Construction businesses are used to working to deadlines. But when sites are busy and teams are stretched, employment paperwork can be easy to put off. The latest Peninsula readiness survey suggests this is an area the sector needs to take seriously: construction had the highest unprepared rate of the 19 industries surveyed.
The Employment Rights Act 2025 is being introduced in stages, and some changes are already in force. Others are due in 2027. For employers, contractors and small firms in Essex, Kent and London, the practical question is not whether to support or oppose the Act. It is whether your contracts, people processes and records are ready for the changes that apply to your business.
That matters for insurance too. Employment practices, workforce records and supervision sit alongside cover such as employers’ liability and legal expenses. They are not the same thing, but good records and clear procedures can make a real difference when a claim or dispute needs to be handled.
What the survey says
Peninsula’s Employment Rights Act readiness survey was conducted in September 2026 among 519 UK business decision makers. It found that 73% were familiar with the Act, but only 47% felt very or completely prepared. Just 15% said they were completely prepared. While 82% had started preparing, awareness and action had not removed employers’ concerns.
Construction had the highest sector-level unprepared rate, at 14.3%. This sits against a changing workforce picture: the government’s Construction Jobs Plan, published on 19 October 2026, forms part of wider efforts to address skills needs, including plans to support up to 60,000 additional skilled construction workers by 2029. That is a workforce target, not a promise that every contractor will be hiring, but it underlines why recruitment and people management are live issues for the sector.
Here are five practical lessons for construction employers.
1. The preparation gap is real, and the timetable is fixed
The 14.3% unprepared figure is a warning sign, not a reason to panic. The same survey found that 82% of businesses had begun preparing. The challenge is completing the work that preparation involves, rather than assuming that reading about the Act is enough.
The most prominent concern for employers was the change to unfair dismissal rights. For dismissals with an effective date on or after 1 January 2027, the qualifying period is due to fall from two years to six months. Zero-hours contract reforms are also due in 2027. They include measures on guaranteed hours, reasonable notice and payment for short-notice changes, and apply to directly engaged and agency workers.
Other phases have already taken effect: statutory sick pay changes and day-one paternity and unpaid parental leave rights began in April 2026, while stronger harassment protections came in during October 2026. The government’s implementation roadmap sets out the phased approach.
On a construction site, a programme can slip when conditions change. A statutory date is different. Site pressures do not move the deadline, so put the relevant dates on your compliance calendar and assign someone to own each action.
2. Familiarity is not the same as readiness
Knowing the headlines is useful, but readiness means translating changes into the way your business actually operates. That could mean updating employment contracts and staff policies, training supervisors, checking payroll and absence systems, and making sure records are accurate and accessible.
Peninsula’s Chief Operations Officer, Kate Palmer, identified this translation as the practical challenge for employers. The Act involves 173 individual pieces of legislation, with changes being phased in. For smaller businesses without a dedicated HR team, keeping policies and documents current can become a job in itself.
Start by mapping the reforms against your own workforce. Think about how you recruit, manage probation, handle absence, make dismissal decisions and use flexible or agency labour. If you use different arrangements on different sites, do not assume one process automatically fits them all.
3. Small business owners may carry more of the load
The survey found that business owners were 2.3 times more likely than senior leaders to say they felt unprepared. That is understandable: in a small contractor, the owner may be responsible for winning work, paying wages, managing staff and keeping up with legal changes.
One survey respondent described the six-month unfair dismissal qualifying period as “a blocker to even considering hiring someone.” That is one employer’s view, but it reflects a wider concern: 53% of businesses surveyed saw the change as negative. In construction, where getting the right person onto a job can be difficult, employers may be tempted to delay recruitment or rely more heavily on subcontractors and agency workers.
If your labour mix changes, review how those workers are engaged and recorded. Check that your contracts and insurance declarations reflect the work you actually do and the people you use. For guidance on the wider cover considerations, see our article on Construction Contractor Insurance and our information for General Contractors.
4. Hiring choices can affect your insurance picture
Employment law changes do not automatically alter an insurance policy, but the way a business responds can affect the risks it needs to disclose. For instance, a shift from directly employed staff to labour-only subcontractors or agency labour may change how your workforce is described to insurers and how responsibility is understood after an incident.
Employers’ liability is relevant where employees are injured or become ill through their work. Public liability and other sections may also matter if a third party is injured or their property is damaged. The precise position depends on the facts, the policy wording and the working arrangements. Make sure you understand how your insurer treats different types of worker, and tell your broker if your arrangements change.
Clear supervision and records help too. They can support a consistent account of who was on site, what work they were doing, what training they had and which business was responsible for the task. These records do not guarantee that a claim will be covered or succeed, but gaps can make it harder to establish what happened.
5. Understand where legal costs and insurance cover meet
A dispute about unfair dismissal is not the same as an injury claim. Employers’ liability insurance does not pay unfair dismissal awards. Some commercial policies offer legal expenses cover for employment disputes, but the terms, exclusions, limits and scope vary. Check your own policy wording rather than assuming the cover is included or that it will meet every cost or award.
A commercial combined policy may bring together several types of cover, and some products include legal expenses. Moyak’s commercial combined insurance page describes cover options that can include employment disputes, subject to the policy terms. If you are unsure what your policy includes, ask your broker to explain it in plain language.
Sick pay and absence changes are primarily matters for payroll and employment administration, not insurance. But accurate absence and payroll records can be important when a dispute arises, and good record-keeping also supports the practical management of site safety and liability risks.
What to do before 1 January 2027
I think the sensible approach is to treat the Act as a compliance reality and prepare in manageable steps. Before the unfair dismissal qualifying-period change takes effect, review your contracts, probation and dismissal procedures, and make sure managers know how to follow them consistently. Check your approach to zero-hours, agency and flexible workers ahead of the reforms due in 2027. Confirm that payroll and absence processes reflect the changes already in force, and keep clear records of recruitment, training, supervision and decisions.
Then review the insurance side. Check how your policy responds to employment disputes, whether legal expenses cover is included, and whether your declaration of employees, subcontractors and agency workers remains accurate. If the answer is unclear, raise it before renewal or before your workforce arrangements change.
Construction’s readiness gap is a practical management issue, not a verdict on every employer in the sector. Businesses that start early have more time to spot gaps, seek specialist HR or legal guidance and make their processes clearer before a deadline or dispute forces the issue.
Moyak Insurance Services is a business insurance broker in Essex, Kent and London. We work with the UK’s leading master insurance brokers to find cover that fits your business and budget, with an individual approach and care about every client. If you run a small construction firm or a growing contractor business, speak with us about your cover and whether it still reflects how you work.