Hospitality sector on brink of claims crisis as Employment Bill looms
The hospitality and leisure (HAL) sector is already experiencing a rising number of Employment Tribunal claims, a situation likely to worsen further when the Employment Rights Bill becomes law.
New research from law firm Birketts, shared with CityAM, revealed that the hospitality and leisure sectors had received an average of 44.53 Tribunal claims over the past two years, 12 per cent higher than the average across all sectors.
The research, reported by 500 HR professionals in England and Wales, noted that the most common claim brought against a business from this sector was one related to harassment based on a protected characteristic.
Over 70 per cent of claims in the hospitality and leisure sector were settled before reaching a final hearing, which Birketts noted was higher than the average across all sectors.
The most common reasons for settling claims included management time (28 per cent), poor
merits and reputational risk. As a result of the rise in claims, HR teams spent an average of 4.32 working weeks dealing with Tribunal claims over the two-year period.
However, the upcoming Employment Rights Bill will, if passed, introduce a major overhaul of workers’ rights, including the introduction of ‘day one rights’.
The Employment Tribunal is already dealing with a backlog of cases stemming from the pandemic, during which some courts were closed for extended periods.
In June, data from the Ministry of Justice (MoJ) revealed that the open caseload at the Tribunal increased by 32 per cent from January to March 2024/25 compared to the same quarter the previous year.
The UK hospitality industry is already struggling with the implications of the autumn Budget, which saw an increase in employers’ NICs. Data last month revealed that the sector shed 69,000 jobs since Chancellor Rachel Reeves’s tax increases took effect.
Catherine Johnson, partner in Birketts, warned: “The introduction of ‘day one’ rights under the Employment Rights Bill will likely increase the volume of claims, especially in areas like harassment and discrimination.”
“Employers must act now to strengthen their internal processes, provide robust training to line managers, and ensure grievances are handled effectively. Failure to do so could result in costly and time-consuming Tribunal proceedings,” she added.