Employment Rights Act 2025: What Employers in the Built Environment Need to Know
The Employment Rights Act 2025 (ERA 2025) is in phased implementation, and employers across construction, real estate, infrastructure and engineering face new compliance expectations that will directly influence how they structure and manage their workforce.This article sets out the headline reforms within ERA 2025 and what they mean for employers operating across the built environment.
A Changing Landscape for Workforce Management
The built environment runs on a blend of permanent staff, contractors, consultants and agency workers, and that flexibility is often the point: labour needs shift quickly and projects evolve as they go.ERA 2025 introduces new obligations that reach directly into that model. The scale of change is real, particularly around zero-hours regulation, day-one rights and the launch of the Fair Work Agency. It isn't fully settled, either. APSCo's Tania Bowers has pointed out that the government's latest implementation timeline has quietly dropped its earlier wording on applying the zero-hours reforms to agency workers, even though the Act itself extends corresponding rights to agency workers a sign that the detail of how they'll be covered is still being worked out. For employers, the priority now is preparation, clarity and compliance.
Zero-Hours and Low-Hours Contract Reforms (2027)
The Act's new protections aim to end exploitative zero-hours arrangements. The confirmed measures give workers a right to a contract that reflects their actual hours worked, compensation when shifts are cancelled at short notice, and greater predictability on insecure contracts.The main area still being worked out is agency workers. APSCo has raised concerns that recent government timelines no longer explicitly confirm whether these measures will extend to agency staff. The Act itself does include corresponding rights for agency workers, with the hirer generally responsible for making guaranteed hours offers, but the detailed rules are still being finalised. Employers should plan on agency staff being in scope while watching for the final regulations.Sector impact: project-driven employers will need to review how they use zero-hours and low-hours arrangements now, and prepare for closer scrutiny of scheduling and cancellation practices once the reforms land in 2027.
Day-One Rights (from 6th April 2026)
From April 2026, several rights took effect from an employee's first day: Statutory Sick Pay with wider eligibility, day-one paternity leave, and day-one unpaid parental leave. These sit alongside strengthened expectations around flexible working requests, with clearer guidance on how employers should respond.Sector impact: employers needed onboarding processes, policy documentation and manager training updated ahead of April 2026, and should now be checking those changes have actually stuck.
Fair Work Agency (from 7th April 2026)
The Fair Work Agency (FWA) launched as a new single enforcement body, bringing together existing labour market enforcement functions, with plans to expand over time into areas such as holiday pay enforcement. Record-keeping duties tightened alongside it: since April 2026, failing to keep adequate holiday records has been a criminal offence, not just a compliance gap.
Sector impact: given the built environment's reliance on complex labour supply chains, employers should expect closer scrutiny of pay accuracy, holiday entitlement and agency worker treatment.
Also from 1st October 2026: Right to Work Checks Reach the Supply Chain
This one sits outside ERA 2025, but it lands in the middle of the rollout and hits the same labour model. From 1st October 2026, section 48 of the Border Security, Asylum and Immigration Act 2025 extends right to work obligations beyond direct employees to agency workers, individual subcontractors, zero-hours and casual workers, and people found through online platforms. The test is no longer whether someone is your employee, but whether you're engaging their labour.
A new extended liability regime means businesses can face civil penalties of up to £60,000 per worker even where they don't directly employ or engage the individual. Digital checks tighten too: any provider used for right-to-work checks must be on the government register and specifically authorised for right-to-work checks, not just general identity verification. Genuinely self-employed people trading on their own account remain outside scope, as do pure end-clients who aren't supplying work onwards through a chain.
Sector impact: with multi-tier subcontracting and agency supply the norm, employers need clarity on who is responsible for checks at each level of the chain and contracts that say so, before 1st October.
Unfair Dismissal and Fire-and-Rehire (from January 2027)
From January 2027, the qualifying period for unfair dismissal is expected to reduce from two years to six months, increasing early-stage risk. Restrictions on fire-and-rehire practices come into force at the same time, limiting employers' ability to dismiss and re-engage staff to impose contractual changes.
Sector impact: probation processes, documentation and early-stage performance management will need to be more structured and consistent.
A note on bereavement leave. A new bereavement leave entitlement, including for pregnancy loss, is also part of ERA 2025; but it wasn't part of the April 2026 day-one rollout. Current government timelines place it in 2027, with an exact date still to be confirmed, so employers should track it separately rather than build it into next April's onboarding changes.
What This Means for Employers in the Built Environment
ERA 2025 adds up to a more predictable, more regulated employment framework. In practice, that means less flexibility in scheduling and labour allocation, increased cost exposure from guaranteed hours and cancellation payments, greater emphasis on documentation and compliance, higher tribunal risk from shorter qualifying periods, and more structured workforce planning across multi-contractor environments.
