Eleanor VaughanNational Agreement for the Engineering Construction Industry (NAECI) 2025–2026: A Complete Guide for Workers (2026)
What Is the NAECI?
The National Agreement for the Engineering Construction Industry (NAECI) is the UK's central collective agreement for approximately 30,000 highly skilled workers who build and maintain the nation's most critical industrial infrastructure. In force since 1981 and negotiated through the National Joint Council for the Engineering Construction Industry (NJC), it governs employment conditions for pipefitters, welders, mechanical fitters, scaffolders, electricians, thermal insulation engineers, and other specialist trades working on power stations, chemical plants, oil refineries, nuclear assets, and — increasingly — offshore wind installations, hydrogen plants and grid-scale battery storage facilities.
The NAECI is a negotiated agreement between two trade unions — Unite the Union and the GMB — and three employer associations: the Engineering Construction Industry Association (ECIA), the Thermal Insulation Contractors' Association (TICA), and SELECT, which covers electrical contractors in Scotland. All employment under the agreement must be direct employment on a PAYE contract; all forms of self-employment are expressly prohibited under NAECI rules and by the Employment Rights Act 1996.
The 2025–2026 period was historically significant. In a first in the agreement's 44-year history, ECIA imposed a pay settlement unilaterally, triggering a formal dispute under the NJC's four-stage grievance procedure. Unite and the GMB challenged the imposition through the NAECI machinery, and a negotiated resolution was reached in April 2026, securing a ~6% pay award for 2026. The episode underlines both the robustness of the NAECI's dispute resolution framework and the importance of union membership for workers on major projects.
Pay and Pay Award 2026
NAECI pay rates are set at two tiers. National Guaranteed Rates apply to standard repair and maintenance work and minor contracts. Higher Categorised Work Rates (Categories 1–3) apply to major new construction projects, long-term maintenance operations and major shutdown events.
2025 National Guaranteed Base Rates (effective 6 January 2025)
| Grade | Designation | Basic rate/hr |
|---|---|---|
| Grade 1 (adult) | Junior operative | £12.51 |
| Grade 2 (adult) | Operative | £14.35 |
| Grade 3 (adult) | Senior operative | £16.27 |
| Grade 4 | Craft (pipefitter, welder, erector) | £19.04 |
| Grade 5 | Advanced Craft | £20.01 |
| Grade 6 | Skilled Working Chargehand | £20.91 |
Approximate 2026 National Guaranteed Base Rates (following ~6% award)
| Grade | Designation | ~Basic rate/hr |
|---|---|---|
| Grade 1 (adult) | Junior operative | ~£13.26 |
| Grade 2 (adult) | Operative | ~£15.21 |
| Grade 3 (adult) | Senior operative | ~£17.25 |
| Grade 4 | Craft | ~£20.18 |
| Grade 5 | Advanced Craft | ~£21.21 |
| Grade 6 | Skilled Working Chargehand | ~£22.16 |
Rates marked with ~ are derived by applying the reported ~6% 2026 award to the confirmed January 2025 rates; official 2026 figures will be promulgated by NJC Communiqué. All figures are for normal day-work; shift premiums, overtime rates and Categorised Work supplements increase earnings further.
On Category 1 major projects, Categorised Work Rates are ~10–12% above the National Guaranteed Rates — for example, a Grade 4 Craft worker on a Category 1 project earned £21.53/hr in 2025, rising to ~£22.82/hr in 2026.
Workers qualified for coded welding to ISO 9606/ASME IX earn additional proficiency supplements ranging from 15p per hour (carbon steel) to 44p per hour for the most complex build-quality welds.
Employers may also introduce locally agreed incentive bonus arrangements. On National Guaranteed Rate work the maximum bonus is £2.40/hr for Grades 4–6; on Categorised Work performance-based schemes can reach £2.37/hr.
Working Hours and Leave Entitlement
The NAECI basic working week is 38 hours, worked over five normal days (Monday to Friday), with 8 hours Monday to Thursday and 6 hours on Friday plus an unpaid 30-minute meal break. Employees are entitled to a paid 10-minute refreshment break on most mornings. Alternative four-day or rolling shift patterns may be agreed locally with NJC approval.
