By Will Marshall, Head of Legal and Risk Management
The UK’s Employment Rights Bill 2025 (ERB) aims to reshape the employment landscape - and few sectors will feel its effects more deeply than healthcare and social care. As a flagship element of Labour’s New Deal for Working People, the Bill looks to introduce sweeping reforms aimed at improving pay, job security and workplace fairness. Yet alongside the benefits for workers, it also creates new compliance, cost, and liability pressures that employers and their insurance partners must prepare for.
The Bill is politically sensitive, and it remains to be seen how much of its current content will find its way on to the statute books. However, if and when it is implemented, the ERB is set to deliver the most extensive overhaul of employment law in a generation, with phased implementation from 2026 to 2027. Key reforms include day-one rights for unfair dismissal and flexible working, restrictions on zero-hours contracts, new Fair Pay Agreements (FPAs) - including for adult social care - and stronger duties on employers to take all reasonable steps to prevent harassment. It will also modernise statutory sick pay and family leave entitlements, removing service and earnings thresholds.
For healthcare and care providers, the implications are significant. FPAs are expected to lift pay and conditions across the care sector, helping recruitment and retention but also intensifying cost pressures for providers dependent on fixed public funding. Proposed new predictable-hours rights could challenge workforce agility in sectors that place heavy reliance on agency staff. Meanwhile, the strengthened duty to prevent workplace harassment, including by third parties such as patients or relatives, introduces both operational and reputational risks in an already sensitive care environment.
For insurers and brokers, the reforms expand the potential scope of Employment Practices Liability (EPL), Directors’ and Officers’ (D&O), and Legal Expenses Insurance (LEI) exposures. Policy wordings, risk models, and pricing assumptions will need review as claims frequency and complexity evolve. The priority now is preparation: providers should audit workforce structures, update contracts and policies, train managers, and budget for new statutory obligations. Brokers and advisers, in turn, should embed HR due diligence into renewal discussions and align risk management with the phased implementation timetable.
Handled proactively, these reforms could foster a more stable and professional workforce. Handled reactively, they risk rising costs, claims, and reputational harm. The difference will depend on early collaboration between providers, insurers, and advisers - turning compliance into resilience.
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"The information contained in this article does not represent a complete analysis of the topics presented and is provided for information purposes only. It is not intended as legal advice and no responsibility can be accepted by Altea for any reliance placed upon it. Legal advice should always be obtained before applying any information to particular circumstances.
