This is the second article in our two‑part series examining the Employment Rights Act 2025 (the Act) and its implications for retailers.

Published: 4 March 2026
Authors: Amy Frost, Simon Fennell & Jonathan Naylor

Part 1 explored harassment, unfair dismissal and equality action plans. Part 2 turns to reforms that will have a direct impact on workforce planning, union relations and organisational change across multi‑site retail operations.

Zero / low hours reform

Despite early headlines, there will not be a ban on zero‑hours contracts (exploitative or otherwise), nor does the Act define what ’exploitative‘ would cover. Instead, the Act introduces a new right to be offered guaranteed hours for certain zero and low‑hours workers after a reference period (anticipated around 12 weeks) where actual hours exceed the contractual minimum. ’Low hours‘ is not yet defined and further regulations are required to provide the detail on which workers will be caught by these provisions.

The government intends that contracts should reflect reality, giving both parties more certainty. The reality for retail is the administrative burden could be substantial particularly where hours fluctuate weekly, scheduling is devolved to stores, and seasonal peaks are common.

How the new rights will work in practice will be key and draft regulations setting out the detail can’t come soon enough. Unresolved issues that will concern retailers include:

• students and holiday patterns: if a student works 35 hours over the summer on an 8‑hour contract, must the employer offer a guaranteed hours offer of 35 hours in September?
• seasonal peaks: if Christmas hours spike, will employers be forced to uplift contractual hours that are unsustainable from January?
• redundancy exposure: if employees accept higher guaranteed hours that later exceed business needs, does that create a redundancy risk?

Retail employers can take several practical steps now while waiting for the detailed regulations. This includes stress‑testing workforce planning and forecasting models to understand where guaranteed‑hours offers may be triggered and identifying roles where genuine flexibility remains essential. Scheduling technology should also be reviewed to ensure rostering systems can track contractual versus actual hours and automatically prompt compliant offers at the end of each reference period. Employers may need to simplify their contract structures, ensuring clarity on minimum hours, notice arrangements and temporary uplifts, and establish clear governance over who monitors reference periods, how offers are documented and how any declines are recorded. Finally, setting expectations early with variable‑hours staff about how guaranteed‑hours offers may work will help minimise confusion and reduce the risk of disputes later.

Industrial action reform

Industrial action changes will also impact retailers, particularly those with large, dispersed workforces.

Union relationships in the sector are increasingly a contingent partnership capable of collaboration when the groundwork is good, but sensitive to operational pressure. Employers in the sector should use the upcoming reforms as both a risk and an opportunity to refresh consultation frameworks, scenario‑plan for disruption, upskill leaders on how to negotiate with unions, and engage early with recognised unions.

The right of access to workplaces, both physically and digitally, from October 2026 along with the requirement on employers to inform employees of their right to join a union, both at the start of employment and at regular intervals thereafter, and the simplification of the statutory recognition process, is likely to increase union membership and recognition in workplaces. Employers will not be able to avoid interactions with unions, and need to be prepared for greater collective bargaining. This is particularly so given the changes to the industrial action requirements which will make this a more attractive option for unions and their members to pursue.

Given this fundamental change presents huge opportunities for unions to increase their memberships and influence, it is likely that they will be compiling lists of potential target employers where they feel they have good prospects of gaining recognition. Retailers, particularly those with a high public profile or brand, are likely to feature on such lists.

Employers may wish to consider their strategic approach to this issue ahead of the planned introduction of the reforms. For example, they may consider entering into voluntary recognition agreements with unions perceived as more pragmatic, rather than risk a more aggressive union gaining a foothold in the workplace.

Collective redundancies

From 2027, collective consultation will be triggered where an employer proposes to dismiss 20 or more employees at one establishment, or a further (yet to be confirmed) threshold across multiple establishments within 90 days. The government will consult on the multi‑site threshold later this year,  a development of particular importance to retailers operating across stores, distribution centres and concessions.

Additionally, from April 2026, the maximum protective award for failing to collectively consult will double from 90 to 180 days’ gross pay per affected employee, with a potential uplift of up to 25% for breaches of the Statutory Code on Dismissal & Re‑Engagement. This means the total potential penalty could reach 225 days’ gross pay.

For multi‑site retailers, the reforms heighten the need for coordinated oversight. Employers will need to track proposed redundancies across all locations to ensure that aggregated numbers do not inadvertently trigger consultation obligations. The government has confirmed that representatives across different sites do not need to be consulted together or reach identical agreements, offering some flexibility for dispersed workforces.

Retailers should consider whether any planned organisational changes ought to be implemented before the new thresholds and increased penalties take effect. They should also monitor the government’s forthcoming consultation on multi‑establishment thresholds and evaluate whether to submit a sector‑specific response. Finally, multi‑site employers should ensure that their HR systems can track proposed redundancies across all locations so that collective consultation triggers are identified and acted upon in good time.

Strategic outlook for HR leaders

Preparing for these reforms is as much about culture as process. Employers who act early will find compliance easier and gain real benefits in retention, engagement and brand protection. Policies must work in practice not just in head office but on a busy Saturday in peak trading so partner closely with stores, distribution centres and contact centres when designing solutions. The new six month qualifying period for unfair dismissal also heightens the need for strong probation management.

Reliable data will be essential, from scheduling and hours to reported incidents and probation outcomes, enabling systems to automate routine compliance steps such as guaranteed‑hours offers.

With crucial detail still to come, especially on third‑party harassment and guaranteed hours, seeking early advice will help balance compliance with operational practicality and avoid unintended consequences.

In light of the significant legal developments that will take place this year, we are supporting a Future focused thought leadership series by the CIPD. The four-part series will explore how HR across key sectors like retail can stay credible, influential and sustainable amid fast-changing workforce, skills and organisational demands. For more information visit:  Future-focused HR.