The Employment Rights Act 2025: What It Means for UK Care Homes

The Employment Rights Act 2025 overhauls existing employment law under the government’s 'Plan to Make Work Pay'. It replaces and strengthens parts of previous legislation, with a particular focus on fairness and predictability in work arrangements. Adult social care will be extremely affected. According to government data from 2024, around a quarter of care staff are on zero-hours contracts compared with 3.5% in the wider economy, and many are paid at or near the National Living Wage.

The Act introduces staged changes from April 2026 through 2027, covering statutory sick pay, guaranteed hours, shift notice, unfair dismissal, and the creation of a Fair Pay Agreement negotiating body. Care home managers, HR leads, and operations directors will need to update policies, model costs, and ensure systems are ready for compliance.

The most immediate change is Statutory Sick Pay (SSP) from day one, which removes the current three-day waiting period and abolishes the lower earnings limit. All care staff will be entitled to SSP  from the first day of absence, at £123.25 per week or 80% of weekly earnings, whichever is lower.

Care homes must update sickness absence policies to reflect this change. Managers should also model the financial impact. For example, a care worker on the National Living Wage who takes one week off will now generate an SSP cost of approximately £123.25 instead of zero. Across a medium-sized home, several absences could significantly increase costs, so planning and budgeting are essential to reduce financial risks while maintaining staff welfare.

What SSP Day One Really Means for Care Home Managers

Operationally, managers must communicate these changes to staff, update payroll systems and track absences from the first day. The goal is not to punish staff but to enable them to take necessary sick leave without financial hardship, which improves resident safety.

Digital workforce management tools such as Access Care Rostering support managers by making sickness absence tracking clear, consistent and transparent. The system helps teams monitor patterns, understand SSP implications and plan rotas with confidence. Rather than increasing administrative pressure, it gives managers a dependable framework for implementing day‑one SSP while maintaining resident safety and staff wellbeing.

From 2027, staff on zero-hours contracts will gain the right to guaranteed hours after a 12-week reference period. Employers must also provide advance notice of shifts and compensation for short-notice cancellations. With approximately a quarter of social care staff currently on zero-hours contracts, UK care homes must begin preparing now.

The 12-week reference period means managers will need to audit which staff are likely to qualify for guaranteed hours, review rotas and forecast workforce costs. This operational preparation is essential to ensure fair treatment, staff retention and compliance.

As we have mentioned, preparation is key. Start by auditing zero-hours arrangements and identifying staff approaching the 12-week reference period. Build predictable shift patterns into your rotas and factor in compensation for short-notice cancellations.

You should use technology to your advantage. The right workforce management software can help managers prepare for the ‘guaranteed hours requirement’ by giving clear visibility of who is working regular patterns, how hours accumulate and where predictable shifts can be introduced. A good system supports fair scheduling and proactive cost planning, enabling care homes to meet their obligations while strengthening trust and stability for staff.

The Adult Social Care Fair Pay Agreement Negotiating Body is expected in October 2026. While outcomes are unknown, care homes should prepare payroll and workforce systems for potential sector-wide pay increases. Reviewing contracts, modelling the impact of pay uplifts and ensuring workforce systems can handle rapid adjustments are crucial. Preparing early ensures homes remain compliant and can respond quickly to policy changes without disruption.

From January 2027, the unfair dismissal qualifying period drops from two years to six months, and the compensation cap is removed. This means care homes must tighten probation processes, document performance thoroughly and manage staff issues earlier. Although this change takes effect in 2027, updating HR and payroll processes now reduces litigation risk and ensures a culture of fair management.

Several other employment law changes will affect care homes in 2027, which we will cover more in-depth as the time approaches and updates arise:

• Fire and rehire becomes automatically unfair in most cases.
• Enhanced dismissal protections for pregnant staff and those
• returning from maternity leave.
• New day-one bereavement leave.
• Collective redundancy consultation thresholds updated.

These changes require policy updates, clear communication and preparation of HR workflows. It’s advised to seek specialist employment law advice for guidance tailored to your care service.

1. Update sickness absence policies to reflect SSP from day one.
2. Model the financial impact of SSP across your workforce.
3. Audit zero-hours staff and identify those approaching the 12-week reference period.
4. Review rostering systems for shift notice tracking and planning.
5. Seek specialist employment law advice for contracts and policies.

What does the Employment Rights Act 2025 mean for care homes?

The Employment Rights Act 2025 introduces significant changes that particularly affect care homes. From April 2026, SSP is payable from day one. From 2027, zero-hours staff gain guaranteed hours rights, shift notice requirements apply, and the unfair dismissal qualifying period drops to six months. Care homes employing high numbers of zero-hours staff are particularly exposed. Seek specialist advice for your home.

When does SSP change to day one for UK care homes?

SSP changes take effect on 6 April 2026. The three-day waiting period is removed, and the lower earnings limit is abolished. SSP will be paid at £123.25 per week or 80% of weekly earnings, whichever is lower. Care homes must update policies and model financial impacts.

How will zero-hours contract changes affect care homes in 2027?

From 2027, staff on zero-hours contracts who regularly work will be offered guaranteed hours based on a 12-week reference period. Employers must provide advance notice of shifts and compensate for short-notice cancellations. Homes should audit arrangements and review rostering software now.

What is the Fair Pay Agreement for adult social care?

The government will establish an Adult Social Care Negotiating Body in October 2026 to negotiate sector-wide pay agreements. Outcomes are not yet known. Care homes should prepare payroll and workforce systems for potential pay adjustments.

Do care homes need to update employment contracts for the ERA 2025?

Yes. Contracts, sickness absence policies, and workforce management processes must be reviewed to reflect guaranteed hours, SSP changes, and probation/notice adjustments. Seek specialist employment law advice.

The Employment Rights Act 2025 marks a significant shift for UK care homes, with changes taking effect from April 2026 that will reshape how providers manage sickness absence, staffing, and workforce compliance.

For care home leaders, success will depend on taking a proactive approach by reviewing policies, planning ahead for zero-hours reforms and ensuring systems are in place to manage increasing operational complexity. By acting early and focusing on structured, data-informed decision-making, providers can not only remain compliant but also strengthen workforce stability and maintain high standards of care.

How Digital Workforce Management Helps Care Homes Comply

Digital workforce management tools are increasingly essential for compliance. They allow managers to track average hours per worker, manage absences efficiently, monitor shift notice periods, and provide analytics that identify emerging risks. This makes compliance with the ERA 2025 practical, transparent, and manageable without adding administrative burden.

Access Care Rostering gives managers clear, reliable visibility of staff hours, shift‑notice periods and absence patterns, helping them stay compliant with the Employment Rights Act 2025 without adding to their administrative workload. The system brings structure and confidence to everyday workforce planning by consolidating essential information into one place, making it easier to plan predictable rotas, manage staffing pressures and respond to changes with clarity.

By supporting fair scheduling and giving managers a clearer understanding of how legislative updates affect their teams, Access Care Rostering helps create a more stable and transparent working environment for both staff and residents. If you would like to learn more about Access Care Rostering, please contact us today to speak to one of our experts or book a demo to see our software in action.

Disclaimer: This article provides general guidance on the Employment Rights Act 2025 and its likely impact. It does not constitute legal advice. Please seek specialist employment law guidance for your specific circumstances.