The Employment Rights Bill – What the Adult Social Care Negotiating Body means for care business and other reforms

One of the Labour Party’s manifesto commitments was to ensure ‘fair pay’ in the social care sector.  The Employment Rights Bill (ERB) has set out plans for an Adult Social Care Negotiating Body, along with a number of other reforms affecting the care sector.

This article considers the proposed Negotiating Body and then provides an overview of other aspects of the ERB that are expected to have the biggest impact on the sector.

Adult Social Care Negotiating Body

The proposed Negotiating Body will comprise of trade unions and employer representatives to bargain on behalf of social care workers and employers. Its purpose is to address recruitment and retention issues by empowering worker, employer and sector representatives to negotiate collectively.

This new institution will decide ‘fair pay’ agreements in the social care sector.  Other than pay, it is unclear what other terms of employment will be within the Negotiating Body’s remit.

We consider that there are some fundamental ‘unknowns’ with this proposal:

• The proposal assumes that social care workers want or need trade unions negotiating on their behalf. There are over 1.5 million social care workers in the UK but it is estimated that fewer than 2% are trade unions members
• Unlike the more centralised NHS England, there are thousands of private organisations providing social care across the UK. They consisting of different structures and objectives, e.g. charitable, profit making, owner-run small business through to foreign owned large corporations.  It is unclear what organisation would have the authority to represent social care employers in any negotiations and how they would represent the interests of such diverse organisations
• It is not clear which social care workers will be covered. If the likes of cleaners and kitchen staff are not covered, might their voices be marginalised?

The social care sector continues to grapple with high labour turnover and high job vacancy rates.  Employers are already struggling to absorb recent increases to the minimum wage and employer’s national insurance rates. Any increases to employment costs on top will make running a financially viable business even more challenging.

If the outcomes of fair pay agreements are ratified by the Secretary of State they would become mandatory across the sector, in the same way as the minimum wage. The government must therefore ensure that any increases to pay and conditions in the social care sector are properly funded.  Otherwise many private sector social care providers will simply not be able to afford to continue operating. If the government’s failure to fully fund teachers’ pay increase is anything to go by, full funding to match promises seems unlikely.

More consultations and detailed legislation will be forthcoming, which we hope will provide more detail about the Negotiating Body and its remit.

Zero hours contracts

The ERB will bring in a right to guaranteed hours of work for workers on zero hours contracts and will require employers to compensate workers if shifts are cancelled without ‘reasonable’ notice. Employers will also be required to give workers ‘reasonable’ notice of shifts to be worked.

The effect of these changes is to transfer much of the risk associated with unpredictable labour requirements from employer to employee.  It removes much of the flexibility that care operators enjoy, as do some workers, through the use of zero hours or similar arrangements.

The proposals are complex, but essentially require employers to make an offer of guaranteed hours to a zero hours worker after the end of every 12 week reference period.  Guaranteed hours of work will be calculated based on the average number of hours worked over a 12 week ‘reference period’, with the calculation repeated every 12 weeks.

The changes to zero hours contracts in the ERB will likely cause huge challenges across social care in a similar way to those highlighted by operators in the hospitality sector.

Some workers will turn down guaranteed hours as many people – second jobbers and students – enjoy the flexibility offered by zero hours contracts.  But it is unclear what percentage that will be.

We recommend that organisations start planning for these reforms now.  You will need to assess if you can take on the risk of having to provide guaranteed hours when there may not always be a need for work to be carried out.  But if you take a too restrictive approach to this, you may find that you cannot call upon labour at short notice, which may detrimentally affect the service you provide.

Other employment reforms

The ERB would also remove the two-year qualifying period for protection from unfair dismissal, meaning that employers would only be able to dismiss staff for a fair reason that falls under any of five categories (conduct, capability, redundancy, statutory restriction, or some other substantial reason) from the start of their employment. However, employers would have more flexibility to dismiss during an initial probationary period set by regulations, which is likely to be nine months, though will be subject to consultation.

Other key measures in the ERB include:

• Flexible working – reducing employers’ scope to reject flexible working requests only to cases where accepting the request were not reasonable
• Harassment – requiring employers to protect their staff from harassment from third parties such as suppliers, relatives, customers and the general public
• Trade unions – making it easier for trade unions to gain recognition from employers to collectively bargain on behalf of staff
• Statutory Sick Pay – workers will be entitled to claim statutory sick pay from day one of sickness.

The majority of reforms are anticipated to take effect from 2026, with  consultations already underway and the ERB currently being considered by the House of Lords.

Our expert Employment team has extensive experience of advising the care sector on employment related issues.