Employment Rights Act 2025: What care sector employers need to know

Despite this, there are many consultations on key parts ongoing, and the practical impact of some completed consultations not yet clear. Further Regulations will be required to provide some of the detail in 2026.

Employers in the care sector now have more certainty and can begin to consider how their organisations may need to adapt to change in the areas that the Act’s proposals have been developed.

Unfair dismissal and Employment Tribunal Claims

Currently, employees who have been dismissed must have two years’ service before they are able to bring an unfair dismissal claim. This is helpful to employers where they experience conduct or performance issues with newer employees, however, this will be changing. Under amended new proposals, from 1 January 2027, this will be reduced to six months required service. Previously, we updated that employees would be able to claim this from their first day of employment, with a less rigorous dismissal process prescribed within an initial period – this is no longer the case.

Many employers implement six month probationary periods, but it will soon become crucial for the dismissal of any underperforming employees to be completed prior to the expiry of this six months, to avoid lengthy dismissal processes or costly claims.

It is also highly likely that the cap on the amount of compensation employees may claim where they have been unfairly dismissed will be removed. Currently, lost earnings awards are capped at 52 weeks’ gross pay for the ex-employee, or £118,233 – whichever is lower. Removal of this cap would make unfair dismissals more costly for high earners, but an impact assessment should take place before this change is brought in.

From (likely) October 2026, employees will have 6 months, rather than 3 months, to submit an Employment Tribunal claim. This will leave employers in a situation whereby they will be waiting twice as long to see if a claim is to be received.

Zero hours contract reform

Following an open consultation and legislator negotiations, more detail on the proposals to reform zero hours contracts is available. After the end of a set reference period (likely to be 12 weeks), employers will be required to send written notices to workers on zero hours or ‘low’ (currently undefined) hours contracts. These notices must confirm the worker’s right to be offered guaranteed hours contracts, reflecting their usual hours, that they may accept or decline. For agency workers – it will be the responsibility of the end-user to make these offers.

There is a possibility that workers will be able to decline to be sent further notices or offers, unless they subsequently opt back in to receiving them.

Providers will also be required to give zero hours workers reasonable notice of shifts, and of cancellations and changes to shifts, with some limited (awaited) exceptions. What ‘reasonable notice’ will look like will be confirmed in secondary regulations and businesses that fail to comply will be required to pay specified compensation amounts to the worker. In agency working arrangements, the liability for these payments will be allocated between the agency and the end-user on a case by case basis. It will therefore become even more important to review and negotiate the terms of business with the agency.

Interestingly, providers will be able to agree with Trade Unions to contract out of these rights in a collective agreement.

These changes are expected to come into force in 2027.

Changes to Statutory Sick Pay

From April 2026, employees will no longer need to wait for three days before they are entitled to Statutory Sick Pay, and this will need to be paid from their first day of sick leave. The lower earnings threshold of £123 per week will also be removed – with employees entitled to receive 80% of their normal weekly pay or £123.25 per week, whichever is lower. Care providers should be advised to consider these changes when revising budgets, negotiating contracts and continue to work on reducing the levels of sickness so far as possible.

Adult Social Care Negotiating Body

Since our last update, a public consultation has been launched regarding the formation of the Adult Social Care Negotiating Body, which has the aim of negotiating a ‘Fair Pay Agreement’ on behalf of care workers.  Legislators are currently consulting on how workers should be represented by this body, how negotiations should proceed, and the body’s key priorities concerning pay and conditions, amongst other items. The consultation will close on 16 January 2026 and if you haven’t already done so, it is strongly recommended that you respond to the consultation here.

Duty to Prevent Sexual Harassment

The Employment Rights Act 2025 expands the duties of care providers to prevent sexual harassment, or harassment based on any protected characteristic (including race, religion, sexuality and gender) of their employees in two ways from October 2026:

• Employers will need to take all reasonable steps to prevent sexual harassment of their employees during the course of their employment – currently, they are only required to take reasonable steps.
• The duty will extend to preventing harassment by third parties.

This puts an onus on businesses to do much more to prevent harassment, not just by other employees, but by service users, residents, contractors, visitors and suppliers. Expanding existing risk assessments applied to service users to a much broader pool of individuals that staff encounter daily is essential.

Collective consultation

Collective consultation is a prescriptive process of redundancy consultations, that must be followed where an employer plans to dismiss 20 or more employees at one establishment within a period of 90 days. As we previously reported, the Act will remove the ‘one establishment’ element, so that multi-location care providers must include the redundancies occurring across their entire business, when determining whether collective consultation has been triggered.

It is unclear (and will be confirmed in regulations) how many employees or what percentage of headcount must be at risk of redundancy to trigger collective consultation under the new law. What is clear, is that sites will need to communicate swiftly and effectively with one another to assess when the threshold is crossed.

Following consultation, the process will not only be more easily triggered, but more expensive to get wrong. Under new amendments to the Bill, where employees are not consulted properly, the maximum ‘protective award’ that they can claim will be increased from 90 days pay to 180 days pay per affected employee. This makes it increasingly unattractive for businesses to ‘buy out’ employees where they lack the time and resources to consult properly.

Trade Unions

Finally, under new proposals it will be easier for a trade union to gain statutory recognition (and protections) – with regulations to be drafted by ministers that will reduce the current recognition threshold (10% of a relevant workforce) to potentially as low as 2%.

It will also become easier for recognised unions to recruit, organise and consult with members, as they will gain a right to access care provider locations – a right which has been consulted on recently. Employers will be duty bound to inform their employees of their right to join a trade union, which again has been the subject of recent consultation.

Conclusion

The establishment of the Employment Rights Act 2025 marks a significant shift in workplace legislation, particularly for the care sector. While many provisions will not take effect until 2026 and beyond, employers should start preparing now—reviewing policies, updating contracts, training managers and engaging with ongoing consultations. Early action will help mitigate risks, manage costs, and ensure compliance as these reforms reshape employment law in the coming years.

To discuss any of these changes in detail, contact Charlotte Nuttall or one of our employment team.