Labour Government’s Employment Rights Bill approaches final approval

It is due to become law before Christmas.

Most of the changes will not take effect immediately. Many measures need further, detailed regulations before they apply in practice.

Even so, the Bill signals major changes to employment law. This comes at a time when businesses are already adjusting to higher National Insurance costs, with further increases to the minimum wage and apprenticeship wages coming in April 2026. The Bill applies to England, Scotland and Wales. Employment law is devolved in Northern Ireland.

Key changes and what they could mean for your business

Unfair dismissal

• Employees will be able to claim unfair dismissal after six months, not two years. This is expected to start in early 2027.
• Anyone employed from July 2026 will benefit once they reach six months’ service.
• The Government plans to remove the cap on compensation for unfair dismissal.

Employers will face legal risk much earlier. Clear probation processes, regular performance reviews and good record-keeping will be essential, particularly for project-based and seasonal work.

Positively, it was initially proposed that employees would be able to claim unfair dismissal from day one, however, government since backed down.

Zero-hours contracts and guaranteed hours

• Workers on zero-hours contracts will have the right to request guaranteed hours, based on what they work over a 12-week period.
• Workers can stay on zero-hours contracts if they prefer. Employers must give reasonable notice of shift changes and may need to pay compensation for cancelled or shortened shifts.
• A new duty to offer predictable hours for regular working patterns is planned, subject to consultation.

These changes may reduce flexibility, especially for businesses that scale staffing up and down. Employers may need to review roles with regular hours and check agency agreements.

Flexible working

• Flexible working will become the default from day one of employment.
• Employers must agree to requests unless they can show it is unreasonable.
• Existing business reasons for refusal are expected to remain.

There may be limited change in practice for construction businesses, where site attendance is essential for many, but decisions must be clearly justified.

Sick pay

• Statutory Sick Pay will be payable from day one of illness.
• The lower earnings limit will be removed.
• Low-paid workers will receive 80% of weekly pay when off sick.

More workers will qualify for sick pay, and costs may rise for employers.

Fire and rehire

• Dismissing staff and rehiring them on worse terms will be banned in most cases.
• It will only be allowed where a business is at risk of insolvency.

Employers will have far less scope to change terms and conditions through dismissal and re-engagement.

Sexual harassment protections

• Employers must now take all reasonable steps to prevent sexual harassment.
• This includes proactive measures such as risk assessments, training and clear reporting routes.
• Employers can be held responsible for harassment by contractors, clients or the public.
• Sexual harassment complaints are covered by whistleblowing protections.

Construction sites are higher-risk environments. Employers should assess site-specific risks, train all staff and contractors, review agency contracts, and ensure clear and confidential reporting processes are in place.

Other measures in the Bill are less relevant to roofing and cladding businesses. NFRC will continue to monitor developments, contribute to consultation on the specifics of each measure, and keep Members informed as further details and timelines are confirmed. If you have views to share, please contact [email protected]