Your essential HR & payroll checklist for 2026

As the saying goes, ‘new year, new you’. Yes, we know it’s a phrase that usually belongs in a January gym advert or alongside a soon-to-be-abandoned New Year’s resolution. But for HR and payroll, 2026 really will mark a new beginning.

This year, some of the biggest changes we’ve seen in decades are expected to land as the Employment Rights Bill takes shape, raising expectations around fairness and transparency. Add to that the recent Budget’s impact on pay, tax and employment costs, it’s fair to say HR and payroll teams will have plenty to keep them busy.

We know this can all feel a little overwhelming, so we’ve pulled together a clear view of what your year is likely to look like based on what we know so far. Here’s our essential HR & payroll checklist to help you understand what’s changing when and what’s worth preparing for now.

What’s changing and why it matters

If there’s one theme running throughout HR and payroll in 2026, it’s preparation. We’re starting to see the first phases of major employment law reforms take effect alongside Budget-driven payroll changes that will shape how pay, tax, and employee rights are managed this year. Together, they point to a year where getting the basics right will really matter.

That means:

• Stronger employee rights from day one
• Tighter expectations around payroll accuracy and compliance
• Greater scrutiny on data accuracy and record keeping

For many businesses, the work starts well before anything becomes legally enforceable.

Preparing for the Employment Rights Bill

The Employment Rights Bill marks a major shift in how employee rights are protected in the UK. While the legislation is wide-ranging, several key measures are expected to come into force during 2026.

From April 2026

The first wave of changes focuses on strengthening baseline protections and simplifying access to rights.

Expected changes include:

• Removal of the Lower Earnings Limit and waiting period for Statutory Sick Pay
  Making SSP available to more workers, from day one of sickness absence.
• Day one paternity leave and unpaid parental leave
  Removing qualifying service requirements and changing how early employment rights are handled.
• Stronger whistleblowing protections
  Offering greater safeguards for workers who raise concerns.
• The establishment of the Fair Work Agency
  A new enforcement body bringing together oversight of key employment rights.
• Double the protective award cap for collective redundancy
  Increasing the potential cost of non-compliance where consultation obligations are not met.
• Simplification of the trade union recognition process
  Making it easier for unions to gain formal recognition.

From October 2026

The second phase places stronger emphasis on fairness, transparency and enforcement.

Expected changes include:

• Restrictions on fire and rehire practices
  Increasing the requirement to explore alternatives and consult meaningfully.
• A Fair Pay Agreement for adult social care
  Introducing sector-specific pay standards.
• A new two-tier code for procurement
  Linking fair employment practices to public contracts.
• Tightened rules around tips and gratuities
  Strengthening protections to ensure workers receive tips fairly.
• A duty to inform workers of their trade union rights
  Requiring clearer communication from employers.
• Stronger trade union access rights
  Making it easier for unions to engage with workers.
• A new duty on employers to prevent sexual harassment
  Moving from reactive handling to proactive prevention.
• A ban on third-party harassment
  Extending employer responsibility beyond direct employees.
• Extended time limits for employment tribunal claims
  Giving individuals more time to bring claims.

What you should review now

• Redundancy consultation processes
• Family-friendly and sickness absence policies
• Whistleblowing procedures
• Manager training on early-stage employment decisions
• Dismissal and reorganisation strategies
• Anti-harassment policies and training
• Union engagement processes
• Employee communications and onboarding materials

Payroll changes you can’t afford to overlook

The recently announced Budget has officially set the direction for several payroll changes in 2026. While some updates are routine annual changes, others require payroll teams to review systems and processes to avoid errors or delays.

Key payroll areas to keep an eye on this year include:

• Changes to expenses and benefits processing
  Homeworking tax relief will be withdrawn from April 2026, while certain reimbursed costs, such as eye tests and flu jabs, will become tax and NIC exempt when processed through payroll.
• National Minimum and Living Wage increases
  From April 2026, the National Living Wage will rise to £12.71 per hour, with larger increases for younger workers. It’s worth checking pay structures now, particularly where rates sit close to minimum thresholds.
• Frozen tax and National Insurance thresholds
  With income tax and NIC thresholds remaining frozen, more employees will move into higher tax bands as wages rise. Clear payroll calculations and payslip communication will be essential.
• Student loan repayment changes
  The Plan 2 repayment threshold will increase in April 2026, affecting deductions for a large number of employees.

What to check now

• Payroll systems are updated for new rates and thresholds
• Pay remains compliant with minimum wage rules
• Payroll and HR teams are aligned on expense and benefit processing
• Employee communications are clear and timely

Policies, processes and people readiness

Legislation and payroll rules only work well when people understand them. With several changes affecting employee rights and pay, 2026 is a good year to sense-check how confident your managers and teams really are.

It’s worth reviewing:

• Whether policies reflect how things actually work day to day
• If managers understand their responsibilities under new rules
• How you communicate change without causing unnecessary worry

Clear guidance and consistent processes will make a bigger difference than perfect wording alone.

Are your systems ready for 2026?

Many of the changes coming this year rely on accurate, joined-up data. If information is split across multiple systems or teams, small errors can quickly snowball into major compliance issues. This is especially true when pay, tax and employee rights intersect.

Ask yourself:

• Can your HR and payroll systems talk to each other properly?
• Are employee records, pay data and absence information up to date?
• Can you produce clear audit trails if needed?

If the answer is ‘not quite’, this year is a good time to address it.

Your 2026 HR & payroll checklist

To pull it all together, here’s a simple checklist to start the year strong:

☐ Review contracts and policies ahead of Employment Rights Bill changes

☐ Update probation, dismissal and flexible working processes

☐ Prepare for Statutory Sick Pay reforms, including day one entitlement

☐ Check payroll readiness for Budget-related changes to pay, tax, and deductions

☐ Plan employee communications early

☐ Check systems can support accurate, joined-up reporting

You don’t need to do everything at once, but having a plan in place makes a big difference.

Want to stay ahead of the changes?

Keeping on top of HR and payroll compliance doesn’t have to feel like guesswork. Our HR Compliance Kit and Payroll Compliance Kit are designed to help you navigate change with confidence, giving you:

• Clear guidance on upcoming legislation and key deadlines
• Practical tools and templates you can actually use
• Trusted insight to help you stay compliant as requirements evolve

Whether you’re preparing for employment law reforms, payroll process changes, or both, our Compliance Kits are built to support you throughout the year.