Teachers to benefit from 6.5% multi-year pay deal
On 1 July 2026, the Education Secretary accepted the School Teachers’ Review Body’s (“STRB”) recommendations in full. This means that teachers and leaders will see their pay increase by 6.5% over the next 2 years. In a press release dated 1 July 2026 the government confirmed that teachers will receive a 3.5% pay increase from September 2026 and a further 3% increase from September 2027, which represents a cumulative 17% increase in teacher pay since the general election in 2024.
To support the award, the government has announced £1.8 billion of additional funding for schools over the next two years, together with £485 million for colleges and further education providers. However, the pay award is not fully funded. Schools will be expected to fund the first 1% of each annual pay increase from existing budgets, which the Department for Education (“DfE”) says can be achieved through efficiencies and its Maximising Value for Pupils programme. Further, the government has stated that maintained schools will be permitted to make modest non-consolidated recognition payments to staff. Additionally, employer contributions to the Teachers’ Pension Scheme will reduce from 28.6% to 17.6% from April 2027.
Union response
Following the government’s confirmation of a partially funded pay award, the National Education Union (“NEU”) responded, describing the 1% unfunded burden on schools as “completely unacceptable”. The NEU has further confirmed that it is considering all options, including a formal ballot for industrial action in the autumn.
Serious concerns have also been raised by NAHT and ASCL, warning that the financial pressure placed on school budgets will still be significant even with the government’s additional funding allocations.
How can Schools and MATs prepare?
The impact of the pay awards will no doubt be far reaching and require careful consideration by Schools and MATs over the coming years. In particular, given the potential financial implications of the impending changes, we are encouraging schools and MATs to proactively and promptly review their financial forecasts and workforce budgets to assess the impact of the multi-year pay settlement over the next two academic years. Consideration should be given to the requirement to fund the first 1% of each annual pay award from existing budgets, alongside wider inflationary and operational cost pressures.
Schools and MATs will need to consider any opportunities to achieve efficiencies through procurement, banking, recruitment and other resource management arrangements in light of the government’s continued emphasis on maximising value from school budgets. We expect to see the continuation of the sector-wide restructure and redundancy exercises that have dominated the 2025/2026 academic year, continuing into the new academic year, in order to achieve the cost savings needed to part-fund the pay award and mitigate deficits.
Schools and MATs should continue to monitor developments in industrial relations closely. Whilst no formal industrial action ballot has been announced following the government announcement on 1 July 2026, trade unions have indicated that industrial action remains a possibility. Even before the pay deal was announced the NEU had already said that formal ballots over pay and funding in state-maintained schools in England would open on 3 October and close on 15 December. The formal ballot follows NEU indicative ballots of teachers and support staff in England, carried out between February and April 2026, which were overwhelmingly in support of strike action over the issue of pay, funding and workload.
As a reminder, under the Employment Rights Act 2025, trade union industrial action ballots and mandates remain valid for 12 months. That means that a ballot in Summer or Autumn 2026 would remain valid until Summer or Autumn 2027. School leaders should therefore maintain effective and constructive communication with staff and recognised trade unions and consider appropriate contingency planning should disputes arise. If your school or MAT does not have a recognition agreement in place already, it may be beneficial to consider adopting one for the new academic year to provide an effective framework for managing union relationships and any disputes arising.
Similarly, maintained schools may wish to consider how the new ability to make modest non-consolidated recognition payments may support recruitment, retention and staff recognition strategies.
The forthcoming reduction in Teachers’ Pension Scheme (“TPS”) employer contribution rates from April 2027 will likely generate small financial savings for schools and MATs who still adopt TPS, which may offer some reprieve going forward. Finance teams should ensure that future budget forecasts and financial planning assumptions accurately reflect the revised contribution rates once further implementation details are published. For those schools who moved away from TPS, primarily those in the independent sector, governing bodies should be informed, financial plans updated, and pension strategies reviewed as necessary. Given the complexity of pensions, specialist advice should be sought at an early stage and before any changes are made.
This briefing is not intended to be a definitive statement of the law and is correct at the time of publication. It should not be taken as a substitute for professional legal advice. It does not represent the views of Winckworth Sherwood or any of the authors.
If you require advice in relation to the teacher pay award, industrial action or any other employment law or HR related issue for a school or MAT please contact our specialist Schools HR team on schoolshr@wslaw.co.uk or 0345 026 8690