From unfair dismissal reform to zero-hours contract overhaul, the most significant change to UK employment law in a generation is closer than most providers realise. Here is what you need to know – and what you need to do.
The Employment Rights Act 2025 became law on 18 December 2025 and for health and social care employers, the implications are significant across every part of the sector – elderly care, adult residential services, children’s care, and healthcare.
The most time-critical change is the reduction of the unfair dismissal qualifying period from two years to six months, effective 1 January 2027. That date is six months away. Any hire made from late June 2026 onwards will be in role when the new threshold applies.
Here, we discuss what is changing and the practical steps that senior leaders and hiring managers across health and social care need to take now.
What UK employment laws are changing and when?
The Act delivers its reforms in phases across 2026 and 2027. The table below sets out the key changes for health and social care employers.
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When |
What changes |
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April 2026 (already live) |
Day-one Statutory Sick Pay. The three-day waiting period is removed. SSP is extended to lower-paid workers previously below the earnings threshold, payable at 80% of earnings or the flat weekly rate, whichever is lower. |
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1 January 2027 |
Unfair dismissal qualifying period cut from two years to six months. The statutory cap on unfair dismissal compensation is removed entirely. |
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1 January 2027 |
Fire and rehire becomes automatically unfair in most circumstances. Employers can no longer dismiss and re-engage staff to impose changed terms without meeting a narrow financial necessity test. |
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2027 (date TBC) |
Zero-hours and low-hours contract reforms. Workers must be offered a guaranteed-hours contract reflecting average hours after a 12-week reference period. Employers must give reasonable advance notice of shifts; short-notice cancellations must be compensated. |
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By Oct 2026 |
Adult Social Care Negotiating Body established in England, with powers to negotiate a fair pay agreement for the care workforce. |
The most notable change is to 6 month probation periods for new employees
Much of the public conversation around the Employment Rights Act has focused on zero-hours contracts. But for most health and social care employers, the unfair dismissal change is the more immediately pressing issue.
Under current legislation, dismissing an employee in their first two years carries limited legal exposure. From January 2027, that window closes at six months. After that point, any dismissal must be procedurally fair – documented, with a legitimate reason, and handled consistently. Without that, the employer faces a claim with no upper limit on compensation. The statutory cap has been removed.
“From January 2027, dismissing a six-month employee without proper process carries the same legal exposure as dismissing someone with ten years’ service. The compensation cap is gone. There is no ceiling.”
Across elderly care, adult residential services, children’s care, and healthcare, high volumes of new starters are a constant operational reality. The old model of running probation loosely to six months, extending if uncertain, and making a final call somewhere around nine or twelve months is no longer viable. The decision point must come before six months – and it must be documented.
What this means for probation management
If there are performance concerns, suitability questions, or cultural fit issues with a new hire, they must be surfaced and acted on by month five at the latest. Month six is no longer the time to make decisions, hiring teams will need to address suitability much earlier.
This has direct implications for how operational managers are trained and supported. Across health and social care, many managers are promoted for clinical or care expertise rather than people management skills. Expecting them to independently navigate the new legislative framework without structured support is both unrealistic and risky.
Senior leaders and HR functions will need to own this, which means documented review cycles, clear performance frameworks from day one, and a culture where difficult probation conversations happen early rather than being deferred.
The cost of waiting could now be substantial for hiring managers as employment lawyers estimate the cost of managing an exit after the six-month threshold at approximately three months’ salary once legal process, management time, and claim risk are factored in. Across a portfolio of homes, wards, or services with dozens of new starters each quarter, the aggregate exposure from poorly managed probations is material.
In children’s residential care and specialist education, where regulatory standing depends heavily on stable, qualified leadership, the consequences of a failed hire extend beyond the financial. A registered manager appointment that is mishandled, and drags on past the six-month mark, has operational and inspection implications that compound the HR cost.
Zero-hours contracts could mean a structural rethink for many providers
In adult social care, approximately 21% of the workforce is employed on zero-hours contracts – six times the national average across all sectors. The sector’s dependence on flexible, variable-hours staffing is structural, built around occupancy fluctuations, variable care packages, and the logistical demands of residential and domiciliary rotas.
