Anger over proposed 2.5 percent pay rise for healthcare professionals in 2026, what this means for employers

Trade unions representing healthcare professionals have reacted with strong criticism to the government’s proposed 2.5 percent pay rise for the 2026 to 2027 pay year. The recommendation has been submitted to the NHS Pay Review Body and is already proving controversial across the sector.

While the headline focuses on the NHS, the wider implications of this dispute stretch beyond public healthcare. It raises important questions around pay expectations, workforce pressures and how employers across all sectors approach pay reviews in the coming year.

Why unions are angry about the proposal

Unions argue that a 2.5 percent increase does not reflect the real cost of living or the ongoing pressure placed on healthcare workers. Many staff have faced several years of below inflation pay growth, alongside workforce shortages, rising workloads and retention challenges.

From the union perspective, the latest proposal risks worsening recruitment and retention issues across the NHS at a time when services are already under strain. There is also concern that a lower than expected pay award sends the wrong message to a workforce that played a vital role during recent years of crisis.

What this means for employers beyond healthcare

Although this specific pay rise relates to NHS staff, the reaction highlights a wider issue that many employers are currently facing.

Employee pay expectations are rising 
Across all sectors, employees are more aware of pay levels, inflation and market competition. A widely reported dispute like this can put upward pressure on pay demands in other industries as staff compare their own increases with those in the public sector.

Retention and recruitment pressures remain high 
Where pay increases are viewed as insufficient, staff morale can suffer. This can quickly translate into higher turnover, more sickness absence and difficulty attracting new talent. Employers in competitive labour markets may feel increased pressure to review pay decisions more carefully.

Budget planning becomes more challenging 
With inflationary pressures still affecting many businesses, balancing fair pay with sustainable budgets remains difficult. Employers must consider how future pay awards will impact cash flow, pricing and profitability.

Industrial action risks 
Ongoing disputes in the public sector also raise awareness of industrial action. While not every business faces this risk, it reinforces the importance of transparent communication and fair pay processes.

The payroll and HR impact

For payroll and HR teams, periods of pay tension always bring additional complexity. This includes:

Implementing pay awards accurately and on time 
Managing back pay where settlements are agreed late 
Adjusting pension contributions and statutory payments 
Dealing with employee queries and disputes linked to pay 
Supporting leadership teams with clear reporting and forecasting 

Where businesses run lean payroll operations, these pressures can quickly become time consuming and risky.

What employers should be doing now

Review your current pay strategy 
Make sure your approach to pay is clear, competitive and sustainable. Consider how your last increase compares with inflation and the wider market.

Plan early for your next pay review 
Build realistic assumptions into budgets for 2026 and beyond so you are not forced into rushed decisions later.

Communicate openly with employees 
Uncertainty around pay often creates more concern than the outcome itself. Clear and honest communication helps manage expectations and protects trust.

Ensure your payroll processes are robust 
Any changes to pay need to be implemented smoothly and accurately. Errors during sensitive pay reviews can quickly damage employee confidence.

What this means for your payroll provider

Periods of pay pressure highlight the value of accurate, compliant and responsive payroll support. A trusted payroll partner helps ensure pay changes are processed correctly, statutory calculations remain accurate and reporting supports informed business decisions.

For growing businesses, outsourcing payroll or strengthening payroll systems can remove risk and free up management time during demanding review periods.