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The Employment Rights Act introduces wide-ranging changes that will affect how you hire, manage and retain staff.
For SME building companies, these changes are not just legal updates. They will affect how you run jobs, manage teams on site and deal with everyday situations like sickness absence and performance issues.
This guide and webinar explains what’s changing, what it means in practice, and the steps you can take now to prepare.
This guide highlights key changes and practical considerations. You may need tailored advice depending on your business and workforce.
Key employment law changes timeline
| When | What's changing | Why it matters to builders |
|---|---|---|
| April 2026 | Statutory Sick Pay reforms | Higher cost of absence and new processes required |
| April 2026 | Fair Work Agency introduced | Increased enforcement over time |
| October 2026 | Harassment law changes | Greater responsibility for behaviour on site, including third parties |
| January 2027 | Unfair dismissal rights reduced to six months | Earlier legal protection for employees and more pressure on probation processes |
What these changes mean for your business
Hiring and probation periods
Employees will be able to claim unfair dismissal after six months of service, instead of two years.
This increases the importance of:
- Having a robust recruitment process in place to choose the right people for the job.
- Actively managing probation periods.
- Documenting performance concerns early.
A six-month probation period could now overlap with legal protection. You may want to review your approach, but shorter periods are not always the right answer.
Longer probation periods can still be appropriate where roles take time to assess. The key is making sure reviews happen on time and do not drift.
Managing sickness absence
From April 2026:
- Statutory Sick Pay (SSP) will be paid from day one.
- Lower earners will qualify for SSP.
- The three-day unpaid waiting period will be removed.
These changes may increase the cost of short-term absence, especially where teams are small and absence has a direct affect on delivering jobs on time. It will help you to put steps In place to manage absence more consistently – take a look at your current process and identify where the gaps are.
Site management and behaviour
From October 2026, employers must take reasonable steps to prevent harassment, including from third parties.
This includes:
- Subcontractors
- Suppliers
- Anyone working on or visiting site
You may be liable if you fail to take appropriate steps to prevent or respond to issues. On multi-trade sites, this means behaviour expectations need to be clear and consistently enforced.
Compliance and enforcement
A new Fair Work Agency will bring enforcement under one body.
It will:
- Oversee areas such as SSP, holiday pay and minimum wage.
- Have powers to investigate and issue penalties.
- Increase visibility of non-compliance over time.
The agency will be introduced from April 2026 but is likely to take time to become fully operational.
Tribunal risk and business confidence
These changes may increase the likelihood of tribunal claims, particularly where processes are informal or poorly documented.
Some small firms are concerned this could affect hiring decisions, especially for short-term or project-based roles. The key is not to avoid hiring, but to strengthen how staff are managed from the start.
If you only do three things before April 2026
If you focus on a few key actions, prioritise:
- Strengthen your sickness absence process
Clear reporting, consistent records and return-to-work conversations. - Review how you manage probation and performance
Make sure reviews happen on time and decisions are documented. - Train whoever manages staff on site
Consistency matters – processes don’t need to be overly complicated.
What does a good absence process look like?
A good absence process is clear, consistent and easy to follow on site. As a minimum, you should have:
- Clear reporting rules
Employees should know who to contact, how and by when. - Proper record keeping (this is critical)
Dates, reason, duration, patterns of absence (e.g. Mondays, post-holiday), fit notes for 7+ days - Return-to-work conversations
For every absence, even one day. Confirm reason for absence, check if they need support, reinforce expectations. This can help to reduce casual absence. - Consistent management
Same approach across all staff and sites. - Defined trigger points
To flag when absence needs reviewing – e.g. three absences in three months. Adjust for disability and pregnancy. - Trained managers
So issues are handled properly and fairly – they should know what they can and can’t ask, how to document and when to escalate.
Checklist: What you should do now
Alongside the priorities above, here are the actions to consider for your building business:
- Review your probation periods and how they are managed.
- Update contracts and key policies where needed.
- Set clear expectations from day one through induction.
- Introduce or reinforce return-to-work interviews.
- Keep accurate records for pay, holiday and sickness.
- Review how subcontractors are briefed on behaviour standards.
- Check how consistently managers apply processes across sites.
Real-world scenarios for builders
Scenario 1
A new employee is underperforming after five months
Risk level: high
From 2027, they may gain unfair dismissal rights at six months. You should:
- Act early within probation
- Avoid delays in review meetings
- Document performance concerns clearly
Scenario 2
A worker takes two days off sick
Risk level: medium
From April 2026, they will be paid from day one and will be more likely to be eligible for SSP as more employees will now qualify. You should:
- Follow a clear reporting process
- Hold a return-to-work conversation
- Keep consistent records
Scenario 3
A subcontractor behaves inappropriately on site
Risk level: high
From October 2026 you must take reasonable steps to prevent harassment. You should:
- Take complaints seriously
- Act quickly
- Consider how you manage that subcontractor relationship
Watch the full webinar
Catch up on our webinar with Gillian McAteer, Director of Employment Law at Citation, who will cover:
- Key changes in the Employment Rights Act
- What’s coming in April, October and 2027
- Practical steps to prepare your business
Citation
Citation has over 25 years of nationwide experience supporting over 50,000 clients, helping them to grow their businesses whilst offering protection from Health & Safety and Employment Law issues. They are currently offering FMB members preferential rates.
Get support
FMB members can access expert guidance to help manage these changes with confidence.
- Employment advice and HR support
- Template employer contracts and policies
- A network of support via our exclusive member app
Frequently asked questions
Do I need to change my probation periods?
Not necessarily. You may want to review them, but shorter periods are not always better. The priority is managing probation actively and making decisions on time.
What happens if I get sickness absence wrong?
Poor processes could lead to higher costs and potential compliance issues. Clear procedures, consistent management and good records reduce this risk.
Can I still use zero hours contracts?
Yes, but reforms are expected in 2027. Further detail is still under consultation, so the exact requirements may change.
What is the Fair Work Agency?
It is a new enforcement body that will oversee employment rights. It will increase enforcement activity over time, particularly in areas like pay and leave.
Will there be more tribunal claims?
There may be an increase, particularly where processes are informal. Businesses with clear and consistent approaches are less likely to face issues.
