What Changing Employment Laws Mean for Your Hospitality and Catering Hiring Strategy in 2026

A KSB Recruitment guide for hospitality and catering operators

Employment law in the UK is changing faster than most hospitality hiring strategies are keeping pace with. The Employment Rights Act 2025 has been described as the most significant overhaul of employment legislation in a generation. The April 2026 wave of reforms is now live, and new HMRC compliance rules on agency labour supply chains have quietly created financial exposure that most operators have not yet sized up.

For hospitality and catering businesses, these changes are not a compliance exercise to hand to HR and forget. They directly affect how you structure chef, front-of-house, and management roles, how you manage probation, how you evaluate candidates, and how much a poor hiring decision will cost you if things go wrong.

The operators who understand what has changed, and who are adapting their hiring models accordingly, will find themselves in a stronger position for talent attraction, workforce planning, and legal risk management. Those still operating on autopilot face increased tribunal exposure, higher payroll costs, and reputational risk.

This guide sets out the changes that matter most for hospitality and catering hiring in 2026, what the practical implications are, and what you should be doing now.

The Employment Rights Act 2025: What It Is and Why It Matters Now

The Employment Rights Act 2025 received Royal Assent in December 2025 and is being phased in across 2026 and into 2027. It introduces over 28 individual reforms, broadly designed to shift the balance of power in the employment relationship toward workers, particularly those in variable-hours, lower-paid, or insecure roles. That description fits a very large proportion of the hospitality and catering workforce.

The commercial reality is stark. Research by the CIPD found that 37% of organisations plan to reduce permanent hiring as a direct result of ERA reforms, and 74% expect the Act to increase their employment costs. For a sector already operating on tight margins, this matters.

The changes are deliberately staggered. The first wave of enforcement and compliance obligations landed in April 2026 and is now in force. The most consequential changes for hiring decisions land in January 2027. Those January 2027 changes are already live in their implications for anyone hiring today.

Wage Increases: Now in Force

Since 1 April 2026, the National Living Wage for workers aged 21 and over has been £12.71 per hour, a 4.1% increase from the previous £12.21. For a full-time employee working 37.5 hours, that is an annual salary of approximately £24,784. The rates for younger workers increased more sharply, with the 18 to 20 bracket rising 8.5% to £10.85.

In hospitality and catering, this has hit hardest where it matters most: kitchen porters, commis chefs, food service assistants, front-of-house juniors, and the early-career roles that keep operations moving. Operators who structured pay bands around the old minimums are now feeling the squeeze, and candidate salary expectations have recalibrated quickly.

At KSB, we are already having these conversations with clients. The operators who got ahead of this used April 2026 as an opportunity to redesign their pay bands properly rather than nudging numbers up reactively. If you have not yet done that work, it is the most pressing tidy-up still on the list.

Day-One Family Leave and Statutory Sick Pay: Now in Force

Since 6 April 2026, employees have had day-one access to Paternity Leave and Unpaid Parental Leave. The previous requirement of 26 weeks’ continuous service before paternity leave could be taken has gone entirely. Any employee joining on or after 6 April 2026 can take paternity leave from their first day.

Statutory Sick Pay was reformed on the same date. SSP is now payable from the first day of sickness rather than the fourth, and the lower earnings limit has been removed, bringing workers who previously earned below the threshold into scope for the first time.

For hospitality workforce planning, both changes have real bite. Rotas built around an assumption of three unpaid waiting days, or around new starters being unavailable to take leave in their first six months, are out of date. Operators of part-time and variable-hours teams, which describes most catering and hospitality businesses, are already feeling the SSP change. If managers in your business are not yet factoring potential early absences into team capacity models, that is a gap worth closing this month.

The Fair Work Agency: Now Active

The Fair Work Agency launched on 7 April 2026 and represents perhaps the most structurally significant shift in UK employment law enforcement in decades. It consolidates the enforcement functions of HMRC’s National Minimum Wage team, the Employment Agency Standards Inspectorate, and the Gangmasters and Labour Abuse Authority into a single body with significantly expanded powers.

