What Hiring Managers Need to Know About the Employment Rights Act 2025
The Employment Rights Act 2025 (ERA 2025) represents the biggest overhaul of UK employment law in a generation, and its impact will be felt across the construction, civil engineering, and consultancy sectors. Whether you manage site teams, professional services staff, or mixed project workforces, these reforms will influence how you hire, onboard, manage, and retain people.
With changes rolling out through 2026 and 2027, now is the time to get ahead. Here’s what hiring managers need to know - without the legal jargon.
A Quick Overview of ERA 2025
The Act received Royal Assent on 18 December 2025 and introduces wide-ranging reforms intended to modernise employment protections and reduce insecure work. It includes major changes to dismissal, flexible working, zero‑hours arrangements, family‑related rights, redundancy rules, and enforcement structures.
Many provisions are phased, with some starting in April 2026 and others not landing until 2027.
1. Unfair Dismissal Rules Are Changing
One of the most significant changes for employers is the reduction in the qualifying period for unfair dismissal.
Key points
The qualifying period will reduce from two years to six months from January 2027.
The cap on compensatory awards for unfair dismissal will be removed, making pay outs uncapped.
This strengthens early employment rights and increases risk around dismissals, especially on construction projects where short-term or site-based roles are common.
Why it matters for construction & consultancy
Project teams often rely on quick mobilisation and tight probation periods. Stronger early rights mean:
You must manage performance proactively from day one.
Probation reviews need to be documented thoroughly.
“Informal” site dismissals now carry far greater risk.
2. Zero-Hours & Flexible Working Reforms
The Act tightens rules around unpredictable work patterns - key for sectors relying on ad‑hoc or short‑notice labour.
Key changes
Workers will gain a right to guaranteed hours, reasonable shift notice, and pay for short‑notice cancellations.
Flexible working moves towards becoming the default, with stronger justification required for refusals.
For consultancies and contractors, this may affect:
Scheduling project support staff
Hiring temporary or junior employees
Managing peaks and troughs in workload
You’ll need to ensure that workforce planning is future‑proofed and compliant.
3. Family-Related Rights Are Expanding
From April 2026, several leave entitlements have become day‑one rights, with no qualifying service needed.
What’s changing
Statutory Sick Pay, paternity leave, and unpaid parental leave become available immediately.
New parents gain stronger protections and wider flexibility in how leave is taken.
From 2027, dismissing an employee during pregnancy or shortly after returning from leave will become significantly more restricted.
Construction businesses - traditionally male‑dominated and often less focussed on family‑friendly policies - may need to update policies and manager training.
4. Fire‑and‑Rehire Will Be Heavily Restricted
From October 2026, attempts to change contractual terms through dismissal and re‑engagement will be tightly controlled.
Certain fire‑and‑rehire scenarios will be automatically unfair except in cases of severe financial difficulty.
Consultation requirements around redundancies will expand, applying across the whole organisation, not just individual sites.
This will affect project-based restructures or commercial reorganisations.
5. A New Enforcement Body Is Coming
The Fair Work Agency (FWA) launched in April 2026, consolidating enforcement around minimum wage, holiday pay, agency work, and labour exploitation.
This marks stronger oversight of:
Site labour models
CIS and subcontractor arrangements
Holiday pay compliance
Construction remains a high‑risk sector for misclassification and labour-only subcontractor issues, so expect closer scrutiny.
What Hiring Managers Should Do Now
✔ Review your probation and onboarding processes
With unfair dismissal rights kicking in earlier, early-stage documentation is essential.
✔ Audit your use of zero-hours, freelance, and CIS labour
The Act increases scrutiny over “false self‑employment,” posing risks for site-based workers.
✔ Train line managers on new leave and flexible working rights
Construction supervisors often handle HR issues informally - this will no longer be viable.
✔ Update policies and job offer templates
Particularly around sickness, parental rights, flexible working, and dismissal procedures.
✔ Plan ahead for recruitment timelines
Stricter rules may affect how quickly you can onboard project teams or restructure staffing.
Summary
The Employment Rights Act 2025 brings major changes that will transform how construction, civil engineering, and consultancy employers hire, manage, and retain their people. Although implementation is phased, preparing now will reduce risk, protect your projects, and ensure your business stays compliant as the new regulations come into force.
If you’d like support reviewing your hiring approach or planning your workforce strategy, we’re here to help.
Get in touch if you would like more information.