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Enforcement and compliance changes

The Fair Work Agency was also established April, bringing together enforcement of key employment rights, including NMW, Statutory Sick Pay and average holiday pay. Whilst still early doors, this is likely to increase scrutiny of payroll compliance and record-keeping, particularly in relation to statutory payments.

What to start preparing for now

Add SSP reform readiness to April 2026 planning, including day-one payment and 80% calculations
Review payroll system logic for SSP eligibility and service-based statutory leave rules
Monitor HMRC and DWP guidance as commencement regulations are published
Prepare employee and manager communications ahead of the changes

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The Employment Rights Act 2025

Statutory Sick Pay reforms

On 6 April 2026, Statutory Sick Pay (SSP) became a day-one employment right. SSP is now payable from the first day of sickness absence, with the three waiting days removed.

At the same time, the Lower Earnings Limit has been removed as a qualifying condition. Employees no longer need to earn above a minimum threshold to be eligible for SSP, extending entitlement to new starters, lower-paid and part-time workers who were previously excluded.

A new SSP calculation also applies. The Average Weekly Earnings is still calculated as normal, but the rate of pay is 80% of AWE or flat rate of SSP – whichever is lower.

Day-one statutory leave rights

The Act also introduced new day-one statutory leave rights. Since April 2026, paternity leave is available from the first day of employment, removing the previous 26-week service requirement. Unpaid parental leave has also become a day-one right, replacing the previous one-year qualifying period.

Collective redundancy

The maximum protective award for failure to consult in collective redundancy situations has also increased from 90 days’ pay to 180 days’ pay.

While not a routine payroll calculation, the change increases potential pay exposure in redundancy cases and reinforces the need for accurate pay data and records where awards are calculated.

The Employment Rights Act 2025 (ERA) received Royal Assent in December 2025.

While many provisions will be introduced in phases across 2026 and 2027, several implemented changes have a direct impact on payroll operations, particularly around Statutory Sick Pay and eligibility for statutory leave.

The most significant payroll changes took effect in April 2026.

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Previously, some of these benefits were only exempt when the employer provided them directly. In other cases, employers had to use voucher schemes or risk the reimbursement being treated as taxable.

The April changes are designed to align the tax treatment, so that reimbursing the employee can be treated in the same way as arranging the benefit directly.

What does this mean for employers?

Where an employee buys a qualifying item, the employer can reimburse the cost without creating an Income Tax or National Insurance charge, as long as the conditions are met.

The same tax treatment applies whether the employer:

Pays the provider directly
Issues a voucher
Reimburses the employee

HMRC says the exemption applies automatically where the legislative conditions are met. Employers do not need to submit claims, seek approval or change their payroll or reporting processes.

What should employers check?

Employers should review how they handle homeworking costs and reimbursed workplace benefits, particularly where hybrid or home-based workers buy items themselves and claim the cost back.

It’s worth checking:

Which expenses employees are allowed to claim
Whether those expenses meet HMRC’s qualifying conditions
How reimbursements are recorded

Whether expenses before and after 6 April 2026 are being treated correctly
Whether managers and employees understand the difference between employee tax relief claims and employer reimbursements

HMRC says eye tests or flu vaccinations provided or reimbursed before 6 April 2026 should be treated under the previous rules. From 6 April 2026, qualifying costs can be reimbursed without PAYE or National Insurance being operated, provided the expenditure meets the relevant conditions.

For employers, the main takeaway is that employee claims for non-reimbursed homeworking expenses have been removed, but employer reimbursements remain possible where the costs qualify. 2026 should be treated under the previous rules.

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Homeworking expense changes

What's changed?

Employees can no longer make a claim directly to HMRC for additional household costs they incur because they’re required to work from home.

Previously, eligible employees could claim based on actual expenditure, with evidence, or at a flat rate of £6 per week without receipts.

However, this doesn’t stop employers reimbursing eligible homeworking costs tax and NIC-free.

HMRC has confirmed that the existing rules allowing employers to reimburse qualifying homeworking costs without deducting Income Tax or National Insurance contributions still apply.

What else changed?

Since 6 April 2026, new Income Tax and National Insurance exemptions also apply where employers reimburse employees for certain work-related costs.

This covers reimbursement for:

Eye tests required for Display Screen Equipment users
Glasses required specifically for Visual Display Unit use
Seasonal flu vaccinations
Certain items used in employment duties, including equipment employees need to work effectively from home

Since 6 April 2026, employees can no longer claim Income Tax relief from HMRC for non-reimbursed homeworking expenses.

