Jessica O'ConnorEmployers are being warned of a looming “payroll compliance cliff” as a wave of legislative reforms between April 2026 and April 2027 significantly increases regulatory scrutiny and operational complexity.
A recent briefing from workforce management platform Sona, led by Georgina Richards, director of payroll at Sona, and Paul Watson, VP at Sona, outlined sweeping changes that will reshape employer obligations across payroll, scheduling and compliance.
Central to the reforms is the introduction of the Fair Work Agency (FWA), a new self-funded enforcement body with the authority to investigate businesses up to six years.
Employers found to be non-compliant could face penalties of up to 200% of underpayments, capped at £20,000 per worker, alongside public naming and shaming.
At the same time, key employment reforms are increasing the administrative burden on payroll teams.
From April 2026, Statutory Sick Pay becomes a day-one right, with the removal of the £125 per week Lower Earnings Limit and the introduction of a new 80% calculation. This significantly expands eligibility while adding complexity to payroll processing.
Further changes include zero-hours contract reforms, requiring employers to track 12-week working patterns and offer contracts that reflect actual hours worked. Looking ahead, from January 2027, the qualifying period for unfair dismissal is set to fall to six months, with the potential removal of the compensation cap further raising the stakes for employers.
Richards said: “The convergence of these reforms marks a transition from a reactive to a proactive enforcement era.
“Between the removal of SSP thresholds and the new requirement to track 12-week working patterns, the administrative burden on payroll and operations teams is set to skyrocket.
“In this new landscape, any disconnect between scheduling data and payroll records isn’t just an internal inefficiency; it’s a direct regulatory risk that could trigger substantial financial penalties.”
