Payroll & Employment Law Updates – April 2026

Significant payroll and employment law changes are coming into effect on 6 April 2026. These updates will impact payroll processes, employee entitlements, and compliance obligations. The changes will require updates to employee contracts, handbooks and guidelines before 6 April 2026.

1. Statutory Sick Pay (SSP) Overhaul

• No more waiting days – SSP will be paid from day one of sickness, replacing the current system which starts from day four.
• Lower earnings threshold removed – All employees, including those earning below the previous £123/week limit, will now be eligible.
• Payment structure – SSP shall be the lower of 80% of average weekly earnings (AWE) or the flat statutory rate (about £123.25/week).
• Transitional protection – Employees already on SSP before April 2026 will continue at the flat rate until their entitlement ends.

Impacts & Actions:

• Expect increased costs due to broader eligibility and earlier pay start.
• Update absence policies to reflect the removal of waiting days and broadened eligibility.

2. Contracts & Handbooks: Must-Do Updates

• SSP updates – Remove references to waiting days & earnings thresholds; embed new calculation rules.
• Parental leave changes – Incorporate new day-one and bereavement entitlements (see Section 3 below).
• Fair Work Agency (FWA) – Introduce information about this new enforcement body and added compliance obligations.

Recommended steps:

• Run a full audit of handbooks, contracts, and policies.
• Update documents before April deployment.
• Train HR and line managers on the legal updates and new compliance approaches.

3. Paternity & Parental Leave Enhancements

• Immediate day-one entitlement – No 26-week service requirement for:
  • Unpaid parental leave
  • Paternity leave (formerly requiring two years’ service).
• Bereaved partner’s paternity leave – Up to 52 weeks of leave unpaid is available following the loss of a partner before the child’s first birthday.
• Notice periods – Day-one eligible parents can submit leave notices from 18 February 2026; unpaid parental leave remains at 21 days’ notice.
• Statutory Family leave payments – The weekly rate for Maternity, Paternity, Adoption, Shared Parental, Parental Bereavement, Neonatal care and Maternity allowance will increase from £187.18 to £194.32

Impacts & Actions:

• Extend eligibility criteria in employment systems to include new parents from day one.
• Update parental policy language and ensure clarity on notice procedures.
• Brief managers to support employees requesting these entitlements.

4. Fair Work Agency (FWA): New Enforcement Body

• Launch in April 2026 – The FWA consolidates powers across multiple enforcement bodies, including National Minimum Wage, SSP, and holiday pay enforcement.
• Key functions:
  • Workplace inspections and documentary requests
  • Issuing civil penalties for breaches (e.g. underpayment, non-payment of SSP/holiday pay etc)
  • Powers to initiate tribunal proceedings and recover enforcement costs.

Impacts & Actions:

• Risk of audit and penalties increases- especially in pay & holiday calculations.
• Ensure accurate, accessible records for SSP, holiday pay, and payroll processes.
• Prepare teams for possible inspections and documented requests by FWA officers.

Summary of Immediate Next Steps

Closing note

These reforms reflect the Employment Rights Act 2025, effective 6 April 2026, and are aimed at promoting fairness for employees while raising employer obligations. Proactive preparation is key to maintaining compliance and smooth operations.

We are delighted to offer our clients access to employment and HR documents, policies and guidance materials, as well as expert advice.

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