That means employees can no longer make a claim directly to HMRC for additional household costs they incur because they’re required to work from home, such as increased utility costs or business telephone calls.

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Day one SSP

A quick reminder of the key changes

From 6 April 2026:

The Lower Earnings Limit requirement was removed, meaning employees no longer need to earn above a minimum threshold to qualify for SSP.
The three waiting days has been abolished, so SSP is payable from the first full day of sickness absence.
SSP is paid at 80% of an employee’s normal weekly earnings or the statutory weekly rate (£123.25), whichever is lower.
The maximum entitlement period of 28 weeks remains unchanged.

Timing of the new rules

The updated SSP rules apply based on when the sickness absence begins.

Absences that started before 6 April 2026 continue under the previous SSP rules.
Absences that started on or after 6 April 2026 must follow the new system.
Absences from 6 April that don’t qualify for payment due to the Lower Earnings Limit may now be covered by new transitional rules, meaning some employees could still receive pay.

This means payroll teams may need to manage different SSP rules at the same time during this transition period.

Statutory Sick Pay changes are now in force, bringing one of the biggest shifts to SSP in years.

From 6 April 2026, eligible employees are entitled to SSP from the first qualifying day of sickness absence, with the waiting period removed and access widened to lower earners.

With the new rules now live, the focus for employers and payroll teams is making sure they’re being applied correctly in practice.

That means checking payroll systems, absence processes, policies, and manager guidance are aligned with the updated SSP requirements.

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Checking your SSP processes

With the changes now in force, employers should check their payroll and absence processes are applying the new SSP rules correctly.

Key areas to review include:

Payroll system setup for the new SSP calculation method
Removal of waiting day rules from absence and payroll processes
Internal sickness absence policies and manager guidance
Employee communications explaining how sick pay now works
Treatment of lower earners under the new 80% calculation

Although the reforms broaden access to SSP, they also introduce a different calculation approach for lower earners. Payroll teams should make sure systems can handle this correctly and that sickness absence data is being captured accurately.

Employers should also confirm their software, policies and internal processes reflect the new rules. This will help reduce errors, avoid employee confusion and make sure SSP is paid correctly from the first qualifying day of sickness absence.

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Day one parental leave changes

Parental Leave (unpaid)

Since 6 April, parents have a day one right to take this leave. Previously the employee needed one year’s service to be eligible.

Even with these reforms, the amount of leave will stay the same:

Up to 18 weeks per child in total
Up to the age of 18 years old
4 weeks a year are available to be typically taken in blocks of 1 week unless otherwise agreed

Paternity Leave

Paternity leave has also become a day one right from 6 April, but you do need to remember that the correct notice must be given.

There are transitional notice periods in place for babies due between 6 April and 25 July 2026. For these parents only, they are only required to give 28 days notice (rather than the normal 15 weeks).

For babies due from 26 July 2026 onwards, standard notice periods apply. Notice periods for adopters and parents who already qualified are unchanged.

There has also been a change to the current rules that stop paternity leave being taken after Shared Parental Leave.

From 6 April the second parent will now be able to take paternity leave during a period of Shared Parental Leave, or after, as long as it is taken before the end of week 52 post-birth.

Within the Employment Rights Act 2025 we see a group of changes around the rules on parental leave.

Some leave now has a ‘day one’ right, but still has certain notice requirements. It's worth pointing out now that these are on leave only, pay still has the same rules on eligibility.

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Bereaved Partners Paternity Leave (BPPL)

This was a very last minute leave that has been brought in this year.

It's being described as a stop gap between current rules and the ERA bereavement reforms that are due in the next few years.

Bereavements covered

Applies where the child’s primary carer dies on or after 6 April 2026.
Primary carer includes:
- Mother (birth cases)
- Primary adopter
- Primary parental order parent (surrogacy cases)

Who's eligible?

Eligibility is broad and treated as a day‑one employment right (no minimum service requirement). BPPL is an unpaid statutory right. Employers may choose to offer pay at their discretion.

The employee must:

Be the bereaved partner, defined as:
- The child’s father, or
- The mother’s spouse or partner, or
- The spouse/partner of the primary adopter, or
- The primary parental order parent in surrogacy arrangements

They must also have the main responsibility for caring for the child following the death and use the leave to care for the child.

Leave

Employees can take up to 52 weeks of Bereaved Partner’s Paternity Leave (BPPL).

