Major employment law reforms are coming. For retail and consumer employers already dealing with labour shortages, rising costs and high turnover, the impact will be significant.

Published: 4 March 2026
Author: Amy Frost

This article is the first in a two-part series examining the Employment Rights Act 2025 (the Act) and what it means for the retail sector. Part 1 focuses on harassment reform, unfair dismissal changes and equality action plans - three reforms which retailers should have on their radar.

Why these reforms land harder in retail

Retail and consumer businesses continue to face persistent wage pressure and tight labour markets, while digital transformation is reshaping many roles. Physical stores are also shifting towards experience‑led environments and micro‑fulfilment hubs, demanding more capable and engaged frontline teams. At the same time, most retailers depend on dispersed, customer‑facing workforces, flexible labour and seasonal staffing spikes making the upcoming reforms on harassment prevention, unfair dismissal and zero/low‑hours arrangements particularly significant for the sector.

Harassment reform

From October 2026, employers must take “all reasonable steps” to prevent sexual harassment of employees as well as to prevent third‑party harassment of employees across all protected characteristics. The bar is high and employers will only meet it if no further reasonable steps could have been taken, and unlike previous rules, there is no need for repeated incidents or prior knowledge. While tribunals will recognise the limits of controlling third‑party behaviour, especially where freedom of expression is engaged, they will still expect credible, proactive prevention, particularly in high‑exposure, customer‑facing sectors like retail.

Effective compliance in a retail environment means taking a genuinely proactive approach. Employers should:

• carry out dynamic, site‑by‑site assessments of harassment risk, considering factors such as time of day, product lines, lone working, late‑night trading, and repeat‑offender patterns
• reinforce expectations through customer codes of conduct, visible in‑store signage, and employee‑facing policies that explicitly address third‑party behaviour
• provide practical frontline training, including how employees can intervene if they witness harassment, how employees can raise complaints and guidance for managers on handling complaints

Employers should also strengthen contractual terms with suppliers, contractors and landlords to support anti‑harassment standards, and ensure clear reporting routes with complaints or concerns being taken seriously and acted on quickly. Employers should also consider how to monitor complaints or concerns that are raised to highlight problem areas where further steps may need to be taken, operational controls such as buddying arrangements, lone‑working safeguards, CCTV placement, store layout choices and, where lawful, refusal‑of‑service protocols all play a crucial role in preventing harm and protecting staff. Employers in this sector should embed anti‑harassment measures into culture, operations, and third‑party relationships now so that compliance is a by‑product of doing the right things consistently.

Unfair dismissal reform

One of the most significant proposals under the Act for employers is the removal of the two‑year qualifying period for unfair dismissal. Employees will have the right to claim unfair dismissal after six months service from 1 January 2027, meaning that effective use of probationary periods will become even more crucial.

Roughly 6.3 million UK employees have between six months and two years’ service, with currently very limited protection against unfair dismissal but who would be eligible when the reforms come in next year. For retail, the implications are significant:

• seasonal and short‑term hires that are on the books for six months or more will have the ability to bring unfair dismissal claims, placing greater focus on the process followed prior to ending their contracts.
• with more employees in scope, the risk of constructive unfair dismissal claims also increases (such claims can arise from resignations alleging a fundamental breach of contract).
• the increased scope could result in unmeritorious claims being brought. However, even weak unfair dismissal claims can consume management time and increase legal spend.

Retail employers should act now by reviewing contracts and probation processes as stronger probation management will be essential for assessing new recruits prior to the six month qualifying period being completed. Employers should tighten onboarding, set expectations early, and keep proportionate records of any performance or capability concerns. Investing in manager capability is critical too, equipping supervisors to give feedback, address attendance or conduct issues promptly, and make timely probation decisions. Seasonal workforce models should be stress‑tested so that standards are clear from day one and issues can be resolved quickly in peak periods.

Equality action plans

In addition to the publication of a company’s gender pay gap, large employers (with over 250 employees) will also be required to publish Equality Action Plans, to outline actions they will take to support certain groups within their workforces, such as those experiencing menopause.

The duty will be voluntary from April 2026 and mandatory from spring 2027, marking a shift from reactive management to more structured, accountable approaches that are likely to become a marker of best practice.

For retailers, the practical impact will be considerable. The sector is defined by large, dispersed, customer‑facing workforces, uniforms and PPE, shift‑based operations and high‑intensity environments, all of which can exacerbate symptoms for employees experiencing menopause or other health‑related conditions.

Retail employers should begin assessing where future adjustments may be needed. This includes considering whether current uniforms, PPE, and rest‑break arrangements would enable proportionate, short‑notice adjustments if required. The emphasis is on forward planning: understanding which aspects of the working environment may create barriers and identifying practical steps to reduce them.

What’s next?

These changes are only the start. In Part 2 of this series, we explore reforms to zero‑hours arrangements, industrial action, and collective redundancies, areas likely to reshape workforce planning across the sector.