Critically, the FWA was designed to move away from a complaints-led model toward proactive investigation. Its powers include the ability to enter premises, access pay records, issue notices for underpayment of holiday pay, SSP, and the National Minimum Wage, and impose financial penalties of up to 200% of underpaid sums.

For hospitality operators using agency workers, this is a direct signal that those arrangements will face scrutiny. The historic practice of fixing problems only when staff raise complaints is no longer enough. Proactive payroll auditing, accurate record-keeping, and robust internal compliance processes are now baseline expectations, and the FWA is already six weeks into its remit.

This is also where your choice of agency partner matters. KSB operates a 100% direct PAYE model, a decision we made well ahead of the current legislative direction to protect our clients, ensure our workers are paid fairly, and safeguard the business itself. An HMRC supply chain review confirmed our position three years before the rules now coming into force. Operators using KSB are not the ones the FWA is designed to find.

HMRC Joint and Several Liability: The Compliance Story Most Operators Have Missed

Running alongside the ERA reforms, April 2026 brought new HMRC Joint and Several Liability rules on agency labour supply chains. In short: where an agency fails to pay PAYE and National Insurance correctly, the end client can now be held financially liable for the unpaid tax.

This is a major shift, and it is already in force. Historically, an operator using an agency could assume their compliance ended at “we paid the agency invoice.” That assumption is gone. If your staffing partner cuts corners on PAYE, you carry the exposure.

For hospitality and catering businesses, the practical action is to audit your agency supply chain now. Ask your providers directly: are you 100% PAYE? Can you evidence HMRC compliance? Have you had a supply chain review? Any agency that hesitates on those questions is a risk you are carrying personally.

This is one of the reasons KSB chose to operate the way we do. Our 100% direct PAYE model exists to protect our clients from exactly this kind of exposure, to ensure the workers we place are paid fairly and through the proper channels, and to keep our own business on the right side of HMRC. It is not a marketing message. It is a deliberate operating decision that is now paying off for everyone in the supply chain.

Flexible Working: Stronger Obligations from October

From October 2026, the ERA 2025 introduces a stronger test for refusing flexible working requests. Employers will only be able to refuse where it is reasonable to do so on business grounds, not merely technically possible to cite one of the eight existing grounds. The tribunal will test whether the refusal itself was reasonable, not just whether a ground existed.

Flexible working will also be confirmed as a day-one right for all workers.

For hospitality hiring managers, this changes how offer conversations work from autumn onwards. A chef candidate asking about a four-day week, a duty manager asking about compressed hours, a front-of-house lead asking about school-run timings, all of these will arrive at offer stage and will need a considered, defensible response. Operators who can articulate their position clearly will win talent from competitors who cannot. The next few months are the window to get those positions documented.

Unfair Dismissal Reform: The Most Urgent Action Point

The most consequential change in the ERA 2025 does not take legal effect until 1 January 2027, but its implications are live today. The unfair dismissal qualifying period reduces from two years to six months for dismissals from 1 January 2027. The statutory cap on unfair dismissal compensation is removed at the same time, creating potentially unlimited tribunal exposure.

Why this matters now: anyone hired before 1 July 2026 will gain unfair dismissal protection on 1 January 2027. That window is six weeks away.

Anyone hired after 1 January 2027 will gain protection after six months. The current two-year window, which allowed operators to manage out unsuitable hires without following a full fair process, is closing.

Research indicates approximately 6.3 million additional workers will gain unfair dismissal protection as a result of this change. For senior hospitality hires, head chefs, general managers, operations leads, the removal of the compensation cap is particularly significant.

What to do now:

• Rebuild probation as a substantive assessment, not a formality. Structured reviews, documented feedback, and clear criteria from week one are now a legal risk management tool, not just good practice.
• Start documenting performance and conduct issues from the earliest weeks of employment. Contemporaneous, factual records will be essential.
• Improve the quality of hiring decisions at the front end. The cost of a poor hire is no longer absorbed by a two-year safety window.
• Train managers on fair processes, early intervention, and what constitutes a documented and defensible probationary outcome.

