Employment Law News Roundup – 9.8.26

Adult Social Care Fair Pay Agreement: Government Sets Out Negotiating Framework

The Government has set out how England’s first sector-wide Fair Pay Agreement for adult social care will be negotiated and implemented. The announcement follows a public consultation on the design of the process and represents a major step towards introducing collective pay-setting across a sector employing approximately 1.5 million people.

The Government has not yet determined the pay rates or other employment terms that will form part of the first agreement. Instead, its consultation response establishes the machinery through which worker and employer representatives will negotiate those terms. The statutory foundation is contained in the Employment Rights Act 2025, which received Royal Assent on 18 December 2025 and gives the Secretary of State powers to establish the Fair Pay Agreement process through secondary legislation.

The main consultation ran from 30 September 2025 to 16 January 2026, with an easy-read version remaining open until 6 March 2026. The Government received 1,221 responses across the two consultation exercises, alongside an extensive programme of engagement with providers, workers, trade unions, local authorities, commissioners and people with experience of receiving care.

The Adult Social Care Negotiating Body

At the centre of the new framework will be an Adult Social Care Negotiating Body operating at arm’s length from ministers and led by an independent chair.

The body will contain equal numbers of worker and employer representatives. The Trades Union Congress will co-ordinate the worker side, bringing together UNISON, GMB, Unite and the Royal College of Nursing. The Care Provider Alliance will co-ordinate employer representation, with appointments intended to reflect the different sizes, structures and specialisms found across the provider market. A Department of Health and Social Care secretariat will provide administrative and analytical support.

Local government will not vote on the final agreement but will have a formal role throughout the process. Councils will be able to provide evidence on affordability, commissioning and market sustainability, and local government representatives may submit an assessment that the Secretary of State must consider before deciding whether to ratify a proposed agreement.

The Government is expected to bring forward regulations establishing the Adult Social Care Negotiating Body in October 2026, with the body expected to be set up by the end of the year. Official sources differ slightly on the timing of the independent chair’s appointment, but the chair and other members are expected to be in place ahead of the first negotiations, which are due to begin around April 2027.

What Can Be Negotiated?

The Negotiating Body’s statutory remit will cover pay and other terms and conditions. However, it may also consider wider employment matters, including:

• Training and development;
• Career progression;
• People and culture policies; and
• Additional benefits and financial support.

The body will not necessarily negotiate every available subject during each cycle. The Secretary of State will issue a remit letter setting out the Government’s priorities, the available funding envelope and the deadline for reaching agreement. Within those parameters, worker and employer representatives will decide which matters should be addressed.

The Government expects negotiations to take place annually, although that frequency may be reviewed. The initial negotiation period is expected to run for approximately six months from April 2027, subject to provision for a limited extension or renewed negotiations where necessary.

This flexibility is significant. Although the eventual framework is capable of addressing matters such as sick pay, travel costs, training entitlements and progression, the first agreement may focus on a narrower range of priorities if the parties conclude that this is necessary to remain within the available funding.

How an Agreement Will Become Legally Enforceable

The Negotiating Body will negotiate a proposed agreement, but it will not have unrestricted power to impose terms directly upon the sector.

Once an agreement has been reached, it must be submitted to the Secretary of State for Health and Social Care. The Secretary of State will assess whether it is affordable within the Government’s funding envelope and consider its likely impact and practical deliverability. If approved, the agreement will then be ratified through Parliament.

Only after ratification will the agreed terms become legally enforceable through workers’ contracts. The Government intends the Fair Work Agency to enforce the pay provisions, while further guidance on implementation and compliance will be produced jointly by the Department of Health and Social Care and the Negotiating Body.

The distinction is important: the Government has established a process for negotiating enforceable sectoral standards, but the content of those standards remains to be determined.

Which Workers Will Be Covered?

The framework is intended to cover the paid adult social care workforce in England falling within the definition in the Employment Rights Act 2025.

Workers whose pay is already determined through national collective bargaining or pay-setting arrangements will initially be excluded. This includes workers covered by the NHS Pay Review Body, Agenda for Change and the National Joint Council for Local Government Services. The Government intends to review those exclusions after three years.

Unpaid carers, genuinely self-employed workers and people working through informal care arrangements are also outside the statutory definition and will not be covered by the first Fair Pay Agreement process. The Government has said it will monitor the consequences for self-employed workers and consider related questions as part of its wider work on employment status.

Broad statutory coverage does not necessarily mean that every negotiated provision will apply identically to every role, service or setting. The precise application of each agreement will depend on the negotiations, the remit letter and the terms ultimately approved.

The exclusion of NHS and local-authority arrangements may nevertheless produce wider labour-market effects. Independent care providers, NHS employers and councils often recruit from overlapping groups of workers. Improvements in one part of the sector may therefore create pressure on pay, recruitment and retention elsewhere, even where particular employees are not directly covered.

£500 Million for the First Fair Pay Agreement

The Government has allocated £500 million for the first year of the agreement in 2028-29. The annual remit letter will identify the maximum funding available to councils to cover increased costs arising from the negotiated settlement.

However, the consultation response contains an important qualification. The £500 million will form part of the wider Local Government Finance Settlement and will not be ring-fenced exclusively for Fair Pay Agreement costs. Local authorities will retain discretion over how the relevant grant funding is used.

This is likely to remain a central concern for providers. Consultation respondents repeatedly stressed that higher employment costs must be reflected in commissioning fees and passed through to frontline services. Some questioned whether £500 million would be sufficient, particularly if the first agreement extends beyond basic pay to matters such as travel time, sick pay, pensions, training and other employment benefits.

The £500 million commitment also relates only to the opening year. Future funding will be determined through later annual funding envelopes. The long-term effect of the policy will therefore depend not simply on the terms negotiated, but on whether the funding and commissioning system enables providers to meet them without reducing services, staffing or investment elsewhere.

Care Workforce Pathway Expanded

Alongside the Fair Pay Agreement announcement, the Government published part three of the Care Workforce Pathway. The pathway is a separate but complementary measure intended to provide the adult social care workforce with a clearer and more consistent career structure.

Ten new role categories have been added to the eight already covered. The additions include activity co-ordinators, care technologists, nominated individuals, learning and development practitioners, quality-assurance leads, administrative employees and staff working in catering, domestic and maintenance roles. The expansion means that the pathway now covers nearly all directly employed adult social care roles outside health and social work.

For each role category, the pathway sets out expected knowledge, skills, values and behaviours. Its purpose is to help workers understand potential career routes, support employers with role design and development, and recognise specialist expertise that may not involve progression into management.

The pathway does not itself determine pay or create sector-wide contractual entitlements. Those matters will fall to the Fair Pay Agreement negotiations. Its role is to provide a common framework for professional development that may, in time, inform discussions about pay progression, qualifications and career structures.

Recruitment and Retention Pressures

The reforms arrive at a challenging time for adult social care. Skills for Care estimates that the sector had approximately 96,000 vacant posts on any given day in 2025-26. Although the 6.2% vacancy rate was the lowest for a decade, it remained around three times higher than the vacancy rate across the wider economy. The Government’s consultation response also states that almost one in four adult social care workers leave their role each year.

The sector’s recruitment model is also changing. Overseas recruitment of care workers and senior care workers under the Health and Care Worker route ended for new applicants from abroad on 22 July 2025, although transitional arrangements remain available for some people already in the United Kingdom. The adult social care sector had previously become heavily reliant on international recruitment, with approximately 105,000 international recruits joining during 2023-24.

Against that background, the Government intends better pay, clearer career routes and improved conditions to support a more stable and sustainable domestic workforce. Whether the policy achieves that objective will depend on the eventual settlement, the effectiveness of enforcement and the ability of commissioners and providers to fund the resulting obligations.

What Care Employers Should Consider

Care providers do not yet know what pay rates or other terms the first agreement will contain. They should nevertheless begin preparing for the negotiation and implementation process.

Employers should identify which parts of their workforce are likely to fall within the statutory scope, particularly where their operations include NHS-funded services, local-authority employees, personal assistants, agency arrangements or self-employed contractors. Existing pay structures, differentials between junior and senior roles, travel arrangements, sick pay, benefits and training provision should also be reviewed.

Providers should engage with commissioners and representative organisations as the secondary legislation and remit arrangements develop. Employment, finance and operational teams will need to model the potential cost of different outcomes and ensure that commissioning discussions reflect the full cost of any new contractual minimums.

The Fair Pay Agreement and Care Workforce Pathway together represent one of the most significant interventions in adult social care employment for many years. The pathway provides a framework for professional development; the agreement process is intended to establish enforceable employment standards. Their success will ultimately depend on whether national bargaining, public funding and local commissioning can operate together without undermining the financial sustainability of care provision.

Pay and Benefits Drive Retention Concerns Among Younger Workers

New research has found that pay and employee benefits are becoming increasingly influential in the retention decisions of younger employees.

