Hire in The United Kingdom
Here’s where you get started with human resources best practices and hiring in The United Kingdom.
British Pound (GBP)
Key Country Facts
The United Kingdom of Great Britain and Northern Ireland (commonly known as the UK) consists of four countries: England, Scotland, Wales and Northern Ireland. In total there are approximately 64 million inhabitants and 53 million of those are in England, making it one of the most densely populated countries in the world.
The island of Great Britain lies off the north west coast of the European mainland. Northern Ireland lies on the north eastern corner of the island of Ireland and it shares a border with the Republic of Ireland.
The UK has a temperate climate, with generally cool temperatures. The prevailing wind is from the southwest and bears frequent spells of mild and wet weather from the Atlantic Ocean mostly affecting the western regions. Similarly, Atlantic currents, warmed by the Gulf Stream, bring mild winters.
As a historical result of the British Empire, British influence can be observed in the language, culture and legal systems of many of its former colonies. This includes Australia, New Zealand, India, Pakistan, Ireland, Canada, the United States and the Commonwealth countries. Inward migration from these and many other countries has also influenced modern British culture. The substantial cultural influence of the UK and its language has led it to a global influence far in excess of its geographical size.
Various forms of Christianity dominate the religious environment in the UK. Regular church attendance has however decreased considerably in the last decades. In a recent survey 53% of respondents indicated “no religion.” Islam and Hinduism make up the majority of the approximately 7% who identified with non-Christian religions.
English is the official language of the UK. Over 90% of UK inhabitants are thought to be English monolingual. Other spoken languages are typically those brought to the UK as a result of immigration. Historically, this includes South Asian languages such as Hindi, Punjabi and Gujarati. More recently, Polish has become the second most spoken language.
United Kingdom HR at a Glance
UK employment law is derived from three main sources:
- Common law (custom and practice and court decisions)
- UK labor law legislation (which has supplemented the common law rules)
- European law
The employee’s agreement to work for the employer and the employer’s agreement to pay the employee for the work forms a contract. However, we would always recommend a compliant written contract. Therefore, there is always a contract between an employee and employer. If there is nothing in writing, a contract still exists.
The following details must all be included in the contract or an accompanying principal statement of written terms:
- Employer’s name and the employee name
- Start date (the day the employee or worker starts work)
- Date that ‘continuous employment’ (working for the same employer without a significant break) started for an employee
- Job title, or a brief description of the job
- Employer’s address and the places or addresses where the employee will work
- Pay, including frequency and when (for example, £1,000 per month, paid on the last Friday of the month)
- Working hours, including which days the employee or worker must work and if and how their hours or days can change
- Holiday and holiday pay, including details of how it is calculated in the event the employee leaves
- Amount of sick leave and pay (if this information is not included in the contract or document, the employer must outline where it can be found)
- Any other paid leave (if this information is not included in the document, the employer must state where to find it)
- Any other benefits, including non-contractual benefits such as childcare vouchers or company car schemes
- The notice period either party must provide before employment ends
- How long the job is expected to last (in the event it is temporary or a fixed term)
- Any probation period, including its conditions and how long it is
- If the employee will work abroad (and any terms that apply)
- Training the employee must complete (including training the employer does not pay for)
The terms of the employment contract may not provide for lesser conditions than any minimum legal entitlements established in employment legislation.
Probation Period / Trial Period
Employment contracts often state the employee will be subject to a trial or probationary period at the start of their employment, during which the employer can take the opportunity to assess the employee’s suitability for the role. While the exact terms of the trial period will be governed by the employment contract, it will typically last three months. The maximum period (including any extension) is six months. During the probationary period, the employee may not be entitled to certain benefits.
Workers’ hours of work are regulated by the Working Time Regulations 1998 (“WTR”). Workers may not work, on average, for more than 48 hours per week (normally calculated over a 17-week reference period). In the UK employers can ask workers to consent, in writing, to opt-out of the 48- hour weekly working limit. However, workers must have the right to cancel their opt-out by up to three months’ notice at any time. The WTR also states an employee’s right to daily, weekly and in-work rest periods. A typical standard white-collar working week will be 37.5 hours.
If employers may want to require their employees to work longer than their normal working hours, they should ensure the employment contract provides for this with an overtime clause. This clause should clarify whether or not the overtime will be paid. Typically overtime rates are 1.5 times the basic rate for weekdays and two times the basic rate for weekends and public holidays.
The European Court of Justice stated in 2019 that companies must implement an objective, reliable and accessible system that allows recording of the daily workday performed by each employee.
Bonus schemes are common and can be either guaranteed under contract or discretionary. Many schemes are a mixture of both, which means that while you have the right to be considered for a bonus, the employer has the final say as to whether to pay out or not. However, employers should take care when exercising the discretionary element of any bonus.