This is unpaid
Must usually be taken within 52 weeks of:
- the child’s birth, or
- the child’s placement for adoption

Note: Standard statutory paternity pay rules do not apply to this extended leave.

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P11D reporting

Key deadlines to be aware of

For the 2025 – 26 tax year, the main reporting deadlines are:

July 2026 – Deadline to submit P11D and P11D(b) forms to HMRC
6 July 2026 – Deadline to provide employees with a copy of their P11D
22 July 2026 – Deadline to pay Class 1A National Insurance contributions electronically (or 19 July if paying by post)

Submitting P11Ds

HMRC requires P11D and P11D(b) forms to be submitted online.

You must submit a P11D for each employee who received taxable benefits or expenses that were not processed through payroll.

You must also submit a P11D(b) if:

You have provided benefits to employees
Class 1A National Insurance contributions are due
HMRC has requested that you complete one

Even if you have payrolled some benefits, you may still need to submit a P11D for any benefits that were not included in payroll.

If you provide employees with benefits or expenses that are not payrolled, you must report them to HMRC using P11D forms after the end of the tax year.

For the 2025 – 26 tax year, the deadline for submitting P11D and P11D(b) forms is 6 July 2026.

These forms report the value of benefits provided to employees and the Class 1A National Insurance contributions due on those benefits.

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Missing these deadlines can result in HMRC penalties and interest charges, so it's important to ensure all benefit reporting is completed on time.

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Common errors to avoid

HMRC regularly highlights mistakes in P11D submissions, particularly where benefit values are incorrect or incomplete.

Common issues include:

Incorrect car benefit information
Errors when reporting beneficial loans
Submitting amendments incorrectly after the original forms have been filed

If you need to correct a P11D, you should submit an amended version electronically. HMRC no longer accepts paper amendments.

Preparing for future changes

While P11D reporting remains in place for the 2025 – 26 tax year, the wider landscape for reporting benefits is beginning to change.

As HMRC moves towards mandatory payrolling of most benefits in kind from April 2027, some employers may choose to review how they currently report benefits and consider whether payrolling could simplify their reporting processes in future.

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Data will show where patterns exist, but employee insight can help explain why. Employers should also consider feedback from:

Employee surveys
Staff networks
Exit interviews
Consultation exercises
Menopause-related feedback or support requests

Together this should help employers identify the root causes of inequality, rather than simply confirming that a gender pay gap exists.

2. Choose targeted actions

Actions should be based on the issues identified in the data. For example, if women are under-represented in senior roles, the plan should explain how the organisation will improve progression or remove barriers to promotion.

Employers should choose actions that are realistic, evidence-informed and measurable.

Government guidance is expected to provide recommended actions, but employers should avoid simply picking generic commitments that don’t reflect their own workforce.

Each action will need to be categorised as either:

New or in progress, meaning the employer is starting the action or building on existing work
Embedded, meaning the action is already part of normal working practice

Employers must choose at least two actions that are new or in progress.

3. Write a clear supporting narrative

The action plan should include a narrative explaining what the data shows, what issues have been identified and why the chosen actions have been selected.

This is where employers can show that their plan is purposeful. The narrative should connect the evidence to the action, explaining how each step is expected to make a difference.

The language should be clear and accessible. Employees and members of the public should be able to understand the plan without specialist knowledge.

4. Submit and communicate the plan

Employers should submit their action plan through the online reporting service alongside their annual gender pay gap figures.

Each action will need to be categorised as either:

New or in progress, meaning the employer is starting the action or building on existing work
Embedded, meaning the action is already part of normal working practice

Employers must choose at least two actions that are new or in progress.

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Before submission, the plan should have appropriate internal sign-off, usually from senior leadership. This helps demonstrate that the plan has organisational ownership and isn’t simply a reporting exercise.

Employers should also consider how they communicate the plan internally. Sharing the plan with employees can help build trust and show that the organisation is taking action beyond words.

5. Track progress

Once published, employers should monitor whether actions are being delivered, whether milestones are being met and whether the actions are having the intended impact. This could include reviewing changes in:

Recruitment
Progression and retention
Pay equity
Menopause support

Tracking outcomes helps employers understand what’s working, what needs refining and where further action may be needed.

6. Review the plan

Action plans should be treated as living documents. Employers will be expected to review them regularly and update them where actions are completed, priorities change or new evidence becomes available.

Subject to legislation, employers are expected to review mandatory action plans annually. Current expectations suggest interim progress reviews after years one and two, with a more detailed review in year three.

