We would like to inform you of several important legislative and payroll changes taking effect from April 2026. These updates may impact your payroll processes, employee entitlements, and workforce planning.

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Statutory Sick Pay (SSP) – Key Changes

From April 2026, significant reforms to Statutory Sick Pay will come into effect:

• Expanded Eligibility: All eligible employees will be entitled to SSP regardless of income level.
• New Payment Rate: SSP will be paid at 80% of normal weekly earnings or the uprated weekly flat rate of £123.25, whichever is lower.
• Removal of the Waiting Period: SSP will now be payable from the first full day of sickness absence, rather than from day four.

Employers should review their payroll systems and sickness absence policies to ensure compliance.

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Day-One Employment Rights

Changes to family-related leave entitlements will also take effect:

• Paternity Leave and Unpaid Parental Leave will become available from Day 1 of employment, removing existing qualifying service requirements.

This change will require updates to internal policies and employee handbooks where applicable.

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Launch of the Fair Work Agency

A new Fair Work Agency will be established to consolidate employment rights enforcement into a single body. Further guidance is expected as implementation progresses.

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State Pension Age Increase

From 6 April 2026, the State Pension age will increase from 66 to 67 for both men and women. Employers may wish to consider the potential workforce planning implications of this change.

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Introduction of Student Loan Plan 5

From 6 April 2026, a new student loan repayment plan — Plan 5 — will be introduced.

• Plan 5 will operate in the same way as existing Plans 1, 2, and 4.
• Employers will begin receiving Student Loan Start Notices from HMRC in March 2026 for borrowers entering repayment from April 2026.
• The start notice will clearly state the correct loan and plan type to apply.

Annual repayment thresholds from April 2026 will be:

• Plan 1 — £26,900
• Plan 2 — £29,385
• Plan 4 — £33,795
• Plan 5 — £25,000
• Postgraduate Loan — £21,000

Please ensure payroll systems are updated to reflect these new thresholds and the introduction of Plan 5.

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If you require support reviewing your payroll processes or updating your systems in preparation for these changes, please do not hesitate to contact our payroll team.