The Employment Rules That Changed This April

This is the second "not a web design post" in two days. If that annoys you, fair enough. But the number of small business owners I have spoken to this week who had no idea about these changes is reason enough to write it.

We covered Making Tax Digital yesterday, which is about how you report your income to HMRC. This one is about how you employ people.

On the 6th of April, a set of changes from the Employment Rights Act 2025 came into effect. If you employ anyone, even one person part-time, you need to know about them. Some cost you money. Some create new obligations. And one of them means a government enforcement body can now turn up at your premises without warning.

Sick pay from day one#

This is the big one for most small employers.

Until the 5th of April, Statutory Sick Pay had a three-day waiting period. An employee got sick, the first three qualifying days were unpaid, and you only started paying SSP from day four. That waiting period is gone. SSP is now payable from the first day of sickness absence.

On top of that, the Lower Earnings Limit has been removed. Previously, employees earning below about £123 a week were not entitled to SSP at all. That threshold no longer exists. Every employee is now eligible, regardless of how little they earn.

The rate is £123.25 per week, or 80% of the employee's average weekly earnings, whichever is lower. For most full-time workers the flat rate applies. For someone working a few hours a week on low pay, the 80% calculation kicks in, meaning they get less than the full rate but they do get something. Before, they got nothing.

What this means in practice: if you have part-time staff, casual workers, or anyone on lower hours, check your payroll setup. Your software provider should have updated the SSP calculation already, but confirm it. If you are still running payroll manually or through a basic spreadsheet, this is the kind of change that trips people up quietly.

The government estimates about 1.3 million additional workers are now eligible for SSP because of these changes. The total additional cost to employers nationally is around £400 million a year. For a small employer the individual cost per absence is modest, but if you are running tight margins and have a few staff off sick in the same month, it adds up in a way it did not before.

New day-one rights#

Two changes here that matter.

Paternity Leave no longer requires 26 weeks of service. From the 6th of April, an employee can take Paternity Leave from their first day in a new job. The old qualifying period of 26 weeks' continuous employment is gone. The notice period has also shortened, from 15 weeks before the expected week of childbirth down to 28 days.

Unpaid Parental Leave is also available from day one. Previously you needed a year of service. Now it is immediate.

If you have just hired someone, or are about to, these rights apply from the moment they start. You do not get a settling-in period any more. This is not necessarily about whether you would have granted the leave anyway. It is about knowing that the legal right now exists from day one, and your contracts and handbook need to reflect that.

The Fair Work Agency#

This is the one that caught the least attention and probably matters most.

On the 7th of April, a new government body called the Fair Work Agency started operating. It sits inside the Department for Business and Trade, and its job is enforcing employment rights. It replaces the patchwork of agencies that used to handle minimum wage complaints, holiday pay disputes, and similar issues.

What is different about the Fair Work Agency is that it does not need to wait for a complaint. It can initiate investigations on its own. It has the power to inspect workplaces and enter premises without prior notice, investigating potential breaches of minimum wage rules, holiday pay, and other employment rights.

The penalties are not symbolic. The agency can issue fines of up to 200% of underpayments, investigate historical breaches going back six years, charge its own enforcement costs to the employer, and publicly name businesses found to be non-compliant.

For most small businesses already paying their staff properly and keeping decent records, this changes nothing about your day-to-day. But it changes the stakes of getting something wrong. A minor payroll error, holiday pay calculated slightly off, minimum wage not properly applied to a younger worker who just turned 21. These are the kinds of things that could now trigger a formal investigation rather than an informal conversation.

Annual leave records#

A smaller change but one that catches people out.

Employers now have a clearer legal obligation to keep accurate records of workers' annual leave for six years. That includes details of holiday pay and any payments in lieu of untaken holiday. Failure to comply can result in criminal fines.

If you are already tracking leave in payroll software, you are probably fine. If you are doing it in your head, or on a whiteboard, or not at all, this is the change that turns a casual approach into an actual compliance risk.

The numbers behind all of this#

The cost pressure is real, and it is coming from several directions at once.

The National Living Wage is now £12.71 an hour, up from £12.21. Employer National Insurance sits at 15% with the secondary threshold frozen at £5,000. The FSB estimates that a small business employing nine staff on the National Living Wage will see annual employment costs rise by about £25,850 between January 2025 and April 2026. That is roughly the cost of hiring another person, except you do not get another person.

The Employment Allowance of £10,500 helps offset some of the NIC burden, and the eligibility cap that used to exclude larger employers has been removed entirely. If you have not checked whether you are claiming it, now would be a good time.

What to do this week#

If you employ anyone at all, here is the short list.

• Check your payroll software handles SSP from day one with no waiting period, and applies the 80% calculation for lower earners. Call your provider and ask them to confirm it.
• Update your employment contracts and staff handbook to reflect the new day-one entitlements for paternity leave and unpaid parental leave. If you do not have a handbook, consider getting one. The Fair Work Agency takes the view that clear written policies are a basic expectation.
• Review your annual leave records. Are they accurate? Are they stored somewhere retrievable? Six years is a long time. A spreadsheet is fine. A vague recollection is not.
• Confirm you are paying the new National Living Wage. £12.71 an hour for anyone 21 and over. If you have employees who recently turned 21, check they have moved to the correct rate.
• Check you are claiming the Employment Allowance. If eligible, that is £10,500 off your employer NIC bill. Eligibility was expanded, so even if you were told you did not qualify before, check again.

An afternoon with your accountant or payroll provider should cover all of this. But it does need doing, and the window for getting it sorted before anyone comes looking has shortened considerably.

The wider picture#

I wrote yesterday about Making Tax Digital and how HMRC is shifting sole traders onto quarterly digital reporting. The theme running through all of this is the same: the bar for running a small business compliantly is being raised, and the enforcement behind it is getting sharper.

That is not meant to be gloomy. Most of these changes are designed to protect workers, and a lot of them are overdue. But the practical reality for a small business owner is that you need to stay on top of the admin side of employing people more carefully than you used to. The era of sorting it out roughly and hoping nobody notices is ending.

The businesses that put an afternoon into this now and get it right will not think about it again for months. The ones that leave it are the ones who end up getting the surprise letter from an enforcement agency they had never heard of.