Employees in the UK are entitled to a period of notice to bring the contract to an end unless they have committed an act of gross misconduct. If the employee has not committed an act of gross misconduct the contract will continue until it is brought to an end in accordance with its terms (normally either by giving the required notice or making a payment in lieu of notice if this is provided for in the contract).
For employees without unfair dismissal rights (less than two years’ service) employers can dismiss without a fair reason so long as they do not dismiss on the basis of a discriminatory or automatically unfair reason and they comply with the terms of the contract of employment. It is automatically unfair to dismiss an employee for a wide variety of reasons. This includes dismissing an employee because they have ”blown the whistle” about corporate malpractice, taken advantage of statutory rights to maternity, paternity or parental leave or exercised their right to join or participate in trade union activity (among other things).
Once an employee has two years’ service, they will have rights against unfair dismissal rights and the employer may only dismiss for one of five prescribed legitimate and fair reasons. A fair procedure must also be followed, or the dismissal will be unfair.
Legitimate (fair) reasons to dismiss an employee:
- capability or qualifications
- application of a statutory restriction (for example the employee no longer has a right to work in the UK)
- for “some other substantial reason” (“SOSR”)
SOSR is often, for example, because an employee has refused to agree to a variation in terms and conditions of employment. The courts in the UK apply a narrow interpretation as to whether an employer’s reason constitutes “SOSR”.
An employee enjoys the statutory right to receive a minimum period of notice from the employer once they have been employed for a month, as follows:
- At least one week’s notice (if employed from one month up to two years)
- One week’s notice for each year of employment between two and up to a maximum 12 years.
Redundancy / Severance Pay
Except for redundancy dismissals (in which case, the eligible employee will be entitled to a statutory redundancy payment), there is no statutory entitlement to a severance payment as such. An employee is entitled to notice. It is also common for employees to be paid a sum in lieu of notice, usually equal to the value of pay over the notice period.
Post-Termination Restraints / Restrictive Covenants
A restrictive covenant is a clause intended to protect an employer’s business by restricting the activities of its employees. These are generally enforced once the employment relationship has ended.
Types of Restrictive Covenants:
- Non-compete: This restricts an employee’s ability to work for certain competitors or carry on a competing business for a certain period of time after termination.
- Non-solicitation of customers: This prohibits an employee from soliciting certain clients or customers of their former employer for a certain period of time after termination.
- Non-solicitation of employees: This prohibits an employee from soliciting certain employees of their former employer for a certain period of time after termination.
- Non-dealing: This prohibits an employee from doing business with certain clients or customers of their former employer for a certain period of time after termination.
Restrictive covenants are not automatically valid and enforceable simply because they have been incorporated into a contract of employment. In fact, there is a presumption that restrictive covenants are automatically void for being in restraint of trade and contrary to public policy, unless the employer can show both of the following:
- The employer has a legitimate proprietary interest that is appropriate to protect with the restrictive covenant.
- The protection sought is no more than reasonable having regard to the interests of the parties and the public interest.
Fixed Term Contracts
Fixed-term workers may be contracted to work for a fixed period only or to perform a particular task with the contract terminating at the end of this period or on the completion of the task. Examples are those who are employed specifically to cover for maternity, parental or paternity leave; employees who perform seasonal or casual work (such as agricultural workers and shop assistants amid busy periods); employees hired to cover unusual peaks in demand as in the tourist industry; and employees whose contracts will end on the completion of a specific task such as installing a computer system. There is no requirement for fixed-term contracts to specify the reason why it has been concluded for a fixed-term, although a job title should be included in the contract. This is done to comply with the employer’s statutory requirements on the written statement of particular conditions of employment.
The regulations say that where an employee has been continuously employed on successive fixed-term contracts for four years or more (from July 10, 2002), he or she will automatically receive permanent status.
Tax and Social Security
Personal Income Tax (PIT)
Income tax in the UK is calculated by applying a progressive tax rate to taxable income as follows:
|Band||Taxable Income (GBP)||Tax Rate (%)|
|Personal Allowance||Up to 12,570||0.0|
|Basic Rate||12,571 – 37,700||20.0|
|Higher Rate||37,701 – 150,000||40.0|
|Additional Rate||Over 150,000||45.0|
(NB: Rates valid for England and Wales. The Scottish government set its own rates which are broadly similar)
Employers are obliged to deduct and make tax payments (due from salary income) to the tax authorities on the employees’ behalf.
Some (non-salary) income is exempt from income tax, including:
- Interest and income from many savings and investments, the first £1,000 earned from property rental, the first £30,000 of payments which are compensation for loss of job, most welfare benefits.
|Salary Threshold (£)/year||Employee NI Contributions (Class 1)||Employer NI Contributions|
|12,570 – 50,270||12.0%||13.8%|
|For income >50,270||2.0% on excess||–|
The employer is obligated to make the national Insurance contributions and income tax payments through the PAYE system.
