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The hospitality sector faces numerous challenges as a result of upcoming employment law changes. Below, we explore the potential ban on ‘exploitative’ zero-hour contracts, as well as the introduction of a new law on tipping.
The hospitality sector faces numerous challenges as a result of upcoming employment law changes. Below, we explore the potential ban on ‘exploitative’ zero-hour contracts, as well as the introduction of a new law on tipping.
Casual worker or zero-hours contracts are a form of contract that offer no obligation to provide or guarantee of work. These contracts are used when staff is required on an ad hoc basis and have increased in usage over the years.
In the King’s Speech, the Government pledged to ban ‘exploitative zero-hour contracts’, ensuring workers have a right to a contract that reflects the number of hours that they regularly work and offer all workers reasonable notice of any shift changes alongside proportionate compensation for any cancelled or curtailed shifts.
According to the Office for National Statistics, just over one million people were engaged in zero-hours contracts in the first quarter of 2024.
Given the widespread use of such contracts, it is unlikely that there will be a complete ban on zero-hour contracts, but simply on those that meet the (yet undefined) definition of being ‘exploitative’.
Any reform to the landscape of zero-hour contracts is likely to shake up the hospitality sector in particular, given the industry’s use of such contracts. There is concern within the industry that the Government’s proposal may lead to increased administrative burdens, more complex hiring procedures, and restrictions on business growth.
As we have previously discussed, the Government are also set to introduce the Employment (Allocation of Tips) Act 2023 this year. On 29 July 2024, the Act’s accompanying statutory code of practice was published, and it was announced the Act will come into force on 1 October 2024.
The Act will make it compulsory for all qualifying tips to be passed on to workers without any deductions. Key points of the Act include:
Employers must comply with the code of practice on distributing tips, which sets out overarching principles for employers on what ‘fairness’ is for the Act’s purposes.
Factors that may be taken into account by employers when it comes to allocating and distributing tips include the type of work done by workers, basic pay levels, hours worked and individual and/or team performance.
The code also states that businesses should consult with workers to determine whether there is a ‘broad agreement’ on whether the employer’s ‘system of allocation of tips is fair, reasonable and clear’.
However, the code of practice does not clarify what a ‘fair’ allocation of tips ought to look like. Further, it is likely that the Act’s introduction will see a need for further administrative work for employers in the hospitality and leisure industry, given the requirement that many will face of having to maintain a record of tips.
If you are a business in the hospitality sector and require advice on how to best prepare for employment law changes affecting your industry, contact our award-winning Employment Team on: