Pay, Statutory Sick Pay (SSP) and umbrella company compliance underwent significant changes in April. This entails greater payroll expenses, broader employee eligibility and greater legal accountability throughout labour supply chains for firms. The solution is easy. Recognise these changes, adapt your procedures and lower risk before it affects your company.
Across the UK, these updates form part of a wider shift in employment legislation aimed at improving worker protection while increasing transparency in pay and tax practices. For employers, however, this also means tighter margins and increased administrative pressure, as well as a growing need for accuracy in payroll and compliance processes. Businesses that fail to adapt quickly may find themselves exposed not only to higher costs but also to regulatory scrutiny.
What changed in April?
Payroll budgets are under more strain as the minimum wage has increased once more. In keeping with a consistent growing trend, the National Living Wage has risen to £12.71. One of the biggest changes has occurred within SSP. Starting on April 6, 2026, SSP is now to be paid on the first day of illness, and more workers are eligible since the lower wage cap has been eliminated. The maximum weekly SSP payment has increased to £123.25, or 80% of the worker’s average earnings, whichever is lower.
Rules for umbrella companies are becoming progressively stricter. If something goes wrong in the supply chain, agencies and end users may now be held accountable for unpaid taxes under new HMRC regulations.
In addition to these headline changes, employers are also seeing increased enforcement activity and guidance updates from HMRC. There is a stronger focus on correct worker classification, accurate payslip reporting and ensuring that all intermediaries in the labour chain are operating compliantly. This means due diligence is no longer optional; it is an essential part of risk management.
The real problems employers face
The change itself is not the problem. It’s the effect. Since more workers are now eligible for SSP, the cost of absences has increased. Day-one pay has increased the cost of short-term illness. Payroll systems quickly grow antiquated. Umbrella company risk shifts back onto the employer.
Errors are frequent. Due to payroll problems, even major UK companies have recently underpaid employees, resulting in fines and reimbursements.
For many businesses, the challenge lies in keeping pace. Legacy payroll systems, outdated absence policies and a lack of visibility across labour supply chains create the perfect conditions for costly mistakes. Even small administrative errors can quickly escalate into compliance breaches under the new rules.
Simple solutions
Reviewing payroll and policies should come first. Verify that the new SSP regulations and pay rates are reflected in the systems. Revise the policies regarding absences. Day-one SSP modifies the way that illness is treated.
Examine your labour supply chain. Verify compliance if your agency partners use umbrella businesses. You may be liable under the new regulations. Budget ahead of time. Employer costs in the UK are predicted to rise due to SSP reforms alone.
It is also worth introducing regular internal audits and working closely with trusted recruitment and payroll partners. Clear communication with employees around sick pay entitlement and pay structure can reduce confusion and disputes. Proactive planning now will help prevent reactive, costly fixes later.
PAYE vs umbrella
Paying employees is more important than ever due to stricter HMRC regulations. Umbrella corporations can increase complexity. There are several people seated between you and the employee. This may result in tax liability risk, ambiguous deductions and gaps in compliance. PAYE is easier. A typical payroll model is used to pay employees directly. National Insurance and taxes are unambiguous and completely compliant with HMRC requirements. This reduces risk for employers, with fewer surprises and greater authority. Many companies are switching back to PAYE-only solutions from umbrella models because the end user may now bear accountability.
This shift is becoming increasingly common across industries that rely on temporary or contract workers. Employers are recognising that simplicity and transparency are no longer just preferences; they are safeguards against financial and legal exposure.
How we can help
We assist you in adhering to evolving UK employment regulations. We operate a PAYE-only model. No umbrella companies. No hidden layers. We are a REC corporate member with all the latest recruitment and employment updates.
We review your personnel configuration and identify potential hazards early. We guarantee a transparent and compliant supply of temporary workers for you. We keep things simple so you can concentrate on developing.
Our approach is built around reducing complexity while keeping you fully compliant, giving you confidence in your workforce strategy even as regulations continue to evolve.
These changes are not optional; they affect every employer in the UK. The risk comes from doing nothing. The advantage comes from getting ahead early.
To find out more, contact ACS Staffing Solutions on 01604 704058, email info@acsstaffingsolutions.co.uk or visit our website here.
UK Partnership Director
ACS Staffing Solutions