This is the front-end-of-hiring work where a specialist hospitality recruiter earns its place. Better job briefs, structured selection, rigorous reference checks, and genuine cultural fit assessment are no longer nice-to-haves. They are how you protect the business from a tribunal claim that no longer has a ceiling.

Zero-Hours Contracts: The Direction of Travel

The guaranteed hours obligation for zero-hours workers is not expected to take legal effect until 2027, but the direction is clear. From 2027, operators will be required to assess hours worked over a reference period of approximately 12 weeks and offer a contract reflecting those regular hours to qualifying workers.

The Work Foundation has noted that nine in ten zero-hours workers in 2023 would have qualified for guaranteed hours under the proposed reference period. The number of workers on such contracts reached 1.23 million in late 2025, an all-time high, as employers moved to lock in flexibility before the reforms land.

Hospitality is the sector most exposed to this change. Banqueting, events catering, hotel housekeeping, seasonal operations, and contract catering all depend on flexible staffing models. The strategic response requires an honest workforce audit in the second half of 2026. Which roles involve genuinely irregular demand, where flexibility serves both sides? Which roles have become structurally dependent on zero-hours for cost reasons rather than operational ones? The latter will require a rethink before 2027 forces the issue.

Key Dates: Quick Reference

Date	Status	Change	Hiring Implication
1 April 2026	Live	National Living Wage rose to £12.71; 18–20 rate to £10.85	Review entry-level pay bands across kitchen and front-of-house
April 2026	Live	HMRC Joint and Several Liability on agency labour	Audit your agency supply chain for PAYE compliance
6 April 2026	Live	Day-one Paternity Leave and Unpaid Parental Leave	Update workforce planning for early leave from new starters
6 April 2026	Live	Statutory Sick Pay from day one; lower earnings limit removed	Review absence policies and payroll for variable-hours staff
7 April 2026	Live	Fair Work Agency operating with proactive enforcement powers	Audit payroll compliance; review holiday pay and NMW records
October 2026	Upcoming	Flexible working; stronger reasonableness test for refusals	Document all flexible working decisions with clear business justification
October 2026	Upcoming	Tribunal time limit doubles from 3 to 6 months	Longer exposure window after every dismissal; sharpen documentation
1 January 2027	Upcoming	Unfair dismissal qualifying period reduces from 2 years to 6 months; compensation cap removed	Restructure probation now; hire more carefully, train managers on fair process
1 January 2027	Upcoming	Fire and rehire restrictions take effect	Review contract change processes; consult properly before imposing changes
2027	Upcoming	Guaranteed hours for zero-hours workers	Begin workforce audit now; identify which roles genuinely require variable hours

What This Means for Your Hospitality and Catering Hiring Strategy

Four themes run through these changes and apply to every hiring decision you make in 2026.

1. The Cost of a Poor Hire Is Rising

The reduction of the unfair dismissal qualifying period to six months compresses the window in which a hiring mistake can be managed quietly. Removing the compensation cap creates exposure for claims involving senior chefs, general managers, and specialist roles that previously carried a ceiling. The HMRC Joint and Several Liability rules already in force mean a poor choice of agency partner can now generate tax liability for the end operator.

The strategic response is to invest more in the front end of hiring. Better job design, structured and documented selection processes, rigorous pre-offer assessment, and reference checks conducted within the legal framework. A specialist hospitality recruiter who understands the legislative landscape adds direct value at this stage, not just by finding candidates but by helping build a process that produces defensible decisions.

2. Compliance Behaviours Are Becoming Visible to Candidates

Day-one rights, now in force, mean new joiners are already asking about family leave, sick pay, and flexible working from their first day, and their expectations are shaped by statutory minimums that are now higher. Chefs and managers with options are comparing your offer to your competitors’ on these terms.

