10 March 2026 · 10 min read · Arviteni
The Employment Rights Act 2025 is the biggest change to UK employment law in a generation. For care providers, the implications are significant: day-one SSP, guaranteed hours for zero-hours workers, a new Adult Social Care Negotiating Body, and Fair Pay Agreements. Here is what is changing and how to prepare.
The Employment Rights Act 2025 received Royal Assent in December 2025. It introduces 28 reforms across unfair dismissal, zero-hours contracts, sick pay, parental leave, fire and rehire, and sectoral pay bargaining. It is the most significant upgrade to UK employment law in a generation.
For most industries, these changes require adjustments to HR policies and contracts. For adult social care, the impact is deeper. The sector employs 1.71 million people, 21% of whom are on zero-hours contracts. Turnover sits between 25% and 35% annually. Employment costs account for 70 to 80% of providers' total operating costs. Every change to employment law hits care harder and faster than almost any other sector.
This post covers what is changing, when it takes effect, and what care providers should be doing now to prepare.
The Act does not take effect all at once. Implementation is phased across 2026, 2027, and 2028. Here are the changes that matter most for care providers.
From 6 April 2026, the three-day waiting period for Statutory Sick Pay is removed. SSP becomes payable from the first day of sickness absence. The Lower Earnings Limit (currently £123 per week) is also removed, extending SSP to an estimated 1.3 million additional low-paid workers who currently have no entitlement. Those earning below the threshold will receive 80% of their normal weekly earnings.
For care providers, this is immediately significant. Short-term sickness absence is common in a sector where staff work closely with vulnerable people and are expected to stay home when unwell. Paying SSP from day one, across a workforce with higher-than-average absence rates, adds direct cost pressure. Payroll systems need updating before April.
Paternity leave and ordinary parental leave both become day-one rights from 6 April 2026. Previously, paternity leave required 26 weeks' continuous employment and parental leave required one year. Care providers need to update their leave policies and ensure HR systems reflect the new eligibility rules.
This is the single most significant change for the sector. The Act creates a new body that will negotiate binding terms and conditions for adult social care workers in England. The body will include representatives from trade unions and sector employers, and its agreements will be legally enforceable in the same way as minimum wage legislation.
The government consulted on the body's design between September 2025 and January 2026. Secondary legislation establishing it is expected in October 2026, with the first round of negotiations beginning in 2027 and the first Fair Pay Agreement implemented in 2028 or 2029.
The government has allocated £500 million for 2028 to 2029 to fund the first agreement. The Health Foundation has calculated that £500 million spread across approximately 1.5 million care workers equates to roughly 20p extra per hour per person, well short of the £2.3 billion they estimate would be needed to raise care worker pay to NHS Agenda for Change Band 3 levels.
The LGA has called the model "unworkable" without proper funding and local government involvement. Care England has welcomed it in principle while warning that implementation requires "substantial government funding, clear timelines, and a comprehensive strategy." The Nuffield Trust has warned that "good intentions aren't enough" and that misalignment between funding and ambition risks financially destabilising parts of the sector.
For care providers, the immediate action is to watch the secondary legislation closely. Fair Pay Agreements will set minimum standards for pay, training, career progression, and working conditions. Providers who are already paying above minimum wage and investing in staff development will be better positioned than those who are not.
The qualifying period for unfair dismissal protection drops from two years to six months from 1 January 2027. During the initial six-month period, employers can use a simplified dismissal process, but the protection applies from that point. The compensation cap is also being removed entirely, meaning there is no upper limit on tribunal awards.
In a sector with high turnover and frequent new starters, this changes the calculus around probationary periods significantly. Every hire needs proper documentation, clear performance expectations, and a structured process from day one. The days of being able to let someone go in their first two years without significant process are over.
Anyone hired from late June 2026 onwards will be covered by the new rules when they take effect.
After a reference period (expected to be 12 weeks), employers must offer zero-hours and low-hours workers a contract reflecting their actual working pattern. Workers can accept or decline the offer. Employers must also give reasonable notice of shifts (no more than seven days), and workers will be entitled to compensation for shifts cancelled, moved, or curtailed at short notice.
This is a structural change for care. Skills for Care reports that 21% of the adult social care workforce is on zero-hours contracts, rising to 35% in domiciliary care. Workers on zero-hours contracts have turnover of 30.6%, significantly higher than permanent staff.
For care providers who rely on zero-hours contracts to manage variable demand, the guaranteed hours requirement means tracking actual hours worked accurately and making offers accordingly. Rostering software that can calculate reference-period hours and generate compliant offers becomes essential infrastructure, not a nice-to-have.
Dismissing employees to rehire them on worse terms (changes to pay, pensions, hours, shifts, or time off) becomes automatically unfair dismissal unless the employer faces genuine severe financial distress. No qualifying service is needed to bring a claim, and compensation is uncapped.
