neither measure is in force and no rate is fixed, so every figure here is a scenario. A five-hour shift at £12.71 is worth £63.55. Under the consultation's options a cancelled shift would cost 50% of £63.55, which is £31.78, or 80%, which is £50.84. If the restaurant cancels, moves or curtails eight in-scope shifts a month inside the short-notice window, that is 96 a year, and the wages not paid on them are 96 times £63.55, or £6,100.80. A 50% payment hands back £3,050.40 of that, leaving the owner half. At 30% the cost is £1,830.24; at 80% it is £4,880.64, leaving the owner £1,220.16. At four shifts a month and 50% the cost is £1,525.20, and at 16 shifts and 80% it is £9,761.28, a stress case. On the 28-hour modelling threshold only groups C, D and E fall in scope, and all are paid exactly £12.71, so "percentage of pay" and "percentage of the minimum wage" give the same figures.

For guaranteed hours, the central modelling case is a 16-hour threshold and a worker who has worked at least eight of 12 weeks. A group D worker guaranteed 14 hours in a year when the rota needs only ten for 20 weeks has 4 times 20, or 80 idle paid hours, which at £12.71 is £1,016.80; for three such workers, £3,050.40. These are assumptions; the real exposure turns on the final threshold, the reference period and whether the worker accepts.

The result is more modest than the headlines and more specific than the anxiety. The measures already in force cost this restaurant roughly £1,400 to £2,000 a year in sick pay plus a few hundred pounds of admin time. The unsettled payment costs between £1,830.24 at 30% and £4,880.64 at 80% at eight late changes a month, and nothing if the rota is stable. The larger costs sit outside the arithmetic: cover for a sick sous chef, a dismissal that now needs a six-month paper trail, and a claim that now has six months to arrive.

The government's position is that the Act's direct annual cost to business is around £1 billion once fully implemented, "no more than a modest increase of 0.1% on total employment costs", though for businesses relying on flexible contracts or low-paid employment "these changes could be more significant, at least in the short run". It says the figure "is not a forecast". The largest line in its direct-cost table is statutory sick pay at an equivalent annual net direct cost of £419.7 million, then the zero-hours notice and cancellation-payment package at £201.4 million and guaranteed hours at £222.6 million, a line carrying a note that workforce planning costs are probably counted twice across the two assessments. Fire and rehire is £97.6 million, the unfair dismissal change £42.4 million, tipping £6.5 million, the Fair Work Agency £3.8 million and the tribunal limit £0.9 million, in 2024 prices.

The sector's trade body reads the same changes as a cumulative squeeze. UKHospitality said of the first measures that the April changes, "particularly Statutory Sick Pay, could be a significant cost for businesses". After the August 2026 zero-hours modelling its chair called the cost "eyewatering", arriving "on the heels of more than £5 billion in additional employment costs in the past two years", and said more than 100,000 hospitality jobs had been lost. Those figures are the trade body's own and are not sourced on the page where they appeared. A law firm's July 2026 hospitality briefing says day-one sick pay "increases the SSP bill materially" in a sector with high absence and many low-paid workers.

The two sides use numbers that do not line up. The January 2026 economic analysis puts the whole Act at about £1 billion a year. The August covering note, modelling only the zero-hours package on the consultation's parameters, gives £350 million low, £1.1 billion central and £2.9 billion high, with a net cost of £300 million to £1.4 billion after benefits. One package's central estimate is therefore larger than the January figure for the whole Act. The documents differ in date and assumptions, and the pages read do not reconcile them. The sensible reading is that the zero-hours number is assumption-driven: at an 80% payment it is £1.3 billion in the note's sensitivity, at 65% £1 billion and at 50% £0.69 billion.

Who gains is clearer than who pays. Workers on variable hours gain a sick pay floor, a brake on last-minute cuts and longer to challenge a decision. Restaurants with disciplined rotas and good records lose little; the most exposed run the week on text messages, because the costs the Act creates are costs of habit. The government's analysis cites ONS survey data suggesting hospitality is among the sectors most likely to respond by raising prices, which small independents, with the least room to do it without losing covers, feel most sharply.

The independent view is thin. No assessment of this Act by the OBR, the IFS, the Resolution Foundation or the Low Pay Commission was among the sources verified for this analysis, so none is quoted. No hospitality-only government cost figure appears in the documents read, and no source gives a hospitality figure for day-one sick pay. The disagreement can be stated but not settled: the government's totals are modelled and labelled not a forecast, and the trade body's are asserted.

Which measure matters most to a small independent? Not the one with the biggest national number. Day-one sick pay is the only large measure already costing cash, and it is the easiest to price, so it is a budgeting question. The zero-hours package changes how the restaurant is run, because its cost depends on how late the rota changes, and it has the least settled rules. The harassment duty is the first with a hard date and the cheapest to meet, but the most costly to get wrong, because failure means a claim from someone who was hurt. Unfair dismissal is a process measure for a high-turnover team. The order of attention that follows: the harassment duty before 30 October, the six-month review diary before 1 January, and a record of shift changes now, because it helps under every version of the zero-hours rules.

There are 17 days from 13 October to 30 October and 80 days to 1 January 2027. Those are the two windows in which a restaurant still chooses how it arrives at the rule; the rest is waiting for the government to finish drafting.

Almost every item on the checklists is a record: a dated risk note, a briefing log, a payroll rule, an accrual entry, a review diary, a log of shift changes, a written tipping split. The Act changes what an employer owes, but a small restaurant will be judged, by a tribunal, by the Fair Work Agency or by its accountant, on what it can show. Those records are normally scattered: the rota in a photograph, hours in the manager's memory, sick calls in text messages, tips in an envelope.

A system helps only where it holds the record in the place the work happens. The staff rota page describes the TableSpark rota that way, as a replacement for the spreadsheet and the group chat. For what rota software costs by team size, see the restaurant rota software guide.

TableSpark is a tool for keeping the rota, the hours and the tips records, and for showing each person their own shifts. Compliance decisions and legal advice stay with the owner and their adviser. Team roles and the drag-and-drop rota, with published shifts on every phone, are on Growth and Full, from £39 a month excluding VAT. Hours worked with payroll export to CSV or Excel are on the same plans, and so are tips under the Tips Act, with a written tips policy, card and cash tips shared by rota hours and records kept. There are no per-seat charges. The walk-through below follows the your team and rota tutorial step by step.

These screens keep three of the records the Act makes valuable: who was on the published rota, what hours were worked and paid, and how tips were shared. They do not replace a dated harassment risk note, a probation diary or an accrual sheet, and they do not decide anything on the owner's behalf. Where a record the law will want is not in the rota, a dated line in a manager's log fills the gap, and the log is worth starting this week.

The Act rewards a restaurant that can show its working. For an independent UK restaurant, the stronger model is a rota, hours record and tips record kept in the system that runs the floor. TableSpark is the best-value and best overall choice for that, because the rota, the hours export and the tips split come with the restaurant's site and booking tools, not as a separate subscription billed per person.

TableSpark starts at £19 a month excluding VAT, and the Team roles and drag-and-drop rota, hours worked and payroll export, and tips under the Tips Act are on Growth and Full, from £39 a month excluding VAT. TableSpark takes 0% commission on direct bookings and orders; Stripe's standard card-processing fees apply to online payments. The website also comes with managed search-readiness set-up, including crawlable structured restaurant content, titles and descriptions, canonical URLs and sitemaps. Indexing and ranking remain decisions for Google.