How to hire and pay employees in The United Kingdom
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Before hiring
Before hiring employees in the United Kingdom, one key thing employers should be aware of is the importance of EU data protection. Your legal requirement to keep employees’ personal data secure impacts how employment information is transferred to and from other countries, so make sure you’re informed before making a cross-border hire.
Another thing to be aware of as an employer is when to offer benefits packages like health insurance and pension in the UK. This will help you stay competitive in the market, but it’s not as cut and dry as it is in other countries.
We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in the United Kingdom below.
At a glance
CURRENCY
GBP
OFFICIAL LANGUAGE
ENGLISH
PAYROLL FREQUENCY
MONTHLY
EMPLOYER TAXES
16.80%+
13th / 14th SALARY
N/A
Good to know
- Employees in the United Kingdom only need to provide one week of notice, no matter how long they’ve been employed. An employer, however, must provide one week's notice for up to two years of an employee’s service, and then one more week for every additional year of service.
- Universal free-access to healthcare is provided by the National Health Service (NHS). Employers can also offer private healthcare to provide faster access to non-emergency care and more comprehensive coverage plans.
- Workers are not generally permitted to work more than 48 hours per week. However, workers can opt out of this limit in their contract known as the 'working time directive'.
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Labor laws in
The United Kingdom
Working hours and overtime
Employees in the UK are not generally permitted to work more than 48 hours per week, but they can opt out of this limit in their contract.
Minimum wage
Employment contracts
Employment contracts should be written in English.
There is no law in the United Kingdom determining the length of a probationary period. However, it’s common for a probationary period to last no longer than six months. The probationary period may sometimes be extended, but this should be mentioned in the employment contract.
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Benefits and leave in
The United Kingdom
Vacation time
Employees in the UK are entitled to a minimum 20 days holiday each year (based on a 5 day working week) excluding public holidays. Employers typically provide 25-30 days each year.
Sick leave
Employees who are unable to work due to illness for four or more consecutive days are entitled to receive statutory sick pay (SSP) in the UK. Employees do not receive SSP for the first three days of any sickness absence. SSP is £95.85 per week and is funded by the employer, which may be offered at a higher rate as part of their contract.
Employees are legally required to give their employer proof of sickness with a doctor's note after seven days.
Maternity and paternity leave
Parental leave
All pregnant employees in the United Kingdom are entitled to 52 weeks of leave, but only two weeks are compulsory. Statutory pay is 90% salary for 6 weeks (and then £184.03 per week for the remaining 33 weeks). Employers will typically pay 100% of their employee’s salary for three to six months (or longer).
Statutory pay for paternity leave is £184.03 per week for two weeks. Employers in the UK may pay 100% of an employee’s salary for one to three months. Some employers will offer a paternity pay equal to their maternity pay, and encourage fathers to take time off.
Shared parental leave in the UK legally allows both parents to share the 52 weeks of maternity leave. This can be shared in up to three blocks of leave. The employer must provide Shared Parental Leave, but isn’t obliged to provide payment for the whole period.
Holidays
View a list of recognized public holidays in the United Kingdom here.
Employer tax
Employers are required to contribute a total of 16.80% in taxes on top of an employee’s salary. National insurance contributions are 13.80% and a minimum of 3% goes to a pension fund.
Individual tax
Employees in the UK are taxed 0% to 45% depending on their income bracket. Employees also have to contribute a minimum of 5% of their salary to a pension fund.
Termination in
The United Kingdom
Employees in the UK who are terminated after over one month's service are entitled to receive the above statutory minimum notice period. An employee may be dismissed without any notice period if they commit a serious breach of their employment contract (for example, gross misconduct).
Any employee who has been employed for greater than two years has a right to not be unfairly dismissed. It’s not considered unfair dismissal if the employee was dismissed for: conduct, capability, redundancy, or breach of statutory restrictions, and if the employer can show they acted reasonably in following a fair process (ACAS provides guidance on this).
An employee in the UK can also claim unfair dismissal if dismissed based on protected characteristics such as gender, race, religion, sexuality, political belief, union membership, taking parental leave, etc. If an employee is found to be unfairly dismissed, there is a possible compensatory award capped at one year's salary or £88,519 (whichever is lower).
Any employee who has been continuously employed for over two years is entitled to a statutory redundancy payment (SRP) if he or she is dismissed on grounds of redundancy. SRP is calculated in accordance with a statutory formula based on the employee's age, salary and length of service.
For employment length that is greater one month but less than two years, an employer must provide one week’s notice. For every year of employment after that (up to 12 years), an extra week of notice is required.
An employee in the United Kingdom must only give one week of notice for the full length of their employment.
Employers and employees can agree longer notice periods in their Employment Agreements. Employers in the UK typically provide one to three month notice periods.
Start hiring employees in
The United Kingdom
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While Oyster strives to provide current and accurate information, Oyster makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
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