What does the Employment Rights Act mean for construction

It is hard to over-state how important employment is to construction. At every stage of a construction project, people power gets stuff designed, planned and built. So, the government’s new Employment Rights Act will have significant and wide-reaching impacts on the industry.

New rules for construction

Having received Royal Assent in December, the Employment Rights Act is being rolled out throughout 2026. Described by the UK government as the biggest upgrade in employment rights for a generation, what exactly does the construction industry need to know?

Unfair dismissal rights

One of the Act’s most significant changes relates to unfair dismissal rights. Rather than wait two years to claim unfair dismissal, employees will be able to do so after only six months. This change increases the pressure on hiring managers, and reaffirms the importance of probationary periods.

Zero-hours contracts

Construction projects often demand a flexible workforce, including the use of zero-hours contracts. Having received much media attention, the government is reforming how they work; although zero-hour contracts will not be banned, employers will be obliged to offer guaranteed hours to qualifying workers.

Collective redundancies

Under previous rules, employers proposing 20 or more redundancies “at one establishment” within 90 days had to go through a process of collective consultation before making any redundancies. Now, the trigger for collective consultation will apply where 20 or more redundancies are proposed across the business as a whole. Another change will increase the severity for non-compliance from 90 to 180 days’ pay. Employers will therefore need to track  redundancies across sites on a rolling basis.

Family rights and sick pay

Parental leave will become a right from day one. Statutory sick pay will also be payable from the first day of absence. For construction managers, this puts more pressure on careful project planning to manage workforce pinch points.

Harassment

Employers were already required to take “reasonable steps” to prevent sexual harassment of their employees. Under new rules, they will now have a duty to take “all reasonable steps”, which will likewise introduce an obligation to not permit harassment of employees by third parties. 

Review and prepare

These far-reaching changes will compel construction managers to review employment processes and prepare. Reduced flexibility to terminate short-term hires will mean more forward planning is needed to meet workforce requirements. The burden on administrative compliance will increase, though the Employment Rights Act also presents opportunities to implement new systems.

What’s next?

The changes enacted by the Employment Rights Act are expected to be delivered in phases across a two-year period, so responding to changes will be an ongoing process. Proactive planning can ensure construction professionals stay up to date with the Act’s key measures, and do not get caught by surprise.