Under the Working Time Regulations 1998 (WTR 1998), reference periods for calculating average weekly working time are successive 52-week blocks. Workers may agree in writing to work more than the 48-hour weekly average limit; the NJC provides a model opt-out form. The NAECI modifies certain WTR 1998 provisions — specifically daily rest (Regulation 10(1)), weekly rest periods (Regulation 11) and rest breaks (Regulation 12(1)) — by way of a collective workforce agreement, as the Regulations expressly permit.
Annual Leave
Every NAECI worker is entitled to:
- 25 days of annual holiday per year (for a five-day basic week), accruing at 1/52 of annual entitlement per week worked
- 8 public holidays per year: New Year's Day, Good Friday, Easter Monday, May Bank Holiday, Spring Bank Holiday, Summer Bank Holiday, Christmas Day and Boxing Day
This totals 33 days, materially above the 28-day statutory minimum under WTR 1998. Holiday pay for 20 of the 25 annual days is calculated using the Euroleave method, which includes overtime, shift premiums and applicable incentive bonus earnings over the previous 52 weeks, ensuring pay during leave reflects actual working income rather than basic rates alone.
Workers on 'away contracts' who live away from home receive 12 periodic weekend leaves per year, with standard-class rail fares reimbursed both ways.
Redundancy Pay
The NAECI provides protection beyond the statutory minimum in two stages:
Under 2 years' continuous service — Contractual Severance Payment: A contractual severance payment accrues for each complete week of employment, up to a maximum of 103 weeks. Based on 2024–2025 NAECI rates (updated by the NJC in line with statutory cap changes), typical weekly rates for Grade 4–6 workers are:
- Aged 40 or under: £12.06–£12.37 per week of qualifying employment
- Aged 41 or over: £18.09–£18.55 per week of qualifying employment
Over 2 years' continuous service — Statutory Redundancy Pay (ERA 1996): The standard statutory redundancy formula under the Employment Rights Act 1996 applies:
- 0.5 week's pay per year of service aged under 22
- 1 week's pay per year of service aged 22–40
- 1.5 weeks' pay per year of service aged 41 or over
The weekly pay cap in 2026 is £700, giving a maximum statutory entitlement of £21,000 (30 qualifying years × 1.5 × £700). The NAECI's contractual severance scheme ceases when the statutory redundancy entitlement kicks in after two years' service.
Redundancy payments made strictly in accordance with the NAECI scheme upon genuine redundancy, as defined in ERA 1996, are currently exempt from income tax by arrangement with HMRC.
Where 20 or more redundancies are proposed within 90 days, employers must undertake collective consultation with Unite and/or the GMB in accordance with statutory requirements under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA 1992). Individual selection decisions can be challenged through the NAECI's four-stage dispute procedure, culminating in a final binding NJC Arbitration Panel ruling.
Notice Periods
The NAECI incorporates the minimum notice provisions of the Employment Rights Act 1996, section 86. After the initial four-week probationary period:
Employer to employee:
- 4 weeks to less than 2 years of continuous employment: 1 week
- 2 years: 2 weeks
- Thereafter: 1 additional week per year of service, up to a maximum of 12 weeks
Employee to employer:
- 1 week after 4 weeks' continuous employment
Notice does not apply in summary dismissal for gross misconduct. During the probationary period, only 2 hours' notice is required by either party. Employers wishing to transfer workers to another site must give at least one week's notice where practicable.
Pension Rights
All NAECI employers are required by the Pensions Act 2008 to auto-enrol eligible workers into a qualifying pension scheme. Minimum auto-enrolment contributions are:
- Employee: 5% of qualifying earnings
- Employer: 3% of qualifying earnings
Many NAECI contractors use the ECI Stakeholder Pension Scheme (administered by Scottish Widows, helpline 0345 716 6777), which predates auto-enrolment and remains open to existing members. Workers who joined the Stakeholder Scheme before their employer's auto-enrolment scheme was set up may remain in it.
Workers who opt out of auto-enrolment may do so by giving their employer an opt-out notice obtained from the pension provider. Employers must re-enrol opted-out workers every three years.
