The Employment Rights Bill has now passed Parliament and is expected to receive Royal Assent, delivering the most significant overhaul of UK employment law in a generation. For the construction sector, this legislation represents a material shift in compliance risk, operational planning and cost exposure, rather than a symbolic political change.

With most provisions scheduled to take effect from 2026, contractors, consultants and developers must now assess how existing labour models, site practices and commercial assumptions align with the new legal framework.

The construction industry’s long-standing reliance on agency labour, zero-hours arrangements and CIS subcontracting means the sector will feel the effects of the new legislation more sharply than many others. The Act directly challenges the flexibility that has traditionally supported project mobilisation, short-term resourcing and programme recovery.

Zero-Hours Contracts

While zero-hours contracts are not banned outright, the legislation significantly alters how they can be used. 

Workers engaged under these arrangements will gain the right to request guaranteed minimum hours based on a 12-week reference period. Employers will be required to justify any refusal with clear business reasons. In addition, compensation will be payable where shifts are cancelled or curtailed without reasonable notice.

For construction businesses, this introduces a direct cost risk linked to poor labour forecasting. Historic practices that allowed late call-offs to manage programme uncertainty will now carry financial and contractual consequences. Site planning, agency agreements and short-term labour strategies will require closer control and clearer allocation of risk.

Unfair Dismissal

The qualifying period for unfair dismissal protection will reduce from two years to six months.

This change has particular relevance to construction, where workforce turnover is often highest during early project stages. Decisions taken during probation periods will now be open to challenge far sooner, increasing the importance of robust onboarding, performance monitoring and formal documentation from the outset of employment.

Informal approaches to early-stage dismissals will carry significantly greater legal risk once the new thresholds are in force.

Day-One Entitlements

The Act introduces day-one access to key statutory benefits, removing existing waiting periods.

Statutory Sick Pay will become payable from the first day of absence, and enhanced family and parental leave entitlements are expected to take effect from April 2026.

Given the physical demands and inherent risks of construction work, contractors should expect increased short-term absence costs. Commercial teams will need to reflect this in workforce planning, preliminaries and cost forecasting, while HR teams update policies and payroll systems in advance of implementation.

Site Operations and Culture

Beyond contractual and financial considerations, the legislation also introduces new operational responsibilities.

Employees will gain a day-one right to request flexible working, requiring employers to have clear, defensible reasons where site-based roles limit flexibility. Poor handling of such requests may expose businesses to legal and reputational risk.

In addition, employers will be placed under a specific duty to proactively prevent sexual harassment, including harassment by third parties such as subcontractors, suppliers and client representatives. This shifts responsibility from reactive investigation to active prevention, requiring stronger site management, clearer behavioural standards and updated subcontractor terms.

What Construction Leaders Should Take From This

The Employment Rights Act 2026 marks a decisive move away from informal labour flexibility towards a more regulated employment environment. For construction businesses, the challenge will be balancing compliance, cost control and programme certainty as the new framework takes effect.

Early preparation will be critical. Firms that review labour strategies, update contracts and train site leadership now will be better positioned to manage the transition without disruption to live projects or future delivery models.