*The above rates serve as a broad guideline. Actual rates charged by GoGlobal will differ.
The apprenticeship levy is a type of tax to support companies in offering apprenticeships, by helping them with developing apprenticeship programmes and providing training. It is a tax paid by employers and stored in a fund which can be accessed to fund apprenticeship training costs.
Employers with an annual payroll of more than £3 million have to contribute, which is 0.5% of total payroll paid monthly via PAYE.
Salary payments are normally paid monthly on the last day of the month or a few days before that.
By law, employers must provide employees with a payslip. The payslip must, at a minimum, show:
- Earnings before and after any deductions
- The amount of any deductions that may change each time the employee is paid (e.g. tax and national insurance)
- The number of hours worked (if the pay varies depending on time worked)
Employers must also explain any deductions fixed in amount, for example repayment of a season ticket loan. They can elect to do this either on a payslip or through a separate written statement.
Employees are entitled to a statutory minimum of 5.6 weeks paid annual leave per annum. This holiday entitlement can include public holidays, of which there are currently eight in England and Wales (20 working days + 8 public holidays). In practice employers often offer more than the statutory minimum of 20 days, with 25 or 30 days being quite common.
The statutory minimum of 20 days must be used in the holiday year. Otherwise, they will be lost except under exceptional circumstances such as long-term sickness, pregnancy or maternity leave etc. Other unused contractual paid leave may be carried over but only with the employer’s agreement and approval.
- Employees who are sick for at least four consecutive days (including weekends and public holidays) are entitled to sick leave, which is subject to certain conditions. They will receive statutory sick pay (SSP). The standard weekly rate of SSP is currently £95.85 as of April 2020.
- Many employers offer enhanced rates of sick pay (company sick pay), typically paying full salary for the first two to three weeks at least.
Nursing Care Leave
Unpaid Parental Leave: Eligible employees are entitled to 18 weeks’ unpaid parental leave to care for a child under eighteen. An employee can normally take only four weeks’ parental leave in any one leave year. For short periods of leave ,due to child sickness, many employers offer formal or informal arrangements for paid leave.
Compassionate & Bereavement Leave
- An employee has the right to time off for a funeral if the person who died was a dependent. This includes, for example, their partner or parent. There’s no legal right for this period of time off to be compensated. However, most employers will offer some period of unpaid leave.
- There is no legal right to time off in the case of bereavement of other non-dependant family members. However, regardless of whether an employee has a right to time off, employers are encouraged to be compassionate towards a person’s individual situation.
Maternity & Parental Leave
- Pregnant employees/new mothers are entitled to up to 52 weeks’ maternity leave. An employee’s usual terms and conditions of employment will continue throughout the period of maternity leave however salary is replaced by statutory maternity pay, which amounts to 90% of basic salary for the first six weeks of leave and £156.66 per week (or 90% of average weekly earnings, if less), for a further 33 weeks. Many employers offer enhanced rates of pay during some or all of the maternity leave period (company maternity pay).
- A woman returning to work from leave generally has the right to return to the job in which she was employed before her absence, subject to the duration of her maternity leave.
Paternity leave is available to employees with 26 weeks’ continuous service. Eligible fathers are entitled to take one or two weeks’ paternity leave, which is payable at the rate of £156.66 per week or 90% of average weekly earnings, if less. Again, many employers pay paternity pay at an enhanced rate (company paternity pay).
Shared Parental Leave
Shared parental leave is a flexible system of parental leave that allows mothers to commit to end their maternity leave or pay early. The balance of the maternity leave and pay period is available for either parent to take as shared parental leave. The leave must be taken in the first twelve months of a child’s life but does not have to be taken as a single continuous period. Both parents can be on leave at the same time if they wish.
Up to 52 weeks’ adoption leave is available to one member of an adopting couple. Adoption pay is paid at the same rates as statutory maternity pay. Adoptive parents can opt in to the shared parental leave system if the parent taking adoption leave elects to end their period of leave early.
England and Wales have eight annual public holidays. Scotland and Northern Ireland may additionally have local public holidays. Days are observed on that calendar day and if falling on a weekend.
Benefits to the Employee in The United Kingdom
The UK maintains a comprehensive social security system, funded by general taxation and from National Insurance Contributions. The social security system provides state benefits to cover leave in maternity, paternity, adoption, childcare, disability and carer matters. It also administers retirement pensions. Employers can contractually supplement state benefits. The National Insurance Fund aims to provide subsistence level benefits to all those in need.
Employers carrying on business in the UK are required to have in place employer’s liability insurance against liability for bodily injury or disease sustained by employees and arising out of and in the course of their employment in the UK. Some employers offer employees benefits such as life insurance, permanent health insurance, private medical insurance and company cars.