In a sector where deadlines are tight, and labour needs shift quickly, these changes call for a more proactive, disciplined approach to workforce management.
Practical Steps Employers Should Take Now
Review workforce models. Identify where zero-hours, low-hours and agency labour are used, and where guaranteed hours or revised scheduling may be needed.
Audit contracts and employment status. Make sure contracts reflect actual working patterns and that status is classified correctly, particularly for contractors and consultants.
Strengthen onboarding and policy documentation. Update policies for day-one rights and make sure managers understand their obligations.
Improve record-keeping and compliance processes. Prepare for FWA scrutiny by keeping accurate records of hours, pay, holiday accrual and agency worker treatment.
Update probation and performance management. With unfair dismissal rights applying earlier, early-stage documentation becomes essential.
Review change-management practices. Make sure any contract changes follow compliant consultation processes to avoid fire-and-rehire risk.
Map right to work responsibilities across your supply chain. Confirm who checks whom for agency workers, subcontractors and contractors, build that into contracts, and make sure any digital checking provider is authorised for right to work checks.
How Cobalt Supports Employers Through Change
We work with employers across the built environment every day, and conversations like these come up constantly as ERA 2025 moves through implementation: how to structure roles compliantly, how to read the wider market, how legislative change is likely to affect hiring and retention. That's the perspective we try to bring to every client conversation: not just filling roles, but helping employers build workforces that hold up as the rules around them shift.
If you'd like to talk through what ERA 2025 means for your organisation, please reach out to me at m.sinclair@cobaltrecruitment.com
Frequently Asked Questions
When does the six-month unfair dismissal rule start, and does it cover staff we already employ?
From 1st January 2027, the qualifying period drops from two years to six months, and it applies to existing staff. Anyone hired on or before 1st July 2026 will be protected from 1st January 2027; later hires are protected once they reach six months' service.
Can we extend probation to buy more time?
No. Probation and statutory unfair dismissal rights are legally separate, so extending probation doesn't delay an employee's rights. Leaving decisions until the last moment is also risky: a dismissal without statutory notice is treated as taking effect when that week's notice would have expired, which can tip someone over the six-month mark.
Is there still a cap on unfair dismissal compensation?
Not from January 2027. The cap currently sits at the lower of £123,543 or 52 weeks' gross pay, and it will be removed entirely on 1st January 2027.
Are zero-hours contracts being banned?
No. The Act stops short of an outright ban. Instead, qualifying workers gain rights to guaranteed hours that reflect what they actually work over a reference period, reasonable notice of shifts and shift changes, and payment when shifts are cancelled, cut short or moved at short notice.
When do the zero-hours changes start, and what's still undecided?
The government's consultation closed on 25th August 2026, with implementation expected from 2027. Key details are still to be set in regulations, including the low-hours threshold (options range from 8 to 48 hours a week, with the government favouring 8–20) and the length of the reference period (its preference is 12 weeks).
Do the zero-hours rules apply to agency workers?
The Act includes corresponding rights for agency workers. The hirer will generally be responsible for making the guaranteed hours offer, and if the agency worker accepts, they become the hirer's worker for that contract. The detailed rules are still being finalised.
What changed with Statutory Sick Pay?
Since 6th April 2026, SSP has been payable from the first day of sickness, and the lower earnings limit has been removed. It's paid at the lower of £123.25 a week or 80% of average weekly earnings, for up to 28 weeks. For shift-based teams, a short absence is now a payroll event, not just a cover problem.
How long do employees now have to bring a tribunal claim?
From 1st October 2026, most employment tribunal claims will have a six-month time limit instead of three (in Scotland, breach of contract claims follow from 9th November 2026). Records relating to disciplinary matters, grievances, and dismissals will need to be kept longer.
What's changing on harassment, including from clients and other contractors on site?
From 30th October 2026, employers must take "all reasonable steps" to prevent sexual harassment, up from "reasonable steps". Employers are also expected to protect workers from harassment of any kind by third parties, such as clients or customers. On a shared or multi-contractor site, what matters is whether the employee is acting in the course of their employment, not where the harassment happens.
Does ERA 2025 apply to self-employed contractors?
Genuinely self-employed people are largely outside its scope; day-one SSP, for example, applies to employees only. The catch is employment status: someone treated as self-employed for tax can still be an employee or, more likely, a worker under employment law, with the statutory rights that come with it. That makes status reviews for contractors and consultants more important than ever.
Sources
Employment Rights Act 2025: revised implementation timeline — DLA Piper
Employment Rights Act 2025 tracker: key changes and implementation dates — Hill Dickinson
Employment Rights Act 2025 implementation for 2026 — Blake Morgan
Failure to keep adequate holiday records will become a criminal offence from April 2026 — Lewis Silkin
APSCo UK raises concerns over Zero Hours Contract measures — APSCo
