Worked Example (illustrative scenario)

How a small restaurant group prepares for ERA 2025 October changes

A practical walkthrough of what the Employment Rights Act 2025 October 2026 reforms mean for a 25-person independent restaurant group with two city centre sites, high customer interaction, and a tronc scheme for tips.

Change event: Employment Rights Act 2025: October 2026 reforms (fire and rehire, harassment, tribunals) Effective 1 October 2026

The scenario

The Riverside Kitchen Group operates two independent restaurants in Bristol city centre. The business employs approximately 25 staff: 8 full-time kitchen staff, 12 part-time front-of-house workers, 3 supervisors, and 2 office staff (owner-manager and part-time bookkeeper). The restaurants have been trading for six years.

Like many city centre restaurants, they experience seasonal variation — summer months and the run-up to Christmas are busy, whilst January and February are quieter. Tips and service charges are distributed via a tronc scheme managed by a head server acting as troncmaster. Several front-of-house staff are on zero-hours contracts to accommodate the variable demand.

The business has had occasional issues with drunk or aggressive customers directing harassment at front-of-house staff, particularly on Friday and Saturday evenings. Until now, the response has been informal — managers intervening to eject problem customers and supporting affected staff — but nothing systematic.

Staff
~25 employees across 2 sites
Structure
Limited company, owner-managed
Trading history
6 years
Compliance deadline
1 October 2026

Third-party harassment: the biggest operational change

For the Riverside Kitchen Group, the introduction of employer liability for third-party harassment represents the most significant operational change. Under the new law, the business can be held liable for harassment of workers by customers unless it has taken "all reasonable steps" to prevent it.

The owner recognised immediately that their current approach — reactive intervention when incidents occur — would not meet the "all reasonable steps" test. Industry guidance from UKHospitality and legal advisers made clear that hospitality businesses face particular scrutiny because customer-facing roles inherently involve exposure to third-party behaviour.

Actions taken: The business implemented a comprehensive harassment prevention programme over a four-month period between June and September 2026. This included:

  • Developing a written anti-harassment policy explicitly covering third-party harassment, distributed to all staff and discussed in team meetings
  • Mandatory training for all staff (2 hours for front-of-house, 1 hour for kitchen staff) covering how to recognise harassment, how to report it, and the business's commitment to support them
  • Manager training (half-day session) on responding to harassment incidents, de-escalation techniques, and when to eject customers
  • Visible signage in both restaurants stating "We do not tolerate harassment of our staff" and making clear that harassment may result in customers being asked to leave
  • A confidential reporting mechanism (dedicated email address and WhatsApp contact for the owner) so staff can report incidents without confronting customers directly
  • An incident log to track patterns and identify repeat problems

Cost: The business spent approximately £2,800 on harassment prevention measures: £1,200 for external training delivery (provided by a hospitality HR consultancy), £800 in staff time for attending training (calculated at average hourly rates), £400 for signage and materials, and £400 for legal review of the policy.

Fire and rehire: restructuring risks

The fire and rehire restrictions had immediate implications for the Riverside Kitchen Group's approach to seasonal variation. In previous years, the business had occasionally restructured zero-hours contracts or reduced guaranteed hours for supervisors during quiet periods.

Under the new law, dismissing an employee and rehiring them on inferior terms (such as reduced hours or lower guaranteed pay) becomes automatically unfair unless the employer can demonstrate the business would otherwise face serious financial difficulties amounting to inability to continue as a going concern. This is a very high bar.

Practical impact: The owner decided that the business could not realistically meet the "inability to continue as a going concern" threshold simply because January and February are quieter. Instead, they adopted a more flexible approach:

  • For zero-hours staff, maintaining existing contractual terms but being transparent about expected hours during quieter periods when recruiting
  • For supervisors, offering voluntary temporary reductions in guaranteed hours with written agreement (not dismissal and re-engagement)
  • Building a contingency fund to cover payroll during quieter months rather than restructuring contracts

The business consulted an employment solicitor for £600 to review their approach and ensure they were not inadvertently triggering the fire and rehire provisions.

Tipping law: tronc scheme review

The Riverside Kitchen Group already operated a tronc scheme, distributing tips via a troncmaster (the head server). However, the strengthened tipping law introduced additional requirements:

  • Consultation requirements: Employers must consult workers before changing how tips are distributed
  • Triennial review: Tipping policies must be reviewed every three years and updated if necessary
  • Transparency: Workers must be informed how tips are allocated and on what basis

The business held a staff consultation in August 2026 to review the existing tronc scheme. The consultation confirmed broad support for the current 60/40 split between front-of-house and kitchen staff, but identified a desire for more transparency about the calculation method.

