The biggest change to employment law in a generation is already in motion. The Employment Rights Bill received Royal Assent on 18 December 2025 and became the Employment Rights Act 2025. It is now law. The changes it introduces will roll out in phases across 2026 and 2027, and they will hit the health and social care sector harder and faster than almost any other industry in the country.
Why harder? Because care providers employ around 1.71 million people. Employment costs make up between 70 and 80 per cent of a typical provider’s total operating costs. One in five care workers is on a zero-hours contract, rising to one in three in domiciliary care. Statutory Sick Pay changes alone are expected to extend new entitlements to an estimated 1.3 million additional low-paid workers, many of whom work in care. Care England has already estimated that employment costs will rise by at least 10 per cent in 2025/26 before the Act’s provisions have even fully taken hold.
This blog sets out what is changing, when it is happening, and what care providers need to do now.
What Has Already Changed
Some provisions came into force before or shortly after Royal Assent. From 18 February 2026, major parts of the Trade Union Act 2016 were repealed. This means unions have stronger rights to organise in workplaces, including the right to access employers’ premises to recruit and represent members. The 40 per cent support threshold for strikes in important public services has been removed. Unions now need to give 10 days’ notice of industrial action rather than 14. For care providers who have not engaged seriously with trade union relationships, this is a prompt to start.
A new Fair Work Agency also came into force on 6 April 2026. This is a single enforcement body that brings together the functions of several existing labour market bodies. It has new powers to investigate employers, enforce rights on behalf of workers, and take action where employment law is being broken. For care providers, this means a better-resourced enforcement environment than existed before. Underpayment of the National Living Wage, failure to provide written contracts, and breaches of working time rules are all within scope.
The Changes Landing in 2026
The biggest operational change for many care providers this year is Statutory Sick Pay. From 6 April 2026, the three-day waiting period for SSP is gone. It is now payable from the first day of sickness absence. The Lower Earnings Limit, previously set at £123 per week, has also been removed, meaning workers who earned below that threshold and had no SSP entitlement at all now have one.
For care providers with large numbers of part-time or low-hours workers, this is a significant cost change. It also means providers need to review payroll systems and absence tracking processes to ensure SSP is being calculated and paid correctly from day one rather than day four. Getting this wrong will fall within the scope of the new Fair Work Agency.
From 6 April 2026, all workers also have a Day 1 right to Paternity Leave and Unpaid Parental Leave. Previously, both required a period of service. That qualifying period is gone. For providers managing rotas in services where cover is tight, this requires better workforce planning and more robust contingency arrangements for short-notice absences.
Employers are now also required to inform all workers of their right to join a trade union. This is not optional. It needs to be included in employment contracts or a written statement provided to every worker.
The Zero-Hours Contract Overhaul
This is the change that will require the most structural adjustment from care providers. From late June 2026 onwards, workers on zero-hours and low-hours contracts will begin to accumulate rights to a guaranteed-hours contract based on their actual working pattern over a 12-week reference period. After that period, employers must proactively offer a contract that reflects the hours the worker has actually been working. Workers can accept or decline the offer, but the obligation to make it sits with the employer.
Alongside this, from 2027, employers will be legally required to give reasonable notice of shifts and changes to shifts. Workers will be entitled to compensation if a shift is cancelled, moved, or cut short at short notice.
For domiciliary care providers in particular, this is a structural change to how the workforce operates. Skills for Care reports that 35 per cent of domiciliary care workers are on zero-hours contracts. The shift to guaranteed-hours offers means providers need to start tracking actual hours worked accurately now, before the reference period rules take effect, so they know what contractual offers they will be required to make. Providers who do not have systems in place to monitor working patterns across their workforce will struggle to comply.
The Fair Pay Agreement for Adult Social Care
This is the most significant long-term change in the Act for the care sector. The Employment Rights Act 2025 creates the legal framework for a new Adult Social Care Negotiating Body in England. This body will bring together trade unions and employer representatives to negotiate a Fair Pay Agreement covering pay, terms, and conditions for adult social care workers. Once agreed, that agreement will be legally enforceable in the same way as the National Living Wage.
The consultation on the design of the body closed in January 2026. Secondary legislation establishing it is expected in October 2026. The first round of negotiations is expected to begin in 2027, with the first agreement implemented in 2028 or 2029. The government has allocated £500 million for 2028/29 to fund the first agreement, though the Health Foundation has calculated this equates to around 20p extra per hour per care worker, well short of what would be needed to bring care pay in line with NHS Agenda for Change Band 3 rates.
For providers bidding for supported living contracts and other long-term commissioning frameworks, this matters now even though the agreement is years away. Commissioners are already asking providers how they plan to sustain their workforce in the context of rising employment costs. Method statements that demonstrate awareness of the Fair Pay Agreement, its likely impact on cost structures, and a credible workforce sustainability plan consistently score better than those that treat workforce cost as a static figure.
Harassment: Tighter Rules Already in Force
From October 2024, employers were required to take reasonable steps to prevent sexual harassment in the workplace. The Employment Rights Act 2025 goes further. Employers must now take all reasonable steps, a higher bar, and must also take all reasonable steps to prevent harassment of employees by third parties, including service users, their families, and visiting professionals.
For care providers delivering services in people’s homes, supported living settings, and residential care, this is particularly important. Staff are regularly in environments where harassment from service users or their families can occur, and providers now have a legal duty to take all reasonable steps to prevent it. This means having clear policies, providing training, documenting incidents properly, and taking action when incidents are reported. Providers who cannot demonstrate this will be at risk both of employment tribunal claims and of scoring poorly on governance questions in tender evaluations.
What Commissioners Are Looking For
The Employment Rights Act 2025 is already influencing how commissioners think about provider quality and sustainability. A provider that demonstrates compliance with the Act, has updated its employment contracts and staff handbooks, understands the Fair Pay Agreement timeline, and has a credible plan for managing rising workforce costs is a provider that looks like a safe long-term partner. A provider that has not done this work looks like a risk.
For providers bidding for nursing care contracts or extra care and live-in care frameworks, workforce governance sections of tender submissions are now more important than they have been at any point in recent years. Commissioners are specifically asking how providers manage statutory employment obligations, how they plan for workforce cost increases, and how they ensure staff are treated fairly and retain their skills within the organisation.
AssuredBID
The Employment Rights Act 2025 is the most significant shift in employment law the care sector has faced in a generation, and it is arriving in a funding environment that is already under serious strain. Providers who understand what is changing and can evidence their response to it are in a much stronger position in both CQC inspections and competitive tenders. Our bid management services help you put that evidence into writing clearly and compliantly.
Book a free consultation at assuredbid.co.uk/book-a-consultation
