What will the Employment Rights Bill mean for construction?

The Employment Rights Bill is set to be the most significant overhaul of employment law in a generation, with major implications for the construction sector. While the bill aims to strengthen workers’ rights and improve workforce stability, its effects will be far-reaching in an industry that has traditionally been reliant on flexible, transient arrangements, agency workers and contractors.

Current status and next steps

While details of the bill remain under review, organisations should prepare for potential changes. The government’s roadmap document, Implementing the Employment Rights Bill, outlines phased consultation and implementation, with some reforms expected from April 2026 and others not until 2027 – albeit the overall timetable for implementation may now be subject to some delay.  

Notably, day-one unfair dismissal reforms are unlikely to be implemented before 2027. Despite the cabinet reshuffle and much speculation, there will not be a massive U-turn on this. The bill is sure to pass. The House of Lords will consider the Commons’ latest amendments on 28 October 2025 and royal assent will probably take place by the beginning of November. 

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Key reforms affecting construction

• Zero hours contracts and guaranteed hours: The bill imposes obligations on employers using zero- or low-hours contracts or agency staff (described as “qualifying workers”). Employers must offer guaranteed hours contracts after a reference period, reflecting actual hours worked during that period. Financial penalties will apply for cancelling shifts at short notice – which may be relevant if projects are delayed for reasons beyond the employer’s control. The House of Lords proposed allowing workers to request guaranteed hours, but the Commons rejected this. Clarification is needed on who qualifies as a low-hours worker, especially for project-based or temporary roles. There will be further consultation on these measures.
• Day-one rights and probation periods: Employees will gain day-one entitlements, including statutory sick pay from the first day of absence and eligibility for parental and bereavement leave. The headline reform – day-one rights to claim unfair dismissal – remains controversial. Employers will still be able to dismiss fairly within what is called an initial period of employment (IPE), akin to a statutory probation period, likely to be set at nine months. Attempts by the House of Lords to have a six-month qualifying period have been rejected.
• Flexible working requests: Flexible working is not the default, but employers must justify refusals. Increased flexibility may affect project completion dates, cause delays, and give rise to additional costs such as hire fees and costs incurred as a result of projects taking longer to complete.
• Collective redundancies: Consultation requirements remain unchanged, but the protective award for non-compliance rises to 180 days’ gross pay per employee.
• Fire and rehire: Dismissing an employee who refuses a “restricted variation” (which encompasses changes to pay, pension, hours, shifts or holiday entitlement) will be automatically deemed unfair. Changes to site location are excluded.
• Harassment liability and third-party conduct: Employers must take all reasonable steps to prevent harassment, including by third parties such as subcontractors, customers and suppliers. This increases due diligence requirements in vetting subcontractors. A recent Unite union survey found 31% of women construction workers have been sexually assaulted at work, and only 25% of women in the sector feel their employers have done enough to promote a zero-tolerance culture surrounding sexual harassment.
• Union rights and collective bargaining: The bill expands trade union rights and access, raising the risk of industrial action.
• Enforcement and tribunal pressure: There will be a newly formed enforcement body called the Fair Work Agency, which will investigate employer breaches, such as failure to pay statutory payments, and impose significant penalties upon defaulting businesses. It will also have the ability to offer legal advice and bring employment tribunal claims on behalf of employees. The timeframe to bring an employment tribunal claim will increase from three to six months.

Actions for construction employers

• Review and update contracts and policies: Ensure that these align with day-one rights, probation and IPE obligations, and ensure contractor and subcontractor contracts and third-party contracts prohibit harassment.
• Workforce audit: Assess staff, worker and contractor arrangements; review use of zero-hours, casual or agency staff.
• Manager training: Train managers on probation periods, feedback provision and handling difficult situations, performance and capability processes.
• Union engagement: Enhance union engagement frameworks and consult with staff to foster constructive dialogue and avoid confrontation.
• Tribunal insurance: In view of the inevitable rise in employment tribunal claims, consider taking out insurance to mitigate increased litigation risk.

Conclusion

The Employment Rights Bill marks a deliberate shift toward transparency and certainty in the labour market. For construction, where informal practices and atypical contracts are common, these reforms present legal, commercial and cultural challenges, increasing costs and administrative demands. 

Proactive workforce audits and planning will help construction companies stay ahead of the curve, maintaining efficiency and reducing litigation risk.

Victoria Regan is an employment law solicitor and a partner at Loch Associates Group