For small and medium-sized hotels, 2026 brings a more demanding HR and employment law landscape than ever before. Ongoing recruitment pressures, rising costs and increased regulatory scrutiny mean that people management is no longer just an operational issue — it is a key legal and commercial risk.
Hotel operators may have felt the balance had already swung against them given the National Insurance and minimum wage increases in 2025. However, recent reforms under the Employment Rights Act 2025 which will begin to be implemented in 2026, add further and different burdens on hotels as employers. This together with recently strengthened obligations to prevent sexual harassment (including harassment by guests, co-workers and other third parties), require hotel operators to take a more proactive, structured and well-documented approach to HR.
It is by no means all doom and gloom, but it does require an understanding of and reacting to the changing landscape.
Employment Rights Act 2025 — Earlier Risk and Longer Exposure
The Employment Rights Act 2025 represents one of the most significant shifts in UK employment law in recent years. There are many changes, but this article focuses on just a couple of particular interest.
One of the more important changes for hotel employers is the reduction in the qualifying period for ordinary unfair dismissal claims, from two years’ service to six months. In a sector with high turnover of staff, often before the employee has reached the two years of service required for unfair dismissal protection, this requires particular attention. Decisions taken during probationary periods — often fast-paced in hospitality — now carry a much greater importance. Poor performance, attitude or conduct issues will need to be identified sooner and handled decisively. It is already common for disgruntled former employees to try their luck with an Employment Tribunal claim. This change presents that opportunity to many more employees.
In addition, the Act extends the time limit for bringing unfair dismissal and many other Employment Tribunal claims from three months to six months. For hotels with high staff turnover, this significantly increases the period of uncertainty following dismissals and workplace disputes.
What this means in practice for hotels:
- Probationary processes must be structured, fair and documented
- Line managers need training to understand that fair procedure applies from day one
- Decisions to dismiss short-serving staff should be supported by clear evidence and rationale
The Duty to Prevent Sexual Harassment — A Proactive Legal Obligation
Since October 2024, employers have been under a statutory duty to take reasonable steps to prevent sexual harassment in the workplace. This duty is expected to be strengthened further, requiring employers to take all reasonable steps, raising the compliance threshold.
For independent hotels, this is particularly significant. Hospitality environments often involve late shifts, alcohol, lone working and close interaction with guests — all factors that increase harassment risk. Tribunals will expect hotels to show that they have actively identified and managed these risks, not simply reacted when complaints arise.
Failure to comply with this duty can lead to an uplift of up to 25% in tribunal compensation, even where the employer is already found liable for discrimination or harassment.
Key preventative steps for hotel employers include:
- Conducting sexual harassment risk assessments tailored to hotel operations
- Implementing clear, hotel-specific anti-harassment policies
- Providing regular, practical training for managers and staff
- Ensuring complaints are handled confidentially, promptly and appropriately
Third-Party Sexual Harassment — Managing Guest and Contractor Behaviour
A major area of risk for hotels in 2026 is third-party sexual harassment, where staff are harassed by guests, customers, contractors or event attendees. Under the current legal framework, hotels can be liable where they have failed to take all reasonable steps to prevent such conduct.
This is particularly relevant for hotels hosting weddings, conferences and public events, where staff may feel pressure to tolerate inappropriate behaviour in the interests of customer service.
Hotels should consider:
- Setting clear standards of conduct for guests, including at events
- Empowering staff to report incidents without fear of repercussions
- Training managers on how to intervene early and escalate issues
- Keeping records of incidents to identify repeat risks or problem areas
Recruitment, Retention and Workplace Culture
Recruitment and retention remain ongoing challenges for independent hotels. However, workplace culture now has direct legal consequences. High staff turnover, poor management practices or unresolved complaints can quickly escalate into claims for unfair dismissal, discrimination or harassment.
Tribunals increasingly look at workplace culture and management behaviour when assessing whether an employer has complied with its legal obligations.
Hotels that invest in training, communication and consistent management practices are better placed to reduce disputes and defend claims when they arise.
Employment Law Advice for Independent Hotels – Practical Support from LBMW Solicitors
Running an independent hotel means dealing with employment law issues as they arise — probation problems, dismissals, staff complaints, guest misconduct, sickness absence and tribunal risk — often under time pressure and without in-house HR support.
LBMW has been providing HR support and employment law advice to hotels for many decades. We have seen all manner of employee issues, some routine, some unprecedented! We understand that hotel owners or managers need almost instant advice and solutions. We know that they are not looking for legal jargon or an intimidating volume of paperwork. We provide clear answers, an early assessment of both legal and commercial risk, practical steps and commercial solutions – an approach that is sometimes markedly different from outsourced HR companies.
For more detail of our full hotels legal advice service please see here. We will be happy to provide further details of our retainer service on request. This allows hotel clients to receive quick telephone or email advice as and when any query, problem or transaction arises. Please contact Ed Henderson , the Hotels team lead, for further discussion.