Employment Rights Act 2026: what will it cost FM and housing teams?

The government estimates the cost of the Employment Rights Act (ERA) at £1bn a year across the whole UK economy. The people running frontline workforces expect it to land far harder on their own pay bill. In our survey of 250 senior facilities management (FM) leaders (coming October 19th 2026), 89% expect the Act to raise their labour costs.

The £1bn is a national average, spread across every employer in the country. The real cost falls on those with large frontline teams on variable hours, so the average tells you nothing about your own bill.

Housing providers employ the same shape of workforce and face similar issues to facilities management: repairs operatives, caretakers and contact centre teams, all covered by the same measures on the same dates. Here is where the money goes, and why passing it on is harder in both sectors than in most industries.

How much will the Employment Rights Act cost employers?

The Department for Business and Trade's revised impact assessment, published in January 2026, estimates direct costs to business of £1bn a year once the Act is fully implemented, down from an earlier upper estimate of £5bn. The same assessment notes costs fall proportionately higher on smaller businesses through fixed admin and compliance burdens. The measures driving the total are concentrated in sick pay, insecure hours and dismissal risk, which is why the average tells you so little.

Where the impact of the cost actually is

Sick pay, from the first day. Since 6 April 2026, statutory sick pay has been payable from day one with no waiting days, and the lower earnings limit is gone. Low earners get 80% of normal weekly earnings or the £123.25 flat rate, whichever is lower. For a repairs workforce or a cleaning contract, every one-day and two-day absence now carries a payroll line that did not exist in March.

Guaranteed hours, from 2027. Employers will have to offer zero-hours and qualifying low-hours workers a contract reflecting the hours they usually work over a reference period (the government's preference is 12 weeks), with the same rules applying to agency workers. Add a right to reasonable notice of shifts and a payment where shifts are cancelled, moved or curtailed at short notice. The proposed penalty for missing a short-notice payment is 50% of arrears, with a £5,000 per worker ceiling.

Dismissal, from 1 January 2027. The qualifying period for unfair dismissal drops from two years to six months and the compensation cap is removed. Anyone with six months' service on that date is protected immediately, which already covers everyone hired up to the end of June 2026.

Holiday pay enforcement, from 2027. The Fair Work Agency, established on 7 April 2026, takes on holiday pay enforcement. The government has consulted on investigating claims six years into the past, with a civil penalty of 200% of arrears and a £20,000 per worker maximum. The mechanism matters more than the numbers: enforcement assesses compliance across the entire workforce, not one worker, and an inspection for holiday pay can look at minimum wage at the same time. If you have historically miscalculated holiday pay for variable-hours staff, this is the largest single exposure in the Act.

Bid costs, from October 2026. The Act amends the Procurement Act 2023 so that outsourced employees are offered terms no less favourable than staff transferred from the public sector, reinstating the two-tier Code withdrawn in 2010. Regulations are expected in October 2026, date unconfirmed. If you bid for public sector work, this changes what new starters on a transferred contract cost you.

Why housing and FM cannot simply pass it on

The government's own analysis found 40% of businesses would respond to higher labour costs by raising prices and around a third would absorb them through margin. Neither route is fully open here.

FM contracts are priced years ahead and rarely reopen mid-term for statutory cost increases. A cost that lands in April 2027 sits against a rate agreed in 2025. Housing providers face a different version of the same constraint: income is set by the rent settlement, and the cost increase arrives whether or not the budget did.

That leaves the third lever: doing the same work with less administrative overhead. Which is where most of the remaining planning effort should go.

What still changes on 30 October 2026

Two harassment reforms take effect. Employers must take "all reasonable steps" to prevent sexual harassment, and become liable where an employee is harassed by a third party, such as a resident, client, contractor or member of the public, and the employer cannot show it took all reasonable steps to prevent it. It covers harassment related to any relevant protected characteristic, and one incident is enough.

The cost tail matters as much as the duty. From 1 October 2026, the time limit for most tribunal claims doubles from three months to six, so your records have to survive longer and stay retrievable.

Employment Rights Act: the dates

• 6 April 2026 (in force): SSP from day one, no lower earnings limit; day-one paternity and unpaid parental leave; collective redundancy protective award doubled to 180 days
• 7 April 2026 (in force): Fair Work Agency established
• 1 October 2026: Tribunal time limits rise from three to six months
• 30 October 2026: "All reasonable steps" duty; third-party harassment liability; trade union access and recognition
• October 2026 (date TBC): Two-tier Code reinstated via the Procurement Act 2023
• 1 January 2027: Unfair dismissal qualifying period cut to six months; compensation cap removed; fire and rehire restrictions
• 2027 (date TBC): Guaranteed hours, shift notice and cancellation payments, including agency workers; holiday pay enforcement; flexible working reform

Dates remain subject to secondary legislation.

What this means for housing providers

Your exposure concentrates in two places: a repairs and contact centre workforce where day-one sick pay costs show up immediately, and a claims window that now runs twice as long against teams who absorb abuse on tenancy visits. The compliance discipline you have already built for Awaab's Law, where every interaction is logged and traceable against the property, is the same discipline the Act now asks for on the staff side.

What this means for FM providers

Three numbers to put in front of your finance director: what a 12-week reference period would guarantee across your zero-hours and bank staff, what six years of holiday pay looks like if a calculation has been wrong, and what the two-tier Code adds to your next public sector bid. The first two need data most operators cannot produce today. In askporter's FM research, 83% reported no real-time visibility of workload across their teams.

How askporter can help you respond to ERA

The Act asks employers to evidence what happened, when and to whom, across the whole workforce and over a longer window. That depends on how good your operational record is.

See the workload before guaranteed hours arrive: askporter Operations and askporter Housing log every task as it happens: raised, routed, assigned and closed against the site or property. That gives you a week-by-week view of where work actually falls, which is the starting point for modelling what a 12-week reference period would commit you to.

Keep a record that lasts the claim window: With tribunal time limits doubling to six months, incidents on tenancy visits or client sites need to stay traceable. Because each interaction is logged against the property and the people involved, the record is there when you need to show the steps you took.

Take the admin out of the frontline: AI-powered task triage captures and routes requests at volume, with 132,000 tasks automated to date. Rule-based automations and SLAs handle escalation without someone chasing it manually.

When prices can't move, reducing administrative overhead is the lever that remains. askporter helps you pull it and gives you the data to plan for what comes next.

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This article is general information, not legal advice.