The owner updated the written tronc policy to include clearer explanations of the allocation formula, committed to sharing monthly distribution reports with staff, and scheduled the first triennial review for August 2029.

Cost: Minimal direct cost (internal staff time for consultation meetings), but the business engaged their accountant to review the tronc scheme for compliance (£350).

Longer tribunal time limits: risk management

The extension of employment tribunal time limits from 3 months to 6 months does not require the Riverside Kitchen Group to take specific action, but it does increase their exposure to potential claims. Previously, if an employee left and did not bring a claim within 3 months, the business could be reasonably confident the matter was closed. Now that window extends to 6 months.

The practical implication is that the business needs to maintain more careful records for longer periods and cannot assume disputes are resolved simply because 3 months have passed.

Actions taken: The business implemented a new record-keeping protocol: all disciplinary meetings, grievances, and exit interviews are documented in writing and retained for at least 12 months (double the new tribunal time limit). They also introduced a checklist for exit interviews to ensure potential issues are identified and, where possible, resolved before the employee leaves.

Trade union disclosure and access rights

The new law requires employers to inform all new workers of their right to join a trade union and to provide strengthened access rights for union representatives. For the Riverside Kitchen Group, this was a straightforward administrative change rather than a significant burden.

The business updated their written statement of employment particulars (issued to all new starters) to include explicit notification of the right to join a trade union. They also confirmed with their HR consultant that if a union representative requests access to the workplace, they must facilitate this (subject to reasonable notice and operational constraints).

In practice, trade union membership is low in the independent restaurant sector, and the business has not yet received any access requests. However, the owner views the disclosure requirement as good practice — transparency about workers' rights reduces the risk of disputes.

Steps taken to prepare

The Riverside Kitchen Group began preparing for the October 2026 reforms in June 2026, giving themselves four months to implement changes. The preparation timeline looked like this:

June 2026: Initial legal review of the new requirements with an employment solicitor (half-day consultation, £600). The solicitor provided a prioritised action plan and template policies.

July 2026: Developed anti-harassment policy and organised training. Engaged a hospitality HR consultancy to deliver harassment prevention training. Updated written statements to include trade union disclosure.

August 2026: Delivered harassment prevention training to all staff over two weeks (scheduled during quieter service periods to minimise disruption). Held tronc scheme consultation and updated tronc policy. Reviewed fire and rehire risks with solicitor.

September 2026: Installed visible anti-harassment signage in both restaurants. Implemented new record-keeping protocols for tribunal time limit extension. Conducted final compliance check with HR consultant.

Total cost: Approximately £5,150 (legal advice £1,200, training £1,200, staff time £800, signage and materials £400, accountant review £350, HR consultant final review £1,200). The owner estimates this represented about 1.2% of annual turnover, but viewed it as essential risk management.

Time investment: The owner spent approximately 40 hours over four months managing the compliance project. Supervisors contributed an additional 20 hours combined for training delivery and staff consultation.

💡 Lessons for similar businesses

Start early: The Riverside Kitchen Group gave themselves four months, which proved just enough time to implement everything without rushing. Businesses waiting until September would have struggled to complete training and policy development.

Third-party harassment is the big one: Of all the October 2026 changes, third-party harassment liability requires the most significant operational response for customer-facing businesses. Don't underestimate the time needed to develop policies, deliver training, and embed new practices.

Use sector-specific resources: Hospitality HR consultancies and training providers understand the specific risks restaurants face (drunk customers, weekend evening pressures, seasonal staff). Generic harassment training may not cover the scenarios your staff actually encounter.

Fire and rehire: rethink seasonal restructuring: If your business has historically used dismissal and re-engagement to manage seasonal variation, you need a new approach. The legal threshold (inability to continue as a going concern) is very high, and few seasonal businesses will meet it.

Document everything: With tribunal time limits extending to 6 months, you need robust records of disciplinary processes, grievances, and exit discussions. If a claim is brought 5 months after the event, you'll need contemporaneous evidence of what happened.

Budget realistically: The Riverside Kitchen Group spent just over £5,000 on compliance — about 1-2% of turnover for a small restaurant. This is not insignificant, but it's cheaper than defending a tribunal claim or suffering reputational damage from harassment incidents.

ℹ️ Northern Ireland

Employment law is devolved to the Northern Ireland Assembly. The Employment Rights Act 2025 does not apply in Northern Ireland. If you operate a hospitality business in Northern Ireland, these changes do not affect you, though separate legislation may be introduced in future.

Related updates