The operators that communicate their people practices clearly and generously will attract stronger candidate slates. Hospitality employer branding should explicitly reference enhanced statutory entitlements as features of the employment offer. Communicating a proactive approach to flexible working, generous sick pay provisions above the statutory minimum, and genuine career development signals alignment with what candidates increasingly value.

3. Temporary Versus Permanent Is Not a Simple Answer

Some operators plan to increase use of temporary workers as a buffer against the ERA’s permanent employee protections. However, the ERA extends protections to temporary and agency workers through the zero-hours provisions from 2027 and the Fair Work Agency’s enforcement scope, which is already active. The HMRC Joint and Several Liability rules add another layer of agency-related exposure that is also already live.

The underlying tension, operators wanting flexibility and workers wanting security, will not resolve neatly. Hospitality businesses that get the best outcomes will be those that design compliant, flexible staffing models deliberately, using PAYE-compliant agency partners for genuine variable demand, rather than defaulting to temporary arrangements as a cost measure without understanding the legal trajectory.

4. Your Agency Partner Choice Is Now a Compliance Decision

This is the change most hospitality operators have not fully processed. With the Fair Work Agency live, HMRC Joint and Several Liability in force, and the broader ERA enforcement environment tightening, the question “who supplies our agency staff?” has moved from a procurement question to a compliance question.

The right questions to ask any agency partner right now:

• Are you 100% direct PAYE, or do you use intermediaries, umbrella companies, or self-employed models?
• Can you evidence HMRC compliance and any supply chain reviews?
• What is your record on holiday pay, NMW, and SSP for the workers you place with us?
• How will you support us if the Fair Work Agency investigates our supply chain?

If your current providers cannot answer these clearly, the risk sits with you, not them.

Staying Ahead of the Curve in Hospitality Hiring

The pace of change in employment law in 2026 is significant. The April reforms are already live. The October and January waves are not far behind. But the operators who will feel it most are not those who understand it best. They are the ones still operating as if the rules are the same as they were two years ago.

The changes outlined in this guide reward precision, preparation, and investment in the front end of hiring. They reward operators who are clear about what roles require, who they are looking for, and how they will manage people in the early weeks of employment. And they reward the decision to work with recruitment partners who understand both the hospitality talent market and the legal landscape.

Note: This guide is intended as a strategic overview and does not constitute legal advice. Employment law is subject to ongoing change, and specific situations should be assessed with qualified legal counsel.

Dawn Bannister

Founder and Managing Director, KSB Recruitment

About KSB Recruitment

KSB Recruitment has been the specialist hospitality and catering recruitment partner of choice for UK operators since 1991. Founded by Dawn Bannister and now in our 35th year, KSB partners with premium hotels, restaurant groups, gastro pubs, leisure venues, contract caterers, and the UK’s most trusted institutions including the MOD and the NHS, placing permanent and temporary talent across the country.

Three things set us apart in 2026. The first is the operating model we chose to put in place to protect both our clients and our workers: 100% direct PAYE, with an HMRC supply chain review confirming our compliance three years ahead of the legislation now in force. The second is the depth of our client and candidate relationships, many of which span decades and continue to underpin our reputation in the sector. The third is the rigour of our recruitment methods, which have been refined over 35 years and have stood the test of time across every economic cycle the industry has weathered.

When the Fair Work Agency and Joint and Several Liability rules came into force last month, our clients had nothing to worry about. That is not a coincidence. It is the result of a deliberate decision about how to run a recruitment business properly. But do not just take our word for it.

“Dawn, keep doing what you are doing. When I think of the great businesses around the country we represent, I always think of owner operators doing things the right way. Your name is one of the first I think of in that regard.”

Neil Carberry OBE, Chief Executive Officer, Recruitment and Employment Confederation (REC)

If the CEO of the body that represents the entire UK recruitment industry singles out KSB as one of the businesses doing things the right way, that should give any operator weighing up their agency supply chain real confidence in where to place their trust.

If you would like to talk through how these changes affect your hiring plans for the rest of 2026, call us on 0121 828 9840 or visit www.ksbrecruitment.co.uk.