The United Kingdom (UK) is a sovereign country in Europe comprised of England, Wales, Scotland, and Northern Ireland. The country includes the island of Great Britain, the northeastern part of the island of Ireland, and smaller islands within the British Isles.

The UK has a high-income economy and the world’s 6th-largest GDP. British culture has been influenced by the combined nations' history, its interaction with the cultures of Europe, the traditions of England, Wales, Scotland, & Ireland, and the impact of the British Empire.

Job Title Restrictions

There are no restrictions on job titles that we can hire in the United Kingdom.

Working Hours

Standard working hours in the UK are 40 hours a week, 8 hours per day. The standard work week is from Monday to Friday.

An employee cannot work more than 48 hours a week on average - normally averaged over 17 weeks. This law is sometimes called the working time directive or working time regulations.

An employee can choose to work more by opting out of the 48-hour week.

Minimum Wage

An employee must always receive at least minimum National Minimum Wage of GBP 10.40 per hour (as of April 2023).

The statutory minimum wage is indexed every Tax year, commencing from the 6th of April, but may be indexed in interim budgets by the Chancellor of Exchequer.

Wage Deductions

The employer may withhold or deduct from wages only if the employee has given consent in writing.

After deduction or offsetting, the gross wage may not be less than the statutory minimum wage.

Exceptions to this rule are:

• Already received advances;
• Contributions by voluntary members of the statutory health insurance scheme;
• Asset-based payments made to building societies or other credit institutions;
• Rent for an enterprise or company apartment;
• Premiums for a direct insurance, pension fund or pension fund financed by the employee through deferred compensation;
• Wage and salary sacrifices;
• Fines, garnishment fees, telephone charges and union dues.

Probation Period

A probationary period can be agreed only in the first contract and has a maximum duration of 6 months.

During the probationary period, both the employee and the employer may terminate the employment contract at any time with one week’s notice.

These conditions apply to both fixed-term and permanent contracts.

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Taxes & Local Employment Costs

Employee Taxes

At a basic level, employees pay:

• Income Tax
• National Insurance

Income Tax

• Up to GBP 12,570: 0% (Personal Allowance)
• GBP 12,570 to GBP 37,700: 20%
• GBP 37,701 to GBP 125,140: 40%
• Above GBP 125,140: 45%

Employee National Insurance (Class 1 Primary)

Employees earning more than £242 a week and under the state pension age need to pay National Insurance:

• Category A: GBP 533 to GBP 1,048 PCM: 0%
• Category A: GBP 1,048 to GBP 4,189 PCM: 12%
• Category A: above GBP 4,189 PCM: 2%

The UK government provides a tax and net pay calculator here: https://www.gov.uk/estimate-income-tax.

Employer Taxes & Contributions

Employer National Insurance (Class 1 Secondary)

Employers pay these directly on their employee’s expenses or benefits. Benefits are paid under Class 1B and Expenses / Wages / Salaries are paid under Class 1A.

• Category A: GBP 0 to GBP 758 PCM: 0%
• Category A: above GBP 758.01: 13.8%

Statutory Pension Contributions (Auto-Enrollment)

For every employee aged between 22 and 66 (State Pension Age for 2023) who is earning over GBP 10,000 per year, employers are obliged to enroll the employee into a qualifying pension scheme, with a minimum employer contribution of 3%.

Employer’s Liability Insurance

All employers in the UK must have Employer’s Liability Insurance covering at least GBP 5,000,000, from an authorized provider. RemoFirst covers this.

Apprentice Levy Tax

If the employer’s payroll is above GBP 3,000,000 per year in total, the employer must pay the Apprentice Levy, which is 0.5% of the employee’s salary.

Annual Leave

All workers are legally entitled to 5.6 weeks of paid holiday a year including public holidays which is known as statutory leave entitlement or annual leave.

The statutory minimum leave for workers in the UK is 20 days + public holidays.

Holidays are paid at an average of the basic wage (not including any bonuses, overtime – unless overtime is guaranteed and forms contract, other ad-hoc expenses) over the last 52 weeks of the employee’s earnings.

Sick Leave

A worker may self-certify as ‘sick’ for the first 7 days and any sickness beyond this period requires a Medical Note certified by a General Practitioner (GP).

All sick leave is paid at the statutory rate of £99.35 per week, except the first 3 days of the sickness period which are known as ‘waiting days’ and no payment is made during this time.

