Significant legislative changes are on the horizon for employers, following the Employment Rights Bill receiving Royal Assent on 18 December 2025. Now enacted as the Employment Rights Act, the legislation introduces wide-ranging reforms that will reshape employment practices over the next two years.
Alongside this, the Government has confirmed new measures to strengthen HMRC’s powers to tackle fraud within the Construction Industry Scheme (CIS), signalling increased scrutiny across the construction supply chain.
Preparing for the Employment Rights Act
The reforms broadly focus on three key areas:
- New rights and protections for workers
- Fair pay, terms, and working conditions
- Enforcement and trade union legislation
Some changes have already taken effect, particularly those aimed at modernising trade union laws, including provisions affecting strike action.
Further updates are scheduled in phases:
From April 2026
- Introduction of ‘day one’ rights to Statutory Sick Pay (SSP), paternity leave, and unpaid parental leave
- Removal of the Lower Earnings Limit for SSP, expanding eligibility
From January 2027
- Reduction of the qualifying period for unfair dismissal from two years to six months
These developments will require employers to review internal policies, employment contracts, and management processes to ensure compliance.
FIS partner Citation has updated its guidance to help employers understand the practical implications of the Act and identify the steps needed to prepare.
Tackling Fraud in the Construction Industry Scheme (CIS)
The Government has also announced tougher measures to combat tax fraud within the CIS framework.
From 6 April 2026, businesses that knew, or should reasonably have known, that payments were linked to fraudulent tax evasion risk:
- Immediate loss of Gross Payment Status
- Financial penalties of up to 30% of the lost tax
For businesses operating within the finishes and interiors sector, this reinforces the importance of robust financial controls, due diligence across the supply chain, and clear governance over payment practices.
What This Means for FIS Members
Together, these changes highlight a continued shift toward stronger regulatory oversight in employment and financial compliance. Early preparation will be essential to minimise disruption and protect business operations.
FIS encourages members to:
- Review employment policies and procedures
- Strengthen payroll and CIS compliance processes
- Seek professional advice where necessary
- Stay informed as further guidance emerges
We will continue to monitor developments and provide updates to support members in navigating these changes.