In brief
- Changes to employment law will have practical implications for employers across the real estate sector.
- From 1 January 2027, the qualifying period for unfair dismissal protection will reduce from two years to six months and the cap on compensatory awards will be removed.
- Changes to trade union rights are also expected to increase opportunities for union involvement in the workplace.
- From 30 October 2026, employers will be required to take all reasonable steps to prevent sexual harassment and will also face liability for failing to prevent harassment by third parties.
- Employers should review their probation and dismissal processes, employee engagement arrangements and harassment protections in light of the changes.
Employment law reform: what employers in the real estate sector need to know
The Employment Rights Act 2025 implements the most significant reforms to UK employment law in a generation. This article highlights three changes of particular relevance to the real estate sector.
Unfair dismissal: a significantly higher risk profile
From 1 January 2027, the qualifying period for unfair dismissal protection reduces from two years to six months, and the cap on compensatory awards is removed entirely. The compensation cap has historically allowed employers to manage exposure with reasonable certainty. Going forward, awards will reflect actual loss with no ceiling, which is particularly relevant for senior or higher-paid employees.
Employers need to decide whether to retain new joiners much earlier and with more confidence. Robust and proactive probationary reviews, with early intervention, are therefore key. Active management of underperformers is also a priority. Given the higher stakes, ensure managers are trained on fair dismissal procedures, with proper documentation of performance and disciplinary issues.
Trade union rights – a relationship reset
The Employment Rights Act also gives trade unions greater opportunities for influence in the workplace, with many measures already in force or coming into effect by 30 October 2026. This reverses years of anti-trade union legislation, gives unions a right of access to almost any employer premises, and makes it easier for unions to gain recognition to negotiate on behalf of the workforce and take industrial action. The power balance between unions and employers is being reset, heralding a significant increase in union involvement over the next several years.
Employers who prefer to keep the relationship with their workforce direct should now audit their employee voice mechanisms. Staff who feel heard rarely look elsewhere for representation. Understand the current sentiment across your workforce and the quality of existing engagement, ensure staff know of and buy into any arrangements, and build them where they are weak or absent. Credible, effective employee voice arrangements are far more effective preparation than looking to resist a union once it comes knocking.
Enhanced harassment protections
From 30 October 2026, employers will be required to take "all reasonable steps" (rather than merely "reasonable steps") to prevent sexual harassment of employees. The word "all" potentially raises the bar significantly: passive or baseline compliance is not enough, and employers need tailored risk identification and management, active monitoring, and documented preventative actions.
Employers will also become liable for failing to prevent the harassment of employees by third parties such as contractors, tenants, visitors and customers. This is particularly relevant where, for example, concierge, security, cleaning, maintenance and lettings staff regularly interact with third parties on-site.
In 2027, new confidentiality clauses that seek to prevent workers from disclosing discrimination or harassment, including in settlement agreements and NDAs, will be void save in limited circumstances. Whistleblowing protection has also already been extended to disclosures about sexual harassment.
Employers should carry out a detailed risk assessment, put clear reporting procedures in place, and maintain a log of preventative measures and complaint outcomes to demonstrate compliance.
Next steps
Real estate businesses should review their employee voice mechanisms, harassment policies and third-party protections ahead of the 30 October 2026 deadline, and tighten probation and dismissal procedures ahead of the January 2027 unfair dismissal changes.
These are only a handful of the many changes being introduced by the Employment Rights Act 2025. Please see our Employment Rights Act Hub for further information.
Our Employment team regularly advises property owners, developers and investors on these issues, including policy reviews, manager training, restructuring strategy and tribunal claims. Please contact the team to discuss the implications for your business.