Payroll is in the spotlight again with new legislative changes affecting employers. From Statutory Sick Pay reforms and new student loan repayment plans to upcoming changes in the reporting of employee benefits, it’s vital to check that payroll processes are fit for purpose.
Payroll is often viewed as an admin function. Yet it plays a critical role in employee satisfaction and business compliance. Paying employees accurately and on time helps build trust, while mistakes can lead to unnecessary costs, employee frustration and potential compliance issues.
Statutory Sick Pay (SSP) Changes
One of the key developments is the reform of Statutory Sick Pay. From April 2026, SSP is payable from the first qualifying day of sickness, meaning the previous waiting days no longer apply.
This may seem like a small adjustment, but it can have a significant impact on payroll administration and costs. Payroll systems must accurately track the first full qualifying day of absence to ensure payments are calculated correctly.
The changes may be particularly noticeable for businesses employing part-time, casual or variable-hours workers. Previously, an employee who missed a single day of work may simply have lost a day’s pay. Under the revised rules, that same absence could now trigger entitlement to SSP, increasing payroll complexity and employer costs.
Student Loan Updates
Payroll teams also need to be aware that Plan 5 student loans are now embedded in payroll systems. As new employees join the business, it’s important that starter information is checked carefully to ensure the correct student loan plan is applied.
Using the wrong repayment plan can result in incorrect deductions, creating additional administration for both employer and employee.
Preparing for Payrolling Benefits
Looking further ahead, mandatory payrolling of benefits is scheduled to take effect from April 2027. While this may seem some way off, businesses should start considering how benefit information will flow into payroll.
Successful implementation will require timely and accurate data from HR teams, finance departments, benefit providers, medical insurance providers and company vehicle fleet managers. Establishing strong processes now can help avoid last-minute challenges later.
Why a Payroll Review Matters
Payroll legislation evolves regularly, and annual software updates alone are not enough. It’s important to review payroll procedures each year to ensure statutory payments, deductions and benefits are being processed correctly.
Managing payroll updates well helps protect your business from overpayments, underpayments and compliance risks while ensuring employees receive the correct pay every time. For SMEs, a proactive payroll review can save time, reduce risk and provide peace of mind.
If you have employees on a PAYE scheme or need to start paying employees, we can help. Our Payroll Bureau can manage the process for you. Please contact our friendly team to discuss your needs.