Other Auto-Enrolment Pension
Employers must ensure workers in the UK – those between the ages of 22 and state pension age and earning a salary of at least GBP 10,000 per annum – are automatically enrolled into a qualifying pension scheme to which the employer must contribute. There are minimum total contributions that have to be made. Currently the total contribution rate is 8%. This includes a minimum for employers of 3% of each employee’s qualifying earnings. Employees have the right to opt out of the scheme but then they are also not eligible for the employer’s contribution.
Some employers may offer employees benefits such as life insurance, permanent health insurance, private medical insurance, company cars, season ticket loans for annual public transport tickets, subsidized gym membership etc.
Flexible Working Requests
Employees with at least 26 weeks’ continuous service are entitled to request to work flexibly (for example, to work on a part-time basis). The employer must consider the request reasonably and within three months of the request being made but is not obliged to agree to it. Originally the right applied only to employees with caring responsibilities but it is now extended to all employees with the relevant length of service (regardless of the reason for wanting to work flexibly).
Visas and Foreign Workers
An individual is eligible to work in the UK and therefore will not need to obtain a work permit if any of the following apply:
- British citizen
- European Economic Area (EEA) citizen
- Swiss national
Due to the UK having left the EU on 31 January 2020, any EU/EEA/Swiss national you (as well as family members) will usually need to apply to the EU Settlement Scheme if they wish to continue living and working in the UK after 30 June 2021. If the application is successful, he or she will get either settled or pre-settled status. Irish nationals maintain their current right to live and work in the UK without further documentation.
If the individual is from outside the European Economic Area (EEA) and Switzerland, they can work in the UK on a short or long-term basis with a work visa. If they have a visitor visa, they cannot take a job in the UK. There are many types of work visas. The visa an individual needs depends upon:
- skills and qualifications
- if there is a job offer and sponsorship
- if they wish to bring family members with them
- what work will be performed (e.g. there are special visas for sporting, charitable or religious work)
- If they are a Commonwealth citizen (they can apply for an Ancestry Visa to work in the UK if they have a British grandparent and meet other eligibility criteria)
The individual should be able to apply for a visa via a British Overseas Mission in his or her own country or at the British Embassy. In order to apply for most work visas, the individual will usually need to gain a job offer with sponsorship from an employer in the UK first. While some organizations have a license to sponsor temporary or permanent employees, not all employers have this ability.
Having a visa does not necessarily mean the individual will automatically be able to work in the UK. He or she may also need to obtain a work permit in order to begin working. If the individual has already found a job in the UK and been accepted to work (or holds a visa but it prohibits them from working) they may need to obtain a work permit. An individual cannot apply for a work permit directly. Their employer in the UK will need to apply on their behalf. The length of the permit will depend on the type of work and the kind of permit granted.
Getting a Tax Number
All employees have to pay tax on income if they come to live in the UK. The employers will deduct income tax directly from the employee’s salary.
Everyone who works in the UK is required to have a National Insurance (NI) Number (also abbreviated NINO). Without one, employers have no way of advising the British Tax Department (HM Revenue and Customs) of the amounts they need to pay as NI contributions for state pension and the social security system. The worker will be charged a potentially substantial emergency tax on their income until they have obtained a NI Number. They can start work without one but will need to apply for one right away.
The National Insurance number is the individual’s own personal account number. It is unique to each individual and stays the same throughout life. It makes sure the National Insurance contributions and taxes paid are properly recorded against the individual’s name. It also acts as a reference number when communicating with the Department for Communities and HM Revenue & Customs (HMRC).
If an individual has the right to work in the UK, they can contact the nearest processing center to make an appointment. They will get a letter from the Department for Work and Pensions (DWP) asking them to come to a National Insurance number interview. This ‘evidence of identity’ interview will usually be one-to-one (unless, for example, an interpreter is needed). They will be asked questions about why they need a National Insurance number, their background and circumstances. The letter will also advise which documents to take to prove identity (originals, not photocopies), such as:
- Passport or identity card
- Residence permit
- Birth certificate
- Marriage certificate
- Driving license
Following the interview, the processing center will write and let the individual know whether their application was successful. If successful, the National Insurance number will be provided. The individual should tell their employer their National Insurance number as soon as they know it.
Public Holidays in 2022
|1.||New Year’s Day (substitute day)||January 3rd|
|2.||Good Friday||April 15th|
|3.||Easter Monday||April 18th|
|4.||Early May Bank Holiday||May 2nd|
|5.||Spring Bank Holiday||June 2nd|
|6.||Platinum Jubilee Bank Holiday||June 3rd|
|7.||Summer Holiday||August 29th|
|8.||Boxing Day||December 26th|
|9.||Christmas Day (substitute day)||December 27th|