Payroll Changes: April 2026!
The Good, the bad and the ugly!
Good News first:
- No uplifts in tax codes!
- Only a slight change to the National Insurance contributions: the lower-level limit (LEL is increasing to £129/week).
- Qualifying thresholds for pension auto enrolment will stay the same.
The Bad:
- Minimum wage increase: aged 21+ £12.71, 19-20: £10.85, 16-18 and apprentices in their first year: £8
- Statutory Parenting Pay rates will increase to £194/32. The rate of compensation will increase to 9% (meaning that small employer’s relief will be able to reclaim 109% from HMRC (Yay!)
- A New student loan plan (plan 5) will come into effect in April 2026.
- Employment allowance will remain the same as previous years at £10500.
The Ugly:
- Statutory Sick Pay (SSP) will be eligible from day 1. No more waiting days, the LEL is also being abolished, which means more employees will be eligible for SSP.
- Employees will be eligible to give notice of paternity leave & Unpaid parental leave from day 1 of their employment.
- Changes to Bereaved Partners Paternity leave will be eligible from day 1 of employment. (if the child is under 1 year, or in the 1st year of adoption and the mother or primary adopter has passed, employees may be eligible for up to 52 weeks unpaid leave)
- Trade Union and redundancy changes are happening, more information can be provided on this if required.
*Our payroll system will have all the new updates from April 2026, so should you want/need any further information on any of the topics, please don’t hesitate to contact me.
*We recommend reviewing your employment contracts before April and make sure your employees know about the changes. I can also advise on key points to look at in your contracts.
Contracts:
All employees should have a contract for their job. We have basic contracts which we can provide, however I’m going to run through all the sections of a standard contract so that you can go and review your current contracts in relation to the changes being made starting April 2026.
Basic information: Business name, their name and address, the start date.
Probationary Period: standard is 3 months, make it clear that within that period, if its not working, either party can give a week’s notice to end the contract.
Job Description: standard info.
Medical Fitness: Have a clause, that any medical changes to the employee need to be reported to the employer for health and safety reasons, so that risk assessments can be carried out.
Qualifications: If the job requires qualifications before starting, certificates must be provided and any further learning can be discussed as and when required.
Place of work: a clause to say that the employer’s business address is the normal place of work, however, should the employee be required to work elsewhere, travel costs will be covered by the employer.
Working hours: how many hours a week you want the employee to work. Zero-hour contracts are still ok. However, as an employer if they are on a zero-hour contract, you can’t stop them from having a second job. They will also still be entitled to holidays and SSP etc.
Pay Frequency: This confirms if they’re paid weekly, 4 weekly or monthly. And how they are paid: cash, BACS, cheque.
Overpayments: We highly recommend having this section in the contract to cover you should you accidentally overpay the employee: “The employer has the right to recover any overpayment by deductions from the employee’s salary and payments due. It is in the employees’ best interest to check their payslips regularly”
Holidays: All employees are entitled to holidays. Any accrued holidays need to be used in the year it applies to; however, employers can use their discretion to carry over any holidays to the next year.
Confidentiality: having a clause which protects your business and your customers, meaning that any breaches of confidentiality can be dealt with by disciplinary action.
Other employment: While you can’t stop employees from having other jobs, they need to understand that while at your business, their focus needs to be on you. Some employers have a clause in their contract meaning that employees can’t work for another company in the same field of work.
Intellectual Property: Any processes that are created by the employee while working for the business, are retained by the employer
Sickness: SSP will now become a day 1 right for all employees. SSP will also be paid out from their first sick day. (No more waiting days) Having a clause in your contract about how an employee contracts you about being sick will be key as well.
Pension Scheme: All eligible employees will be entered into an occupation pension, it would be up to them to opt out via the pension scheme, and the employer is not involved.
Notice of Termination: Standard termination is 4 weeks/1 month notice. From both the employer and the employee.
Redundancy: Any employees that are eligible for redundancy will be notified the employers earliest opportunity.
Misconduct leading to summary dismissal without notice: The section covers things that will result in immediate dismissal of the employee: e.g.: theft, physical fighting, failure to carry out instructions, damage, alcohol and drug use, etc.
Rules of conduct: Standard information on health and safety, notifying the employee of any changes, following any rules or procedures set out by the employer.
Disciplinary Action: A clause to say that the employee has the right to appeal any disciplinary action taken by the employer. But before that happens, we recommend having a meeting with the employee regarding the situation, having a neutral party present to support.
Grievances: Covering that if anything happens, the employer will organise a time and date for a meeting, there should be a neutral party present, and that the employee is allowed a support person in the meeting. State a time frame on which a conclusion should be with the employee.
Parental leave: New rules mean that from April, this is a day one right. However, the basics for a contract should have information about Statutory amounts due to the employee. (more information can be provided for this)
Both the employee and employer need to sign and date this contract, then both should keep a copy for reference.
While we do have standard contracts available, we also utilise various support which we should be happy to share with you:
-Acas: online free information from employees and employers point of views.
– Peninsula: HR representatives. They guys are amazing, they’ll review your current contracts and make sure your up to standards. They also help with any legal issues regarding employment.
– gov.uk offers support for employers.