In addition, all NAECI workers (Grades 1–6 and apprentices) are covered by Welplan Limited, the industry welfare benefit scheme, which provides:
- Death benefit: £35,000 (any cause)
- Fatal accident benefit: £40,000 (occupational or commuting accident)
- Weekly sickness and accident benefit: £192/week for weeks 2–14 (all grades); rising to £289.60/week for Grades 4–6 in weeks 15–27 (2025 rates, subject to annual review)
- Permanent total disablement: £50,000
Your Rights Under the Agreement
The NAECI forms a legally binding part of your contract of employment. Key rights as of 2026 include:
- Direct employment only: No NAECI worker can be engaged as a self-employed individual or through a personal service company. PAYE income tax and Class 1 National Insurance contributions are mandatory, in accordance with ERA 1996.
- Trade union recognition: Under TULRCA 1992, Unite and the GMB are the sole recognised negotiating unions. Employers must encourage NAECI workers to join and must facilitate accredited shop stewards — paid time off for trade union duties is a contractual right.
- Guaranteed earnings: Workers with more than four weeks' continuous service are entitled to guaranteed pay for 38 hours in any pay week, even if work is temporarily unavailable.
- Four-stage dispute procedure: Any unresolved grievance escalates from informal resolution to a formal site meeting (Stage 2), a Project Joint Council or Local Forum (Stage 3), and finally an NJC Dispute Adjudication Panel (Stage 4) — whose finding is final and binding on both parties under the NAECI's collective procedure framework (TULRCA 1992, s.179).
Frequently Asked Questions
Q: What does the ~6% 2026 pay award mean for my weekly earnings?
A: Applied to a Grade 4 Craft worker on National Guaranteed Rates, the increase raises the basic hourly rate from £19.04 to ~£20.18. Over a standard 38-hour week, that is approximately £767 per week in basic pay before overtime, bonuses and allowances. On a Category 1 major project the equivalent rises to ~£22.82/hr, or ~£867/week basic.
Q: How do I qualify as a Grade 4 Craft worker?
A: You must hold a VQ Level 3 qualification (or RQF Diploma Level 3/SCQF Level 6–7 equivalent), typically earned through an ECITB Apprenticeship or Technical Training programme, and have at least two years' experience at Grade 3 level. Your employer assesses competence using the ACE (Assuring Competence in Engineering Construction) scheme. Non-UK qualifications are assessed on a substantial equivalence basis.
Q: Does the accommodation allowance affect my tax position?
A: The daily accommodation allowance (£50.81/day from January 2025, rising with the 2026 settlement) is partially payable tax-free under longstanding HMRC concessions that apply specifically to NAECI-registered work. The taxable and tax-free elements are set out in the rates tables issued by NJC Communiqué. Workers on sites inside the M25 also receive a taxable London supplement of £30.40/day.
Q: I was selected for redundancy — what are my rights?
A: First, request the selection matrix and criteria in writing from your employer. Where 20 or more redundancies are involved, collective consultation must have occurred with Unite or the GMB (TULRCA 1992). You have a right to a domestic appeal. If unresolved, your union representative can refer the case to Stage 2 of the NAECI procedure and, if necessary, to an NJC Dismissal Arbitration Panel, which issues a final binding decision. Contact your Unite or GMB officer immediately for representation.
Q: Can I be required to work on Saturdays and Sundays?
A: Yes — undertaking overtime and shift working as required by management is an obligation of NAECI employment. However, overtime worked on Saturday mornings (up to 4 hours before noon) is paid at the higher Overtime Rate A; all other weekend overtime is paid at the even higher Overtime Rate B. Your employer must consult trade union representatives where regular overtime is required on a programme basis.
Q: What happens to my holiday pay if I have worked a lot of overtime?
A: Under the Euroleave holiday pay calculation (which applies to 20 of your 25 annual days), holiday pay reflects your actual average earnings over the previous 52 weeks — including overtime pay, shift premiums, incentive bonus and welding proficiency payments. This is an enhanced right above the statutory minimum and reflects the requirements of WTR 1998 as interpreted by UK case law.
Related Tool
Interactive Calculator Use our NAECI 2025–2026 Pay & Rights Calculator to estimate your pay, redundancy entitlement, annual leave and pension under this agreement.
This guide is for general information only and does not constitute legal advice. For advice specific to your situation, consult your union representative or a qualified employment solicitor.
