Every Construction Worker You Hire from 1 July Can Claim Unfair Dismissal in Six Months — Here's What Firms Must Do

If your construction business is hiring site staff this summer — labourers, joiners, scaffolders, bricklayers, or any direct employee — you need to know this before you sign another contract: from 1 July 2026, every person you take on can bring an unfair dismissal claim against you in just six months. That's down from the current two-year qualifying period, and it applies to every UK employer regardless of size. A labourer who starts on a summer project on 1 July can take you to an employment tribunal from 1 January 2027. Most construction firms haven't changed a single process.

There is a second angle most businesses haven't noticed. Employees hired before 1 July — anyone you took on in May or June 2026 — who complete six months' continuous service on or after 1 January 2027 will also fall under the new rules. Your spring and early summer hires are already inside your risk window. This guide explains exactly what changes, why construction is one of the most exposed sectors, and the practical steps every principal contractor, subcontractor and site operator must take before the deadline.

What Changes on 1 July 2026?

The Employment Rights Act 2025 — widely described as the most significant overhaul of UK employment law in a generation — changes the unfair dismissal qualifying period from two years to six months, effective 1 July 2026. One change. Enormous practical consequences.

Currently, an employee must work for you for two years before they are entitled to bring an unfair dismissal claim. After 1 July, that threshold drops to six months. The two-year buffer that most construction managers have relied on as a management tool is no longer available. If someone is dismissed within that six-month period without a fair process, they can sue.

Key facts confirmed as of June 2026:

• Qualifying period: two years → six months
• Effective date: 1 July 2026
• Applies to: all direct employees regardless of hours, contract type or site status
• Does not apply to: genuine self-employed subcontractors (but see the worker misclassification risk below)
• Enforced by: employment tribunals — same process, same compensation awards
• Maximum compensatory award (2026): £123,543 or 52 weeks' pay, whichever is lower (SI 2026/310, in force April 2026)

Employers retain the right to dismiss fairly within the six-month period — but "fairly" now has teeth from day one. You need documented processes, formal warnings, and proper procedures from the moment someone sets foot on your site.

Why Construction Is Highly Exposed

Every sector is affected, but construction faces a specific combination of risk factors that makes the 1 July change particularly dangerous.

Seasonal and project-based hiring cycles

Construction employment follows project timelines. Firms regularly take on site labourers, joiners, plasterers and scaffolders in spring and early summer for projects that run through to autumn. When a project completes or a contract ends in September or October, those workers may be dismissed or their contracts ended. From 1 July, that pattern — hire in summer, let go in autumn — creates a direct six-month exposure window. A site operative starting on 1 July who finishes when the project wraps in December has acquired unfair dismissal rights. If the dismissal wasn't handled correctly, the exposure is real.

Informal management culture

Many construction sites still operate on informal verbal agreements, handshake understandings and unwritten rules. Site managers promoted for technical skill — not management training — routinely handle underperformance through informal conversations with no written record. Under the two-year rule, this didn't matter much because short-tenure workers couldn't sue. After 1 July, every informal dismissal of a worker with more than six months' service is a potential tribunal case with no documentary defence.

Worker misclassification risk

Construction has the highest rate of worker misclassification in the UK. Many operatives work under labour-only subcontractor arrangements, CIS payment schemes, or umbrella company structures that do not match their actual working practices. Where HMRC — or an employment tribunal — determines that a "self-employed" subcontractor is actually a worker or employee, all employment rights, including the new unfair dismissal threshold, apply. The Fair Work Agency, which launched on 7 April 2026 and is actively investigating construction sector employers, has explicit powers to examine working arrangements and reclassify workers.

High sector tribunal rates

Construction already accounts for a disproportionate share of employment tribunal claims relative to its workforce size, driven by high turnover, irregular pay structures and complex contractor chains. Halving the qualifying period significantly expands the pool of workers able to bring claims.

The Spring and Summer Hires Already at Risk

This is the point that catches even well-prepared construction businesses off guard.

The new six-month threshold does not only apply to employees hired on or after 1 July 2026. Legal analysis from employment law firms confirmed in May 2026 that the rule applies to any employee who completes six months' continuous service on or after 1 January 2027 — regardless of when they started.

That means:

Hire date	Six months completed	Unfair dismissal rights from
1 May 2026	1 November 2026	1 November 2026
1 June 2026	1 December 2026	1 December 2026
1 July 2026	1 January 2027	1 January 2027
1 August 2026	1 February 2027	1 February 2027
1 September 2026	1 March 2027	1 March 2027

If you hired a site foreman in April, an electrician in May, or a labourer in the last fortnight — they are already in your risk window. The time to update your processes was when they signed their contract. The second-best time is right now.

ComplianceAlert monitors Employment Rights Act implementation updates and sends plain-English alerts when new guidance is published — free forever plan, no card required at compliancealert.co.uk.

What an Unfair Dismissal Claim Costs a Construction Business

Employment tribunal awards for unfair dismissal have two components:

• Basic award: Calculated using the statutory redundancy formula — age, length of service, weekly pay (capped at £719/week in 2026). For a short-tenure site operative, this is typically £1,000–£2,500.
• Compensatory award: The main element. This compensates for loss of earnings, pension, and benefits. Capped at £123,543 or 52 weeks' gross pay — whichever is lower (SI 2026/310). For a site manager on £35,000, that is up to £35,000.

