Embedding respect, transparency and representation: Why retailers must prepare now for the Employment Rights Act

The UK’s Employment Rights Act (ARB) represents one of the most significant reforms of workplace legislation in a generation. For retailers already navigating tight margins, fluctuating footfall and intense competition, the reforms will materially raise the bar for compliance, culture and workforce management.

The Act introduces sweeping changes, from enhanced unfair dismissal and discrimination protections to mandatory flexible working and expanded family‑friendly rights. Retailers that embed respect, transparency and representation into their workforce strategies will be far better positioned to manage risk, maintain stability and protect their employer brand.

A new era of day‑one rights

The Government has described the ERA as “the biggest upgrade to rights at work for a generation”, and for good reason. One of the most consequential changes is the introduction of unfair dismissal rights from 6 months of employment, replacing the current two‑year qualifying period. The shift represents a major cultural and operational change for retailers, who have historically relied on longer probation periods and high‑turnover staffing models.

This change alone significantly increases litigation risk. Retailers will no longer be shielded from the consequences of poor hiring decisions, and discrimination risks will remain present from day one. The reduction of qualifying periods and the broader expansion of rights is likely to lead to increased claims and more complex dispute resolution.

Mandatory flexible working and predictable hours

The Act also introduces mandatory flexible working rights and new obligations around predictable hours. Zero‑hours and variable‑hours contracts widely used in retail to manage fluctuating demand will face tighter regulation. Employers will be required to offer guaranteed minimum hours after a reference period if regular working patterns emerge, provide proper notice of shifts, and compensate workers for short‑notice cancellations. These obligations extend to agency workers and come with new enforcement mechanisms.

For retailers, this represents a major operational shift. Rota planning will become more complex, and the cost of non‑compliance, both financial and reputational, will rise. Retailers should begin reviewing scheduling processes now to identify where improvements can be made ahead of the implementation timeline.

Expanded family‑friendly and sick pay rights

From April 2026, employees will gain day‑one entitlements to paternity leave, parental leave, bereavement leave and statutory sick pay. This marks a significant shift in how retailers manage leave, benefits and workforce planning. For a sector heavily reliant on seasonal recruitment and part‑time staff, these changes will require more robust HR processes and clearer communication with employees.

These reforms will affect day‑to‑day operations from managing leave requests to planning staffing levels, so retailers must work with legal teams to update policies, contracts and training programmes to remain compliant.

Third‑party harassment: A new duty of care

Retailers will also face a new duty to take “all reasonable steps” to prevent harassment of employees by third parties, including customers. Given the customer‑facing nature of retail, this duty is particularly significant. The standards for compliance are still being developed, meaning retailers must act before full guidance is available. This uncertainty increases risk and underscores the need for strong internal reporting mechanisms, training and cultural alignment.

Why culture matters more than ever

The ERB is not simply a compliance exercise; it is a catalyst for cultural transformation. Embedding respect, transparency and representation into workforce strategy will be essential for risk management.

Retailers that proactively build a positive culture will be better equipped to:

• Reduce the likelihood of claims under expanded unfair dismissal and discrimination protections
• Demonstrate “reasonable steps” in harassment cases
• Retain staff in a competitive labour market
• Strengthen employer reputation in a sector where brand perception matters

A culture that aligns with the new legal standards will also support operational resilience, particularly as retailers face rising costs, evolving consumer expectations and ongoing labour shortages.

Practical steps retailers should take now

To prepare for upcoming changes, retailers should:

1. Review and update their internal policies
Policies on dismissal, flexible working, harassment, leave and scheduling must be updated to reflect new legal standards. Early action will reduce the risk of non‑compliance once the reforms take effect.

2. Train managers thoroughly
Managers will be on the frontline of implementing the new rules. Training should cover performance management, fair dismissal procedures, flexible working requests, harassment prevention and inclusive leadership.

3. Strengthen recruitment and probation processes
With day‑one rights and shorter qualifying periods, robust recruitment and early performance management are essential. Retailers should ensure documentation is clear, consistent and defensible.

4. Engage employees and build representation
Transparent communication and meaningful employee voice mechanisms will help retailers navigate change, reduce conflict and build trust.

Key takeaway

The forthcoming changes will significantly raise the bar for retailers. Those who act early embedding respect, transparency and representation into their workforce strategies will not only manage risk more effectively but also build stronger, more resilient organisations. The retailers that thrive under the new regime will be those that see compliance not as a burden, but as an opportunity to modernise, engage their workforce and strengthen their competitive edge.

How we can help

If you have questions regarding the Employment Rights Act, or any other employment law issue, please contact Dawn Dickson or a member of our team.