The trade body warns that the current rules are proving massively disruptive for hospitality businesses across the UK and leading to venue closures and reduced operating hours.
Under track and trace guidelines, even if someone tests negative for the virus after being told to self isolate, they must still quarantine for a period of up to 10 days with no way of being able to reduce the isolation period.
BigHospitality reported earlier this week that the sector could face a lockdown 'in all but name' as more and more restaurants and pubs are forced to close because of staff having to self isolate as a result of contact tracing.
High-profile restaurants that are currently closed because of staff being ordered to isolate include Gary Usher's central Manchester restaurant Kala, which has now had to shut twice in quick succession as a result of a case of Covid-19 being reported amongst the team.
Rather than risk a possible third shutdown, Kala has now chosen to remain closed until 19 July, when all restrictions are meant to be lifted.
In a statement, the restaurant said: "Reopening and closing the restaurants costs so much money, energy and time, and we are just not able to do this again.
"The rules are there for a reason and we will continue to follow them. But how much longer can businesses be put under such pressure?
"How much more strain can the hospitality industry handle?"
UKHospitality has called on the Government to extend the ‘test to remain’ system for vaccinated staff to hospitality, and is also understood to currently be lobbying to allow hospitality businesses to operate a 'test and release' scheme, whereby staff who were self isolating could return to work if they had a negative test result.
“For some weeks we have been telling Government about the severe staff shortages at venues, compounded massively by the absence of staff members who have been told to isolate despite not having shared shifts with colleagues who tested positive," says Kate Nicholls, chief executive of UKHospitality.
“We need urgent clarification of isolation policy to reflect the enormous success of the vaccine roll out and we urge the Cabinet Office to amend the current isolation policy as soon as possible, and certainly ahead of the 19th July, to address the challenges of the current system.
“A sensible and pragmatic approach would be to extend the ‘test to remain’ system for vaccinated staff to hospitality. That would avoid businesses being forced to close, losing thousands of pounds of revenue at a time when cash reserves are low or non-existent following 16 months of closure and punitive trading restrictions.
“If the system remains as it is, there’s a threat of mass isolations, which would hugely damage trade, putting many companies at risk of failure. Hospitality is eager to trade its way back to prosperity, so ideally the Government should act to ensure that vast swathes of the population are not unnecessarily confined to their homes due to rules formulated before the successful vaccine roll out.
"A strong focus on testing when cases are identified, rather than isolating fit and healthy people, would help to avoid mass isolations.”