Care providers sometimes restructure terms when local authority fee rates change or contracts are renegotiated. This route is now effectively closed for all but the most extreme financial circumstances.
The cost implications for care providers are significant, and the sector's response has been consistent: these reforms cannot be absorbed without adequate funding.
Care England estimates employment costs will surge by at least 10% in 2025 to 2026, driven by increased employer National Insurance contributions and National Living Wage rises, before ERA provisions even take effect. The Homecare Association's Minimum Price for Homecare in 2025 to 2026 is £32.14 per hour, while the average council fee rate is just £24.10 per hour. The Association estimates a funding gap of at least £1.6 billion in England.
The government's £500 million allocation for the first Fair Pay Agreement is a start, but the gap between ambition and funding is real. ADASS has called for costs to be funded centrally rather than by councils already overspending on adult social care. The LGA notes that adult social care already costs councils £26.7 billion annually, representing 40% of council budgets.
For individual care providers, the practical question is how to manage these changes within existing fee structures while the funding picture becomes clearer. The answer, in most cases, is better systems.
Update SSP policies and payroll. Remove the three-day waiting period. Extend eligibility to lower earners at 80% of normal weekly earnings. Test your payroll system processes the changes correctly.
Update leave policies. Paternity leave and ordinary parental leave are now day-one rights. Update your employee handbook and ensure your HR system reflects the new eligibility rules.
Audit your workforce contracts. Identify how many staff are on zero-hours, low-hours, or variable-hours contracts. Understand the scale of the guaranteed hours obligation that is coming.
Implement accurate hours tracking. You need to know exactly how many hours each worker actually works over each reference period to calculate guaranteed hours offers. Manual tracking on spreadsheets will not scale. Digital rostering and time-tracking systems are essential.
If your current HR or rostering system cannot handle this, our post on why HR systems fail in care covers the common pitfalls and what a successful system looks like. The issue is rarely the software. It is whether the software has been configured for how care organisations actually operate.
Build proper onboarding processes. With unfair dismissal protection from six months, every new hire needs documented objectives, structured reviews, and clear performance management from day one. Software champions programmes can help with adoption if you are rolling out new HR or rostering systems to support these requirements.
Update scheduling and cancellation practices. Build reasonable notice requirements into your rostering process. Create workflows for short-notice cancellation payments. Update payroll to handle compensation calculations.
Review all contractual variation practices. Fire and rehire is effectively prohibited for anything other than genuine financial distress. If you currently use contractual changes to manage cost pressures when fee rates change, you need a different approach.
Train managers. Line managers need to understand the new dismissal landscape, scheduling obligations, guaranteed hours procedures, and detriment risks. This is not optional training. Getting it wrong exposes the organisation to uncapped tribunal claims.
Monitor the Fair Pay Agreement. Follow the Adult Social Care Negotiating Body's work from October 2026. Model the financial impact of potential pay rises and terms changes on your operating costs.
Invest in workforce technology. A joint report by Care England and workforce platform Sona found that adult social care is "being sustained by workforce goodwill rather than system design." The report specifically calls for treating "digital capability as core infrastructure rather than an optional enhancement."
Digital rostering, accurate time-tracking, automated compliance alerts, and proper HR management systems are no longer optional for care providers. They are the infrastructure that makes compliance with the Employment Rights Act practical rather than impossible.
The Employment Rights Act changes the employment relationship in care. Zero-hours flexibility reduces. Day-one rights expand. Pay is moving toward sector-wide negotiation. Dismissal becomes harder and more expensive.
For care providers, the implication is clear: getting recruitment right the first time matters more than ever. Hiring the wrong person when you could terminate within two years with minimal process was expensive but manageable. Hiring the wrong person when unfair dismissal protection kicks in at six months, with uncapped compensation, is a fundamentally different risk.
Care-sector recruitment needs to be thorough, compliant, and well-documented from the start. That means structured interviews, proper reference checks, DBS compliance tracked systematically, and values-based hiring that identifies candidates who will stay.
Technology does not replace good recruitment judgement, but it does ensure the process is consistent, documented, and defensible. For care providers managing high-volume recruitment across multiple sites, the Employment Rights Act makes that infrastructure essential.
If you are a care provider working through what these changes mean for your organisation, the priority is understanding your current workforce profile: how many staff are on zero-hours contracts, what your actual hours patterns look like, and whether your HR and rostering systems can handle the new requirements.
If the answer is that your systems cannot cope, or that you are still tracking compliance on spreadsheets, now is the time to address that. The Employment Rights Act is not a single deadline to meet. It is a series of changes rolling out across 2026 and 2027 that require better workforce infrastructure to manage.
Get in touch if you want to talk through what this means for your technology setup. We work with care providers on the systems side of workforce management, and we can help you understand what needs to change.