UK government confirms framework for adult social care fair pay agreement

In response to a consultation on the design of the FPA process, the Department of Health and Social Care confirmed that an independent adult social care negotiating body will be established to negotiate legally binding minimum standards on pay, terms and conditions across the sector. The body will also have the ability to negotiate wider workforce issues, including training, career progression, people policies and employee benefits.

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The development marks the next stage in implementing reforms enabled by the Employment Rights Act 2025 and follows proposals first outlined by the government last year. The first round of negotiations is expected to begin in 2027, with the first agreement taking effect from April 2028. The government has also confirmed a £500 million funding envelope for the first year of the agreement.

While the FPA will apply only to adult social care workers and exclude staff already covered by NHS and local government pay-setting arrangements, the reforms are expected to have implications across the wider health and care economy.

Anthony Hollands, employment law expert at Pinsent Masons, said: “Healthcare organisations, care providers and independent sector operators frequently compete for similar workforce groups. As a result, improvements in pay and conditions within social care could alter recruitment and retention patterns across the sector and place pressure on employers operating outside the scope of the FPA to review their own workforce strategies.”

The consultation response also confirms that the negotiating body’s statutory remit extends beyond pay. The government envisages a framework capable of addressing training, career development, workplace culture and other employment related matters.

Hollands said: “Over time, the FPA may develop into something closer to a sector-wide employment framework, setting expectations around workforce management, skills development and employment standards. That could have significant implications for provider compliance, workforce planning and mergers and acquisitions planning due diligence in the care sector.”

The reforms may also become increasingly relevant in transactional and investment activity.

Jesse Tataobuzogwu, specialist in employment law at Pinsent Masons, said: “Buyers, investors and lenders will increasingly need to assess exposure to sector-wide negotiated terms and conditions, particularly in care home, home care and supported-living businesses. Future negotiation cycles may introduce a new category of workforce cost risk.”

The government response also highlighted concerns raised during the consultation around funding sustainability and commissioning reform. According to the consultation findings, stakeholders consistently emphasised that workforce reform cannot be separated from the way adult social care services are commissioned and funded.

The announcement also comes against a backdrop of wider workforce pressures within adult social care, including recruitment challenges and restrictions on overseas labour supply. The government has said the FPA is intended to help improve recruitment and retention by making the sector more attractive as a long-term career option.

The adult social care FPA is one of the first major examples of modern sector-wide bargaining being implemented under the new legislative framework and could inform future debates about workforce regulation in other sectors experiencing recruitment and retention difficulties.

Tataobuzogwu said: “For healthcare organisations with integrated health and social care operations, outsourced care services, community care functions or care home businesses, the immediate priority will be to monitor the establishment of the negotiating body and the development of its bargaining agenda ahead of negotiations beginning. The eventual impact of the FPA is likely to extend well beyond social care pay, influencing workforce planning, commissioning arrangements, operational costs and employment strategies across the wider health and care sector.”

The government's ambition to improve recruitment and retention through the FPA comes as adult social care providers continue to adapt to tighter immigration rules affecting overseas recruitment, historically an important source of workers for the sector.

Shara Pledger, immigration law expert at Pinsent Masons, said workforce reforms cannot be viewed in isolation from recent changes to immigration policy, which have already affected providers' ability to address staffing shortages.

“Recent changes to immigration rules have significantly curtailed the sector's ability to recruit internationally, arriving at precisely the moment when domestic supply is failing to meet demand. Providers are already reporting sustained vacancy rates and mounting agency costs as a direct result. A fair pay agreement has real potential to make careers in adult social care more attractive to domestic workers — and that is genuinely to be welcomed — but it will land in a sector already operating under considerable strain, and that context cannot be ignored," she said.