With the Employment Rights Act 2025 coming into law on 18 December 2025, employers across the country have been making arrangements to accommodate new provisions related to holiday pay, statutory rights, employee protections against workplace harassment and more…
The Act represents the biggest changes to UK employment law in decades and is therefore being rolled out in a series of stages. A number of major changes came into play from April of this year, with the next significant batch set to become active in October.
For construction firms, some of these changes are particularly important, carrying wide-reaching legal implications, with cash outlays required to proactively combat them.
This article sees Carl Johnson, UK Sales Director at construction asset finance providers Anglo Scottish, and Lisa Branker, Head of Employment Law at Beecham Peacock solicitors, explore the changes you should already be aware of, along with which are coming soon and how can you prepare and preempt your policies…
Improve harassment training and policies at all levels
From October of this year, employers will be liable for harassment from third parties, such as clients or site visitors, unless they have taken ‘all reasonable steps’ to prevent such activity from happening. This will apply to all types of harassment.
Construction firms will need to be particularly wary of this, because of the way the average site is structured. A construction site is a multi-employer workplace by definition: a principal contractor’s own staff work alongside subcontractors, plant operators, delivery drivers, scaffolders, inspectors and client representatives. Almost everybody on site is a third party to somebody else’s employer.
That creates an unusual exposure. A subcontractor with a handful of operatives on a large site can be liable for harassment carried out by people it does not employ, cannot supervise and has no power to discipline. Coupled with construction’s male-dominated workforce and a labour model in which operatives move between sites frequently, often receiving a short induction weighted towards safety rather than conduct, the sector is more exposed than most.
To cover this, Branker says: “Construction employers need a clear anti-harassment policy, tailored to their workplace, as well as regular training and simple methods for reporting harassment that are visible across every site.”
Johnson adds: “Now, more than ever, it’s worth allocating budget, taking the time to invest in induction training and taking visible action when standards are breached.”
Audit payroll calculations for site-based workers
Under new employment regulations, incorrect holiday pay or Statutory Sick Pay (SSP) calculations can lead to increased repayment liabilities and penalties, as well as the reputational damage that always follows. This is another area where construction firms face a higher level of operational risk, thanks to the commonality of variable hours, overtime, travel time, day rates and night or weekend working.
Employment status compounds the problem. Where an operative engaged through the Construction Industry Scheme (CIS), an agency or an umbrella company is found in law to be a worker rather than self-employed, holiday pay and statutory payment entitlements follow, and those liabilities aren’t commonly priced into a site job.
In April, during the previous round of employment reforms going live, the Fair Work Agency was established, helping enforce employment rights such as holiday pay and statutory pay.
Branker says: “So, your business could already be at risk. Before the next round of employment rights laws come into play, we recommend proactively auditing your payroll calculations, especially if you have a large number of site-based workers. Opting to audit payroll before an inspector does is likely to save your company money in the long run.”
Johnson adds: “Small errors over statutory payments or holiday pay can easily accumulate into substantial back-pay bills, impacting construction cash flow and spiralling into a six-figure liability for larger contractors. If your business works to a financial year-end of 31 December, push to include payroll auditing in the following year’s budget.”
Invest in robust HR policies
The doubling of tribunal time limits sits awkwardly alongside a workforce that rarely stays in one place. An operative who spent 10 weeks on a site two years ago can still bring a claim, and short-tenure records are exactly the ones that go missing once a project completes and the team demobilises.
Branker comments: “Construction employers need to also be aware that time limits for employment tribunals will double from October 2026. From October, employees will have twice as long to bring tribunal claims against their employers. Practically, this means contractors will have to keep HR records for longer and improve their data handling and documentation processes.”
Johnson adds: “Financially, this means construction businesses must plan for a longer period of exposure. Employment disputes can last for twice as long, which in theory, means more expenditure on legal costs, management time and settlement discussions.
“There’s also the worry that key witnesses might be tied up on live sites, disrupting ongoing operations. So, investing early in robust HR documentation is the best course of action for contractors that wish to protect themselves against budget-busting litigation in the long term.”
Factor employment law into restructuring budgets
Another change that construction firms must be aware of is the increase in financial penalties for collective redundancies with mishandled consultations. From April of this year, the maximum ‘protective award’ for failure to consult doubled from 90 days to 180 days. This means that the price of a mishandled consultation is now materially higher.
Contractors face an added complication. Collective consultation duties are triggered by the number of redundancies proposed at one establishment. When it comes to a business that is running several concurrent projects, it’s rarely obvious whether each site counts as a separate establishment.
Johnson says: “For contractors, this is particularly prudent, given that a huge chunk of sector businesses are investing in offsite manufacture and modern methods of construction to increase output and reduce on-site labour costs.”
Branker adds: “External employment law advice might be required if substantial restructuring is taking place and employees need to be redeployed or retrained. The cost of your investment in legal advice to ensure you meet consultation obligations is likely to be substantially less than protective awards under the new legislation.”
So, is your business prepared? If you have not already made provisions for key points from April’s batch of new laws, you might be lagging behind. And, with more changes slated for 2027, there’s still work to do.
