The 7 key employment trends retailers need to act on now – and not just the Employment Rights Act 2025

One of the most immediate changes is the removal of the 3 waiting days for an employee to be entitled to Statutory Sick Pay (SSP), and the removal of the employee’s need to earn over the lower earnings limit to qualify. This increases the financial cost of absences and allows more employees to qualify for SSP. The widely held concern is that paying sick pay on day one will also drive increased short term absences in a sector where staffing levels are finely balanced and absence can have an immediate operational impact.

In practice, this has prompted many retail employers to review their company sick pay schemes and dial back the enhanced sick pay offered. We’re seeing employers increasingly moving away from guaranteeing any enhanced sick pay and back towards paying SSP only, or SSP with the company retaining a discretion to make a higher payment. 

That said, changes to sick pay schemes must be handled carefully. Enhanced sick pay is often viewed by employees as a core benefit, particularly in a competitive labour market. Removing or reducing it can affect morale, retention and engagement, and may require consultation depending on how the employees’ entitlement to company sick pay was originally promised. 

The reduction of the qualifying period for unfair dismissal to six months (expected in 2027) places renewed importance on the effective use of probationary periods to judge employees’ suitability in the first few months. While probation remains a lawful and valuable tool, it is no longer something that can be treated as a formality which can be delegated to the people team to manage.

In a high turnover sector such as retail, robust probation processes and well trained line managers will be critical. Retailers will need them to actively monitor performance and conduct, provide feedback and take action well within the probation period where concerns arise. Failure to do so risks employees who aren’t performing to standard acquiring unfair dismissal protection and claims against the employer which wasn’t going to keep them on.

Retailers are increasingly seeing employees holding second jobs, sometimes in breach of their contractual obligations and the 48- hour maximum working week. We are seeing cases where this overwork has been linked to fatigue, burnt out and performance issues. Students are often working in addition to studying which can mean that they can’t offer the flexibility needed or their availability for overtime is limited.

Retailers should ensure that contracts and policies clearly address secondary employment and obligations on employees to disclose any additional work.  You need to record their total working time and ensure a safe place of work, so the onus is on the employer to put systems and measures in place to avoid accidents and harm. For more senior staff, retailers will also need to ensure that any other roles don’t pose a conflict of interest and that managers are confident enforcing your rules consistently and fairly.

Whenever the cost-of-living increases, retailers face persistent challenges around theft – this is increasing not just by customers but by their own staff.   We are hearing from employers who are seeing employees removing stock, manipulating sales figures, misusing staff discount schemes, purchasing goods at a discount and re-selling clothes/products online in their “side hustles”.  

The loss of income and risk to your brand and reputation are significant.  Retail operations are often at dispersed locations where high transaction volumes and limited supervision are common. Tight stock control, clear policies, robust internal controls and regular training are essential. Retailers are taking swift and robust investigations and disciplinary action where possible, but must ensure these are carried out fairly, proportionately and consistently.

The government’s consultations resulted in a positive change for retailers - zero hours contracts would no longer be banned but their use will be limited. Employees on zero and low hours will (in 2027) need to be offered guaranteed working hours. The seasonal variations in demand have not been factored in which poses problems for the sector in which operational agility is essential.

From October this year, retailers will be under a duty to take all reasonable steps to prevent sexual harassment in the workplace and will become liable for harassment by customers and other third parties.

Employers already have to take reasonable steps and retailers are already taking steps to deter verbal and physical attacks on their staff – increased prosecutions informed by CCTV, in-store announcements that harassment won’t be tolerated and increased deployment of security staff.  The expansion of the protection for workers increases the risk of a claim and liability and employers need to assess the risks and evidence they have taken steps to minimise them.

 Any retailer facing a Tribunal claim will know the system is already slow and often unresponsive. The proposed removal of the compensation limit on unfair dismissal claims (in 2027), coupled with the extension of the time limit to bring a tribunal claim from 3 - 6 months, increases the financial cost to retailers and the window in which an employee could bring a claim.