Then add the legal and management cost. Defending an employment tribunal claim costs between £5,000 and £15,000 in legal fees, even if you win. ACAS early conciliation will resolve some claims, but average ACAS settlement payments run to approximately £4,500 — and that is before management time spent preparing the defence, gathering site records, and briefing solicitors.

For a principal contractor running multiple sites with seasonal headcount, even two or three successful unfair dismissal claims in a year is a material cost. The six-month qualifying period change makes this a near-certainty for firms that don't update their processes.

Six Steps to Protect Your Business Before July 1

These are the practical changes construction employers need to implement before 1 July 2026:

1. Issue written statements of terms on day one. Every employee must receive a written statement of their principal terms from the first day of employment (this has been a legal requirement since April 2020, but enforcement is increasing). For site staff, this means: job title, hours, rate of pay, notice periods, site location, and disciplinary procedure. No exceptions.
2. Implement a probationary review process with documentation. Your six-month probationary period is now your legal risk window, not your management safety net. Every probation review must be documented in writing. Set 4-week, 8-week and 5-month review points. Record concerns. Give the employee an opportunity to respond. Keep signed copies.
3. Train your site managers on disciplinary procedure. Every site manager who has the authority to dismiss — or recommend dismissal — must understand that informal "not working out" conversations are no longer sufficient. The statutory minimum dismissal process applies from month one: written concerns, investigation, formal hearing, right of appeal. Build a simple one-page guide for your supervisors.
4. Audit any "self-employed" operatives against HMRC's employment status tests. If operatives are being paid through CIS or labour-only subcontract arrangements but work fixed hours, use your tools and equipment, and follow your site supervision — they may be employees. The Fair Work Agency and HMRC are actively investigating construction sector misclassification. Get clarity now, not after a claim lands.
5. Update your contract templates. Ensure probationary clauses clearly state the procedure, the review points, and the grounds for extension or dismissal during probation. A vague "6-month probation, at the company's discretion" clause will not protect you at tribunal.
6. Create a site HR file for every direct employee. One folder per worker — physical or digital. Contents: signed contract, right-to-work documents, any welfare or performance concerns raised, attendance records, site induction sign-off. In the event of a claim, this file is your evidence.

What Good Dismissal Documentation Looks Like on a Construction Site

Employment tribunals assess unfair dismissal claims against a "band of reasonable responses" test — not whether the dismissal was the best decision, but whether it was within the range of responses a reasonable employer would take. The single most common reason construction businesses lose tribunal cases is not that the dismissal was wrong — it's that they cannot prove the process that led to it.

Minimum documentation for any dismissal or non-renewal after six months:

• Written evidence of the performance or conduct concern (not "site manager says he wasn't pulling his weight")
• Record that the employee was told about the concern and given an opportunity to improve
• Record of a formal meeting, with the employee's response noted
• Written outcome letter — confirming dismissal, reasons, effective date, notice payment, and right of appeal
• Record of any appeal outcome if the employee invokes it

This is not bureaucracy for its own sake. It is the difference between a defended claim and an £8,000 ACAS settlement to make the problem go away.

Need help creating compliant dismissal documentation and probation procedures for construction? Find a verified employment solicitor at compliancemarket.co.uk/employment-lawyers — all specialists are ICO-registered and vetted.

Key Takeaways

• From 1 July 2026, the unfair dismissal qualifying period drops from two years to six months for all employees
• Anyone hired on or after 1 July can bring a claim from January 2027 — summer site hires are your biggest exposure
• Employees hired in May and June 2026 also fall under the new rules once they reach six months' service
• Construction faces specific risks: seasonal hiring cycles, informal management culture, and CIS misclassification
• The fix is documentation: written contracts from day one, probation review records, and trained site supervisors
• Maximum tribunal award: £123,543. Average defended claim cost: £5,000–£15,000 in legal fees alone

Frequently Asked Questions

Does the six-month qualifying period apply to agency workers and subcontractors?

The Employment Rights Act 2025 changes apply to employees and workers — not to genuinely self-employed subcontractors. However, if your "subcontractors" are in practice working as employees (same hours, your tools, your supervision), they may be reclassified as workers or employees at tribunal, in which case all employment rights — including the new six-month qualifying period — apply. Review any labour-only arrangements before 1 July.

Can we still dismiss someone in their six-month probation period?

Yes — a fair dismissal during probation remains lawful. The change is that "fair" now has to be demonstrated from month one, not month 25. You must give written warnings, hold a formal hearing, provide the employee with an opportunity to respond, and offer a right of appeal. Informal "we're letting you go" conversations are no longer legally safe after the first day.

What if a project ends and we no longer need the worker — does that count as unfair dismissal?

End of a fixed-term contract or genuine redundancy — including project completion — can be a fair reason for dismissal. However, you still need to follow a fair procedure: consult with the employee, consider if any alternative work is available, and issue written notice. A project ending is not automatic protection if the process is skipped.

How does ComplianceAlert help construction businesses monitor this?

ComplianceAlert monitors Employment Rights Act implementation updates, HSE enforcement notices, FWA guidance and all UK regulatory changes that affect construction employers. When new guidance is issued — on the six-month qualifying period, CIS rules, zero-hours changes, or any other obligation — you receive a plain-English alert with the action required. The free forever plan covers all regulatory monitoring. Start free at compliancealert.co.uk/construction — no card required.

Need professional help reviewing your employment contracts or probation procedures? Find a verified employment solicitor at compliancemarket.co.uk/employment-lawyers.