Fair Pay Agreement 2028: Pricing Multi-Year Care Contracts
The Fair Pay Agreement starts April 2028 and NLW hits £13.21 in April 2027. How to price multi-year care contracts. 92% win-rate care bid team.
The Fair Pay Agreement for adult social care will come into effect in April 2028, and any multi-year care contract you price now will run straight into it. Add the National Living Wage rising to £13.21 in April 2027, and a contract signed in 2026 at today's council rates faces two pay events before its first extension. This guide sets out the confirmed facts and how to reflect them in a care tender price.
At a glance
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- National Living Wage: £12.71 from April 2026 and £13.21 from April 2027 for workers aged 21 and over.
- Fair Pay Agreement: the government response says the first fair pay agreement will come into effect in April 2028, covering all adult social care workers as defined in the Employment Rights Act 2025, in England only. Self-employed workers are excluded.
- Scope: pay and terms and conditions. Enforcement of pay terms will sit with the Fair Work Agency.
- Funding: £500 million in 2028-29. Council grant funding is not ringfenced.
- Workforce baseline: Skills for Care reports a median care worker rate of £12.60 in March 2026 and 49% of independent sector workers paid below £12.71.
- Sources: National Minimum Wage rates, Fair Pay Agreement government response.
The two pay events every multi-year care contract now faces
Care contracts are commonly let for 3 years with extension options. A contract starting in 2027 will cross two confirmed pay changes:
- April 2027: the National Living Wage rises from £12.71 to £13.21 for workers aged 21 and over. The 18 to 20 rate rises from £10.85 to £11.27, and the under-18 and apprentice rate from £8.00 to £8.31.
- April 2028: the first Fair Pay Agreement for adult social care comes into effect, covering pay and terms and conditions.
If your price is fixed at bid stage and the contract's uplift mechanism is weak, both events land on your margin.
What the Fair Pay Agreement covers
The government response on the fair pay agreement process in adult social care, updated on 16 July 2026, confirms the main design points:
- the first agreement will come into effect in April 2028
- it will cover all adult social care workers as defined in the Employment Rights Act 2025, in England only
- self-employed workers are excluded
- the remit includes pay and terms and conditions
- enforcement of pay terms will sit with the Fair Work Agency
- council grant funding is not ringfenced
The government announced £500 million for the first fair pay agreement, which a Department of Health and Social Care blog describes as £500 million in 2028-29. The timetable for setting up the negotiating body is described differently across sources, so treat any pay level or term as unknown until the agreement is published.
Where the sector starts from
Skills for Care's 2026 report on the adult social care sector and workforce in England, published on 14 October 2026, gives the baseline:
- the median care worker hourly rate was £12.60 in March 2026
- 49% of independent sector workers, about 655,000 posts, were paid below £12.71
- the vacancy rate was 6.2%, rising to 8.7% in domiciliary care
- staff turnover was 22.1%
Councils read these figures too. Workforce stability and pay are now scored questions in most home care and supported living tenders, and an answer that promises retention without a credible pay position is marked down.
How to reflect the Fair Pay Agreement in a care tender price
- Read the price review clause first. Identify whether uplifts are annual, linked to the National Living Wage, discretionary, or absent. Raise a clarification question if the contract does not say how a Fair Pay Agreement will be funded.
- Model three pay points. Price year 1 at the April 2026 or April 2027 rate as relevant, then show the effect of the £13.21 rate and an open Fair Pay Agreement scenario across the full term including extensions.
- Separate direct pay from on-costs. Employer National Insurance, pension, holiday pay and paid travel time all rise with the base rate.
- Check ceilings and floors. Where a council sets a maximum hourly rate or a minimum care worker pay rate, test whether the full term is deliverable inside both.
- Keep the method statement affordable. Do not promise pay or retention commitments in quality answers that the price cannot fund.
Our guide on how to price a care tender when the fee rate won't fund the service covers the full cost build-up.
How it changes the workforce answer
A Fair Pay Agreement does not remove the need to compete on workforce quality. It raises the floor. Evaluators will still look for recruitment pipelines, induction, supervision, continuity of care worker and retention data. The strongest answers will show how pay, rota design and paid travel time combine to keep turnover below the sector's 22.1%.
Frequently asked questions
When does the Fair Pay Agreement for adult social care start?
The government response, updated on 16 July 2026, states that the first fair pay agreement will come into effect in April 2028. It will cover adult social care workers in England as defined in the Employment Rights Act 2025, excluding the self-employed.
What is the National Living Wage in April 2027?
GOV.UK lists the April 2027 National Living Wage as £13.21 per hour for workers aged 21 and over, up from £12.71 in April 2026. The 18 to 20 rate rises to £11.27 and the under-18 and apprentice rate to £8.31.
Is Fair Pay Agreement funding ringfenced for care providers?
No. The government response states that council grant funding is not ringfenced. The government has announced £500 million for the first agreement, described as £500 million in 2028-29, but how it reaches provider rates depends on each council.
How should a care provider price a 3-year contract with Fair Pay Agreement risk?
Read the price review clause, model the confirmed £13.21 rate and an open Fair Pay Agreement scenario across the full term, separate pay from on-costs and test the result against any rate ceiling. Raise a clarification where the uplift mechanism is unclear.
Can TenderLab prepare our pricing alongside the quality response?
Yes. We review the pricing schedule, assumptions and uplift terms alongside the method statements, so the commitments in your quality answers are affordable under the price you submit.
What is the realistic lead time to engage TenderLab?
Engage us as soon as the tender is published. Pricing review, requirements mapping and drafting run in parallel, and an early start leaves time for clarification questions on uplift terms before the clarification deadline.
Pricing a multi-year care contract? TenderLab supports health and social care providers only, with a 92% win rate across 200+ submissions. TenderLab Ltd, Companies House 17184263. Book a free consultation.
Related reading
- How to price a care tender when the fee rate won't fund the service
- Winning the workforce question in care tenders after the overseas recruitment ban
- Council paying late? Your 30-day payment rights on care contracts
- Case study: Essex Live at Home Framework 2025
Further reading
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