A maximum of 28 weeks are paid under Statutory Sick Pay rules. For more information click here.

Maternity Leave

An employee can take up to 52 weeks of maternity leave. The first 26 weeks are under ‘Ordinary Maternity Leave and the last 26 weeks are considered as ‘Additional Maternity Leave’.

An employee must meet the following criteria to qualify for Statutory Maternity Pay (SMP) leave:

• Be on payroll in the qualifying week - the 15th week before the expected week of childbirth.
• Give 4 weeks’ notice before commencement of SMP.
• Provide a Maternity Certificate (MATB1) as a proof of Pregnancy.
• Have been employed continuously for at least 26 weeks up to any day in the qualifying week.
• Earn at least GBP 123 a week before taxes in an 8-week ‘relevant period’.

Statutory Maternity Pay (SMP) for eligible employees can be paid for up to 39 weeks, usually as follows:

• The employee will receive 90% of their average weekly earnings (before taxes) for the first 6 weeks.
• For the remaining 33 weeks, the employee will receive the current rate of GBP 172.48 (for 2023) or 90% of their average earnings (whichever is lower).
• If the employer wishes to make up the difference in pay they may do so.
• During maternity leave, the employee acquires the normal holiday entitlement on the SMP rate.

Paternity Leave

Paternity pay allows the worker to take time off when the partner is having a baby, adopting a child, or having a baby through surrogacy arrangement.

An employee must meet following criteria to qualify for Statutory Paternity Pay (SPP) leave:

• Must be the father, husband, child’s adopter or intended parent.
• Be on payroll in the qualifying week - the 15th week before the expected week of childbirth.
• Give 4 weeks’ notice before commencement of SPP.
• Provides Maternity Certificate (MATB1) as a proof of pregnancy, surrogacy arrangement confirmation or adoption letter within 28 day.
• Have been employed continuously for at least 26 weeks up to any day in the qualifying week.
• Earn at least GBP 123 a week before taxes in an 8-week ‘relevant period’.

An employee will receive 90% of their average weekly or to be paid at SPP rate – current rate is GBP 156.66 or 90% of the average earnings (whichever is lower).

The maximum amount of Statutory Paternity Leave the government pays for under statutory rules is 2 weeks.

Shared Parental Leave

Maternity leave not taken for the unpaid period (39-52 weeks) can be shared with the other parent.

The employer is not required to pay for this as per Maternity leave. However, they cannot refuse parental leave or terminate the employment contract as a result of the leave being taken. This would be considered as an unfair dismissal.

Public Holidays

There are 9 Public Bank Holidays in the UK (in 2023).

For past and upcoming bank holidays, see https://www.gov.uk/bank-holidays.

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Benefits

UK employers can typically offer the following benefits:

• Medical Insurance
• Workplace Pension (mandatory)
• Life Insurance
• Critical Illness Insurance
• Group Income Protection
• Optical
• Dental
• Hearing

Workplace Pension (Mandatory)

For every employee aged between 22 and 66 (State Pension Age for 2023) who is earning over GBP 10,000 per year, employers are obliged to enroll the employee into a qualifying pension scheme, with a minimum employer contribution of 3%.

Notice Period

During the probationary period, no notice is required unless otherwise agreed in the employment contract.

When an employer wishes to terminate an employee, the notice period according to UK Employment law depends on the length of employment:

• 1 month to 2 years of employment: 1 week notice
• 2 years to 12 years of employment: 1 week notice for each completed year.
• Above 12 years of employment: 12 weeks notice

Payment in lieu of notice is possible.

Statutory Payments

Statutory leave may only be paid out at the end of the employment relationship when there is no longer any possibility of taking the remaining leave. Severance pay is only mandatory in the case of termination due to redundancy. The amount of depends on the age of the employee:

• Employees under 22 = 0.5 week of pay for each full year of employment
• Employees aged 22-41 = 1 week of pay for each full year of employment
• Employees aged 41+ = 1.5 week of pay for each full year of employment

Understanding United Kingdom's labor laws can be complex - companies working with talent based in the UK should be mindful of UK's IR35 tax law, which was introduced to prevent tax avoidance by contractors who work through limited or personal services companies.

The law requires contractors who work similar to regular employees to pay the same income tax and National Insurance Contributions (NICs).