The research was commissioned by employee-benefits platform Zest and conducted by Opinium, which surveyed 2,000 UK workers between 11 and 22 June 2026. The overall sample was weighted to be nationally representative, with the published findings identifying a number of pronounced concerns among respondents aged 18 to 34.

Pay Expectations Remain Low

Almost half of respondents aged 18 to 34 (47%) said they did not expect to receive a salary increase during 2026. A further 55% did not expect a bonus.

The potential retention consequences were substantial. Some 64% said they would consider leaving their employer if it was unable to increase salaries, while 59% said they would leave for another organisation offering a better benefits package.

These are statements of intention rather than evidence that the same proportion will resign. Employees may express dissatisfaction without ultimately changing jobs, and their decisions will also be affected by labour-market conditions, career prospects and personal circumstances. The figures nevertheless indicate a material retention risk where employees believe that their overall reward is failing to keep pace with financial pressures.

Employers that cannot afford general pay increases should communicate their position clearly rather than allowing uncertainty to persist. Salary benchmarking, transparent review processes and credible explanations of how pay decisions are made may not remove dissatisfaction, but they can reduce the risk that employees interpret an absence of communication as an absence of concern.

Benefits Are Becoming More Important

The survey found that 69% of younger employees considered workplace benefits more important because of the current economic climate. Across the workforce as a whole, two-thirds of employees (66% ) wanted greater financial support from their employer. Among younger employees, 53% described their existing benefits package as inadequate, while 74% wanted their employer to invest more in its offering.

These findings do not mean that benefits can simply replace competitive pay. Salary remains the foundation of an employee’s financial security, and the high proportion prepared to consider leaving where pay cannot be increased reinforces that point.

Benefits can, however, form an important part of a wider total-reward strategy. Where salary budgets are constrained, employers may be able to provide additional value through benefits that reduce everyday costs, improve financial resilience or support employees’ health and wellbeing. The effectiveness of those measures will depend on whether they address needs that employees actually regard as important.

A Communication and Relevance Problem

Only 54% of younger respondents said that they used the full range of benefits available to them. That suggests that dissatisfaction may not always result solely from the amount employers spend. It may also reflect limited awareness, poor communication, difficult access or a mismatch between the benefits provided and the support employees value.

Employers should therefore examine benefit take-up rather than assuming that low usage means low demand. They should consider whether employees understand what is available, how benefits can be accessed and what financial value the package provides.

Regular communications, accessible benefits platforms and total-reward statements can help employees see the full value of their remuneration. Employers should also obtain workforce feedback before introducing additional benefits. Adding more poorly targeted schemes may increase cost without improving engagement or retention.

A flexible approach is generally more effective than assuming that all employees within an age group want the same form of support. Younger employees may have very different priorities depending on income, housing, caring responsibilities, health, pension provision and career stage.

Avoiding Age-Based Assumptions

Age is a protected characteristic under the Equality Act 2010, and the term “young workers” describes an age group for discrimination-law purposes. Employers should therefore avoid turning broad survey findings into stereotypical assumptions about individual employees.

Benefit programmes can be designed to respond to workforce needs, but eligibility rules that treat employees differently because of age may amount to direct or indirect age discrimination unless the employer can establish an applicable exception or objective justification. A flexible package open to the wider workforce will often be safer and more effective than restricting particular benefits solely to employees within a specified age bracket.

Employers should also check whether existing benefits are contractual before changing or withdrawing them. Where a proposed alteration affects contractual terms, the employer should consult affected employees and seek agreement rather than imposing the change unilaterally.

Building a More Effective Reward Strategy

The survey points towards the need for employers to consider pay and benefits together rather than treating them as unrelated HR functions.

A practical response should include reviewing salaries against the external market, examining progression and pay-review processes, measuring benefit take-up and asking employees which forms of support they value. Employers should also consider whether the package is accessible to employees working remotely, part time or in different locations.

Where an organisation cannot meet every request, transparency becomes particularly important. Employees may be more receptive to difficult decisions where the employer explains the financial position, shows that rewards are being reviewed consistently and demonstrates that available resources are directed towards benefits employees are likely to use.

The research does not establish that younger employees value benefits more than every other part of the employment relationship. It does, however, show that pay, financial support and the relevance of workplace benefits are prominent retention considerations for many employees aged 18 to 34.

Employers that respond by improving both the substance and communication of their total-reward offering may be better placed to retain younger talent. Those that rely on outdated, poorly understood or inflexible benefit packages risk spending money without securing the engagement or loyalty that the investment is intended to produce.