What should employers do now?

Mandatory action plans aren’t yet in force, but employers should use this time to get their evidence in order. The key next steps are to:

Review your latest gender pay gap data
Gather wider workforce insight
Check existing equality and menopause support initiatives
Identify at least two actions that could be new or in progress
Agree who will own, monitor and review the plan
Prepare for annual review requirements if the proposals become law

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Gender pay gap action plans

What is an action plan?

An action plan is a public document that explains the steps an employer is taking to reduce its gender pay gap and support employees experiencing menopause.

It sits alongside gender pay gap reporting, giving context to the figures and explaining the actions being taken to improve equality across the organisation.

A strong action plan should be evidence-based, transparent and capable of being reviewed over time. We've outlined what a good plan looks like here.

1. Understand the issues

Before choosing actions, employers need to understand what is driving their gender pay gap and where menopause support may be falling short.

Start by reviewing your gender pay gap data, including:

Mean and median pay gaps
Mean and median bonus gaps
The proportion of men and women in each pay quartile

Then look at the wider workforce data behind the figures. This may include:

Recruitment outcomes
Starting salaries
Promotion rates
Part-time working patterns
Performance scores
Flexible working uptake
Retention rates
The representation of men and women at different levels of the organisation

Gender pay gap reporting tells employers where pay inequality exists. An action plan goes one step further by setting out what the organisation's doing about it.

For now, action plans are voluntary for employers with 250 or more employees. However, subject to legislation, they’re expected to become mandatory from spring 2027.

That means employers should start thinking now about how they will develop, publish, monitor and review a meaningful plan.

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What should providers check?

Providers should check whether they fall within the rules, when their registration window opens and whether they already have an Agent Services Account (ASA).

They should also review their anti-money laundering supervision position, as HMRC says advisers must meet certain conditions before registering.

It’s also worth checking which type of HMRC account you hold. An Agent Online Services Account (AOSA) isn’t enough for these registration requirements. If you only have an AOSA, you’ll need to register for an ASA.

For employers using an outsourced payroll provider, there is no need to register simply because you run payroll. But it may be worth checking that your provider understands the new requirements

and is preparing ahead of the deadline.

The main date to note is 18 November 2026. It may feel some way off, but preparing early should help avoid delays or issues interacting with HMRC on behalf of clients.

If you’re a Moorepay customer, please be assured we’re aware of the new registration requirements and will be reviewing what they mean for the services we provide.

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Mandatory tax adviser registration

What’s changing?

HMRC is rolling out a new online registration process as part of its Modernising and Mandating Tax Adviser Registration programme, known as MMTAR.

The aim is to make tax advisers easier to identify, raise standards across the market and create a more consistent process for those who deal with HMRC on behalf of clients.

Businesses that need to register must apply for an Agent Services Account, unless they already have one.

When do payroll providers need to register?

The registration process is being introduced in stages. For businesses that only provide third-party payroll services on behalf of clients, the registration window opens on

18 November 2026 and runs until 18 February 2027.

Providers can continue interacting with HMRC during this three-month window and while HMRC considers their application. If a business already has an Agent Services Account, it doesn’t need to register again. HMRC will contact them through their existing account if more information is needed.

Who's affected?

The rules may apply where a business is paid to interact with HMRC about someone else’s tax affairs. This could include sending returns, submitting documents or contacting HMRC on behalf of clients.

The main thing HMRC is looking at is whether the provider is paid to deal with HMRC on someone else’s behalf, rather than how the provider describes its service.

HMRC is introducing new mandatory registration requirements for tax advisers, and payroll providers may be in scope.

The rules apply to paid advisers who interact with HMRC on behalf of clients. That means third-party payroll providers could need to register, even if we don’t describe our work as tax advice.

For employers running payroll in-house for their own employees, HMRC guidance confirms they don’t need to register under these rules.

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Employment rights reform in Northern Ireland

In 2024, a consultation was launched on a new Employment Rights Bill designed to promote ‘good jobs’ across Northern Ireland.

Responses came from a wide range of employers, unions and other stakeholders, and the Department for the Economy has now confirmed the areas it plans to take forward. The proposals will go before the Northern Ireland Executive, with the aim of introducing a bill to the Assembly in early 2026. If approved, new measures will be rolled out on a phased basis, with the first changes expected from April 2027.

