Preparing for Changes to Employment Legislation – Key implications for the Construction Industry

The Employment Rights Act 2025 and the Border Security, Asylum and Immigration Act 2025 represent some of the most significant overhauls of UK employment law in recent years.

The construction industry faces challenges due to its reliance on complex supply chains, subcontracted labour and flexible workforce arrangements. As implementation dates approach, consultants, contractors, subcontractors/subconsultants, developers and other industry participants should consider how the reforms will affect contractual risk allocation, project delivery and workforce management.

Upcoming Changes Introduced by The Employment Rights Act 2025

Preventing Sexual Harassment

Taking effect from 30 October 2026, the Act imposes a duty on employers to take “all reasonable steps” to prevent sexual harassment of their employees. Employers will now be liable for harassment from third parties, customers and clients, unless they have taken reasonable steps to prevent it.

The new duty presents challenges for the construction sector, where multiple organisations may operate simultaneously across the same site. Employees of consultants, contractors, subcontractors and suppliers regularly interact with one another, as well as with clients, visitors and, potentially, members of the public. In such environments, maintaining consistent behavioural standards and effective oversight across the workforce can be complex.

Employers will need to review not only their internal policies and procedures, but also how appropriate safeguards can be embedded throughout the wider project team. This may require introducing enhanced training, clear reporting channels and effective site management procedures aimed at identifying risks early and preventing harassment before it occurs.

Consultants and contractors should take proactive steps to identify and mitigate the risk of harassment. Practical measures may include undertaking regular risk assessments, implementing clear policies and procedures, providing targeted training, engaging with staff and ensuring confidential reporting channels are available. Useful guidance is available from the Equality and Human Rights Commission, including its eight-step framework for preventing sexual harassment. Ultimately, organisations should focus on creating a workplace culture in which inappropriate behaviour is actively discouraged, concerns can be raised safely, and preventative measures are embedded into day-to-day project delivery.

For more insights into the impact this reform will have on construction contracts and how to mitigate risks associated with it, see our recent article here.

Changes to Zero-hour contracts

The Act introduces workers’ rights to guaranteed hours, reasonable notice of shifts and compensation when shifts are cancelled or changed at short notice. These changes are scheduled to come into force in 2027.

For the construction industry, these reforms could have a significant impact on established workforce management practices. Construction projects frequently rely on flexible labour arrangements to respond to changing site conditions and project requirements. Labour demands can fluctuate due to factors such as adverse weather, road closures, unforeseen events and employer or client variations. As a result, contractors and subcontractors rely heavily on the ability to scale their workforce up or down at relatively short notice to respond to these changes.

While the reforms are intended to provide workers with greater certainty and security, they may also limit an employer’s ability to respond quickly to changing project demands. Entitlements to guaranteed hours and compensation for cancelled, curtailed or rescheduled shifts could increase labour costs and create additional administrative obligations. In response, businesses may need to strengthen workforce planning and forecasting processes, assess resourcing requirements at an earlier stage of project delivery, and review employment and subcontracting arrangements to ensure compliance with the new statutory obligations.

From a contractual perspective employers should consider whether existing agreements adequately allocate the financial and operational risks arising from project delays, programme changes and labour fluctuations. The reforms may also prompt greater scrutiny of project pricing, contingency allowances and resource planning to ensure that projects remain commercially viable while complying with the new employment obligations.

Changes Introduced by the Border Security, Asylum and Immigration Act 2025

From 1 October 2026, the Border Security, Asylum and Immigration Act 2025 extends the right to work regime beyond traditional employment relationships to cover a wider range of arrangements including, worker contracts, subcontractors and zero-hour contracts.

Organisations that fail to carry out right to work checks face substantial financial consequences. Civil penalties start at £45,000 per illegal worker for a first breach and increase to £60,000 per worker for repeat breaches within a three-year period. In addition to financial liability, non-compliance may result in reputational damage, project delays and potential contractual disputes.

The expanded regime should not be viewed solely as a human resources compliance exercise. Businesses will need to take a proactive approach to workforce and supply chain management, which will require input from legal, procurement, human resources and operational teams. Practical measures may include:

• Mapping out labour supply chains to maintain visibility of individuals personally providing work or services on a project;
• Ensuring contracts and subcontracting arrangements comply with Home Office guidance, including provisions relating to audit rights and restrictions on further subcontracting without consent;
• Implementing robust identity verification and right to work checking processes; and
• Maintaining comprehensive records to demonstrate ongoing compliance.

Concluding thoughts

While these reforms are intended to strengthen worker protections and improve compliance, they will also create new obligations for employers across the construction sector. Early planning, effective risk management and proactive review of contractual and workforce arrangements will be key to ensuring compliance and minimising disruption as the changes take effect.

Beale & Co advises clients across the construction, engineering and infrastructure sectors on contract drafting, risk management and project-related issues. If you have any questions about the content discussed in this article, please contact Nathan Modell and Molly Vautier.