Employment Law

UK Employment Contract

An employment contract is a requirement under UK employment law and must clearly spell out all relevant details of the employment, such as benefits, working hours, remuneration, etc. Salaries and wages need to be displayed and provided in the local currency GBP. The main types of employment contracts in the UK are full-time, part-time, fixed-term and zero-hours (for employees without guaranteed hours).

Fixed Term

Indefinite

UK Working Hours

The legal maximum working time in the UK is 48 hours (averaged over 17 weeks). These can be assigned any way during the week, but almost all office roles are Monday to Friday. Note that employees can also choose to push out this limit. The employer can make the request, but the employee cannot be punished or sanctioned in any way for refusing to accept it.

UK Employment Benefits

The main benefits provided in the UK are through the employer component of National Insurance Contributions, a national social security scheme that requires all employers and employees to contribute to the public healthcare system. In addition to total compensation, the employer's contribution is usually about 14%. There is also a surcharge, called Health and Social Care Levy, which is an additional 1.25%.

Holiday Policy

UK Holiday

Every full-time employee in the UK is entitled to 28 days of fully paid annual leave per year. Public holidays can be included, but employers usually still provide around 20-30 days plus standard public holidays.

UK Sick Leave

If an employee is absent from work for more than 7 days due to illness, a doctor's certificate must be provided as proof. Employers must pay sick pay for up to 28 weeks, starting on the fourth day of consecutive absence, with the statutory sick pay rate of £99.35 per week. Many employers offer more generous sick pay schemes, but minimum legal requirements must be met.

UK Parental Leave

In the UK, women can take 52 weeks of maternity leave, and most workers can take at least two weeks postpartum. The allowance is divided into 26 weeks of "normal" leave and a further 26 weeks of "extra" leave.

Statutory maternity leave pay lasts for 39 weeks. In the first six weeks, this was 90% of average weekly earnings. For the remaining 33 weeks, the weekly amount is 90% the same, or £156.66 (as of 2022).

Partners can apply for one to two weeks of paternity leave (paid). Parental leave can also be shared in the UK if parents wish. This divides up to 50 weeks of leave and 37 weeks of pay between each parent, who can choose to take the leave together or separately.

Employee Severance Pay and Termination of Contracts in the UK

UK employees enjoy a variety of protections, so any employer considering termination should consider relevant anti-dismissal legislation. Employers in the UK are required to give notice when they dismiss an employee. The legal minimum notice period is, if the working period is from 1 month to 2 years, one week's notice should be given in advance; if the working period is from 2 to 12 years, one week's notice should be given in advance every year; if the working period exceeds 12 years, one week's notice should be given in advance. Any further notice should be set out in the employment contract and employers will usually provide one month or more as standard. Some contracts may also provide that payment may be accepted in lieu of notice. In the UK, severance pay is paid to retrenched employees when they have been employed for more than two years. Employees under the age of 22 receive half of one week's salary for each year of service. Those aged 22 to 40 work one full week per year; those aged 41 and over work 1.5 weeks per year. For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. Remoly's UK PEOs can reduce risk for foreign companies and provide guidance along the way.

UK Tax

In the UK, income tax and National Insurance are paid through a pay-as-you-go system, with employers automatically withholding the relevant taxes from employees. Taxes are progressive, so the tax rate varies between 0% and 45% depending on income.

UK Health Insurance

The UK's healthcare system, the National Health Service (NHS), provides almost all healthcare services to citizens and residents. This is covered by the government and National Insurance, so employers are not required to provide separate health insurance. Employers and employees pay National Insurance at rates set by the government based on income. Some organizations do offer private insurance as an added benefit, but it is not required.

Salary and Benefits

UK Compensation Law

The minimum wage in the UK rises regularly. Set different rates for employees and apprentices of different ages:

Welfare Management in the UK

As a foreign employer, setting up a UK benefits administration system can be a complex process, with many different laws and employee protections in place. An effective solution is to outsource your UK benefits administration to Remoly. We'll help you get set up as quickly as possible and in full compliance with the law, so you can focus on rapid, successful expansion.