The Act’s zero-hours provisions (expected to come into force in 2027) will require employers to offer a guaranteed-hours contract to any worker on zero or low hours whose average actual hours over a 12-week reference period exceed their contracted hours. Workers can decline the offer, but it must legally be made. For providers where the gap between contracted and worked hours is frequently significant, this creates real workforce planning obligations.
Additionally, employers will need to give reasonable advance notice of shifts and compensate workers for shifts cancelled or curtailed at short notice. In residential care settings where rota changes at pace are common, this means more structured workforce planning than many providers currently operate.
Providers using agency or bank staff should note that these provisions apply to agency workers too, with liability shared between the agency and the end-user provider. The terms of your staffing agency contracts need to be reviewed before the legislation lands.
The fair pay agreement is a commercial variable to keep an eye on
For providers in elderly care and adult social care, there is an additional development that sits slightly outside the Employment Rights Act itself but is directly connected to it in policy terms. The government is establishing an Adult Social Care Negotiating Body, expected to be operational by October 2026, with powers to negotiate fair pay agreements for the care workforce in England.
If fair pay agreements are reached and given legal force, they will set pay and conditions floors across the sector. The commercial and operational implications – for cost modelling, workforce planning, and the relationship between provider costs and local authority commissioning rates – are potentially significant.
Organisations that are ahead of the curve on compensation and working conditions will be better placed to absorb and respond to this shift. Those that have not kept pace with market rates may find themselves facing mandatory increases on a compressed timeline. Providers should be tracking the consultation process closely and modelling the potential impact now.
A Six-Month Action Plan for Health and Social Care Providers
The changes are coming regardless of organisational readiness. The question is whether providers use the next six months to get ahead of them.
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Audit every active probation period right now. Know where every new starter sits in their probation timeline across all services and settings. Identify anyone approaching four months and ensure a formal review is scheduled. |
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Set a mandatory five-month review point for all future hires. Build this into your onboarding workflow and diarise it at point of hire. It should be non-negotiable across every service line. |
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Upskill your operational managers on probation process. Across residential care, healthcare, and specialist services, managers need to understand that the legal landscape is changing and what their obligations are. This is a governance and training priority, not just an HR one. |
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Review your zero-hours workforce. Audit which roles are on zero or low-hours contracts and model the guaranteed-hours exposure. Understand what your obligations will look like before the legislation arrives, not after. |
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Revisit your terms of business with staffing agencies and bank staff. Shift cancellation liability will be shared between agency and end-user once the zero-hours provisions are in force. Review those terms now. |
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Update contracts, offer letters, and onboarding documentation. New starters from now should have clearly defined probation periods with review points documented. Contracts should reflect the incoming legislative environment. |
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Track the Adult Social Care Negotiating Body. For elderly care and adult residential providers, the fair pay agreement process will have commercial consequences. Stay close to the consultation and model the potential cost impact on your business. |
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Take independent legal advice on your specific position. This briefing is a starting framework. Given the removal of the compensation cap and the scale of workforce exposure in this sector, independent legal guidance is strongly recommended. |
Ultimately, this policy will make work more secure and predictable for workers
It would be unfair to present these changes purely as a cost burden. The Employment Rights Act 2025 reflects a genuine policy intent to make work more secure and predictable for people in some of the most demanding and least well-compensated roles in the economy. Many of the workers who benefit from day-one SSP are healthcare support staff who currently lose income every time they are unwell. Many of those who gain from zero-hours reform are residential care workers who have built their lives around shifts that can currently be cancelled at no cost to the employer.
Providers who have built strong employment practices and who recruit carefully, manage people fairly, and invest in genuine workforce stability, will not find these changes particularly disruptive. The burden falls hardest on organisations that have relied on the flexibility of the current framework to avoid harder structural decisions.
“Workforce stability is not just an employment law obligation in health and social care. It is a quality indicator, a regulatory variable, and increasingly, a commercial differentiator. The Employment Rights Act is a prompt to take it more seriously.”
The providers who will be least disrupted are those who already hire well. The next six months are the window to join them.
This article is intended for informational purposes only and does not constitute legal advice. Organisations should seek independent legal guidance on their specific obligations under the Employment Rights Act 2025.
Looking for recruitment support?
Compass Associates works with health and social care organisations across elderly care, adult residential services, children’s care, and healthcare to support senior and leadership hiring. If you would like to talk through the resourcing implications of these changes, or need support building a hiring strategy fit for the new legal landscape, our team is here to help.