1. Fairer contracts

Banded hours contracts for zero-hours workers who regularly exceed their contracted hours.
Compensation where shifts are cancelled at short notice.
A ban on exclusivity clauses in contracts that don’t guarantee income above the Lower Earnings Limit.

2. Stronger protections

Safeguards against dismissal through ‘Fire and Rehire’ practices, unless employers can prove genuine financial necessity.
Personal liability for employers who fail to notify the department of large-scale redundancies.
Written terms of employment provided to all workers on or before day one.

3. Agency worker rights

Abolition of ‘pay between assignment’ contracts.
A requirement for agencies to provide Key Information Documents to workers.

4. Pay and benefits

Itemised payslips extended to all workers, not just employees.
Holiday pay calculations aligned with Great Britain, moving to a 52-week reference period.
Transparent distribution of tips, with statutory record-keeping and a new Code of Practice.
Support for real living wage adoption through accreditation schemes and a new statutory ‘right to disconnect’ code of practice.

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5. Work–life balance

Flexible working becomes a day-one right, with employees able to make two requests in 12 months.
New entitlements to carer’s leave, neonatal care leave, and enhanced paternity leave.
Extended redundancy protections for pregnant employees and new parents, lasting up to 18 months after birth or adoption.

6. Trade union access and representation

Lower thresholds for workplace recognition requests (from 21 members to 10).
Digital access rights for union representatives and electronic balloting for industrial action.

Greater promotion of collective bargaining, in line with EU minimum wage directives.
Removal of the 12-week limit on protections against dismissal for official strike action.

7. Transparency and consultation

Lower thresholds for Information and Consultation of Employees (ICE) agreements, with requests possible from as few as 10 workers or 2% of staff.
New reporting obligations for whistleblowing bodies (‘prescribed persons’).

What employers need to know

If passed, these reforms will bring employment law in Northern Ireland much closer in line with recent and upcoming changes in Great Britain.

Policies, contracts, and payroll systems will need reviewing and updating well ahead of implementation. While the exact timetable is still subject to Assembly approval, the first changes could take effect in 2027.

If you’d like to learn more about these reforms and what they could mean for employers, you can read the full article here.

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Changes to zero hour contracts

Zero hours contracts have always offered flexibility. But without the right safeguards, they can often leave workers carrying too much of the risk.

That’s why the government is introducing new rights to make work more predictable, fair and secure. The goal is to end ‘one-sided flexibility’. That means giving workers more security over:

The hours they work
The notice they receive for shifts
What happens if shifts are cancelled

These new rights won’t remove flexibility altogether. In fact, workers can choose to stay on a zero hours contract if that suits them, but the default will be shifting towards more predictability. Here's what's changing.

Right to request guaranteed hours

Eligible workers will have to be offered a guaranteed hours contract that reflects the average hours worked over a legislatively defined period.

This is currently expected to be the previous 12 weeks of work. Employers must offer this, but workers can decline and remain on their current arrangement if they prefer.

Right to reasonable notice of shifts

Employers will need to give workers reasonable notice of upcoming shifts. If notice is too short, workers will be able to raise a tribunal claim.

The government will set out what counts as ‘reasonable’, but each case will be considered based on its circumstances.

Right to compensation for cancelled or changed shifts

If a shift is cancelled, shortened or moved at short notice, workers must be compensated.

Again, the exact definitions of ‘short notice’ will be set in upcoming regulations, but the sentiment is that financial risk shouldn’t fall on the worker.

What about agency workers?

The rules will apply slightly differently for agency staff, but key protections will still stand:

Either the agency or the hirer must offer guaranteed hours, the hirer will be obliged by default, but there will be flexibility in certain scenarios
Both are responsible for giving reasonable notice of shifts.

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If shifts are cancelled at short notice, the agency will have to follow the same rules as the employer and compensate the employee.
The Government will consult further on how this works in practice.

Will zero hours contracts still be allowed?

Zero hours contracts aren’t going anywhere. It remains an attractive option for many, especially for those who value flexibility, such as students or carers. Workers can still opt to remain on a zero hours contract.

These reforms are about creating a fairer baseline, not removing flexibility altogether.

What’s next?

The Government will now consult on how to implement these measures. Final regulations will confirm:

What counts as ‘reasonable’ notice.
What compensation looks like for cancelled shifts.
How rights apply across different industries.

The changes are part of the new Employment Rights Bill, but they won’t come into effect until late 2027 according to the governments recently published Employment Rights Bill roadmap.

We’ll keep you updated as things progress and let you know when you need to take action.