On 6 April 2026 paternity leave became a day one right. Section 16 of the Employment Rights Act 2025, commenced by SI 2026/3, removed the 26 weeks' continuous service qualification, so a new father or second parent who started with you last month now has the same entitlement as one who has been with you for a decade.

That is the change. It is worth being precise about what it is not. The rate did not move as part of it, and the two-week length did not move either. Statutory Paternity Pay for 2026-27 is £194.32 a week, or 90% of average weekly earnings if that is lower, for up to two weeks.

About that £3bn

You will have seen a £3bn figure attached to paternity leave. It is worth knowing what it actually measures, because it is not what the headlines imply.

Researchers at the University of Bath's Institute for Policy Research modelled a proposed six-week Paternity Allowance paid at 90% of earnings (Clifton-Sprigg and Hunt, 9 March 2026). Their central estimate was a net benefit to society of about £2.97bn a year. Two things follow from that and both matter.

First, the policy modelled has not been enacted. It is a proposal, and what came into force in April 2026 was the day one right, not a six-week allowance. Second, the £2.97bn is a benefit to society, made up mostly of gains to households and to the exchequer. Within the same modelling, the cost falling on business is about £160m a year. Nobody is handing employers £3bn. If anything, the modelled proposal costs employers money and pays society back elsewhere.

We are flagging this because the figure is being quoted at SMEs as though it were a prize to be claimed. It isn't, and a benefits case built on a misread number does not survive contact with a finance director.

What enhancing it actually costs

The honest way to make this case is arithmetic you can check, not a benchmark you cannot trace. Take an employee on £40,000. That is about £769 a week. Statutory Paternity Pay covers £194.32 of it. Topping those two statutory weeks up to full pay therefore costs you roughly £1,150, plus employer National Insurance at 15% on the additional pay. Adding a further four weeks at full pay costs roughly £3,080 more on the same basis.

That is a real cost and we are not going to dress it up. It is also a good deal smaller than most SME leaders assume when the words "enhanced parental leave" come up, and it is one of the very few areas where a 40-person business can put an identical offer in front of a candidate to the one a 4,000-person business is offering.

The retention case, without the invented numbers

You will find a lot of confident percentages in this space: turnover down 40% with progressive parental leave, two thirds of candidates choosing parental benefits over more salary, replacement costs running to tens of thousands. We went looking for the research behind the common ones. We either could not find it, or found it to be American, or found it measuring something else entirely. So we have left them out, and earlier versions of this article carried several of them, which we should not have done.

What we can point to is CIPD's median cost per hire: £1,500 for most employees and £2,000 for senior managers and directors (CIPD, Resourcing and talent planning report, September 2024, 1,016 UK HR professionals). That figure covers recruitment only. Lost output, handover and the time colleagues spend covering the gap sit on top of it, and most employers never calculate them. Only 31% of UK organisations calculate the cost of employee turnover at all.

Set the arithmetic above against that and the case makes itself without anyone having to invent a multiplier. You do not need a 40% retention claim to justify £1,150.

Getting the communication right

Here is where many SMEs stumble: they enhance paternity benefits and then fail to tell anyone. A progressive policy nobody knows about is a cost with no return. Only 21% of employees say they have a very good understanding of all the health and wellbeing benefits they are offered, against 57% of employers who believe their staff do (Group Risk Development, Opinium survey of 1,212 UK employees and 503 UK HR decision-makers, October 2023).

Start with clarity. Create a simple, one-page guide explaining:

  • Exactly what your paternity benefits include, and that leave is available from day one
  • How to apply, with realistic timelines
  • What support is available during leave
  • How the transition back to work will be managed

Make this information accessible during recruitment, onboarding and annual reviews. Don't wait until someone announces a pregnancy to start these conversations, and don't assume the people who need it will ask.

Consider also how you communicate these policies externally. If you have enhanced beyond the statutory position, that belongs in job advertisements, on your careers page and in recruitment conversations. It is a differentiator, so use it as one.

Implementation without the complexity

Paternity policy is one of the simpler things an SME can change. Unlike group risk arrangements or pension scheme design, there is no underwriting, no scheme documentation and no provider to procure. You are deciding a top-up rate and writing it down.

Start with a pilot. Offer enhanced pay to the next few employees who become fathers or second parents, and track what happens to their return-to-work rate and their tenure afterwards. That gives you your own evidence, on your own workforce, which is worth more than any benchmark we could hand you.

You don't need to match a large technology company's parental package on day one. Two weeks at full pay rather than at the statutory rate is already ahead of where most SMEs sit. You can go further as the business grows.

Where this leaves you

The day one right is now law, so the qualifying-service question is settled and every employer is in the same position on it. What is still a choice is whether you pay the statutory rate or top it up, and whether the people who could use it know it exists.

Those are small decisions with a cost you can calculate in an afternoon. That is a better starting point than a £3bn number that turns out, on inspection, to be measuring something else.