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Employment in United Kingdom

UK employment law may appear complex and confusing. However,  in some ways , there are many similarities to other countries. The following are only guidelines in the broadest sense, and professional legal services are recommended when employing in the UK.

Key points on employment in United Kingdom

There are several key areas to be aware of within the UK’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department.  These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

Hiring in the UK? Here's our latest article on employment in the UK.
  1. Contracts:

    The UK does not require written contracts for employment, but  within two months of starting work, the employee is entitled to a statement of the main terms of employment.

  2. Probation Periods:

    There is no law explicitly limiting probationary period length. However a probationary period and any extension must be “reasonable”. In practice, probationary periods are typically 3 months and not longer than 6 months. However, various protections and benefits such as pension options begin to apply at 3 months regardless of employee status.

  3. Termination Procedures:

  4. Statutory Leave:

    A.  Annual Leave

    Employees have a statutory right to a minimum of four weeks’ annual paid holiday. In the first year this leaves accrues on a pro rata basis.

    B.  Sick Leave

    In the UK there is a statutory sick pay scheme (SSP). Employees earning over a minimum limit are entitled to receive SSP on days they are away due to sickness.

    The main rules of SSP are that the employee does not start getting SSP until after the first 3 days of absence, and receive SSP for a maximum of 28 weeks. The employee must provide evidence of sickness (e.g. a doctor’s certificate).

    C.  Maternity Leave

    All pregnant employees (regardless of length of service) are currently entitled to 26 weeks’ Ordinary Maternity Leave (OML) which can be taken at any time from the 11th week before the expected childbirth.

    Employees who have or will have served at least 26 weeks’ with the employer by the start of the 14th week before birth qualify for Additional Maternity Leave (AML), which provides an additional 26 weeks after the OML.

    Employees who have or will have at least 26 weeks’ service by the 15th week before the birth are entitled to 26 weeks’ Statutory Maternity Pay. The first 6 weeks are paid at 90% of the employee’s normal weekly earnings  while the remaining weeks are paid at a rate set by the Government.

    Employers can recover either 92% or 100%, plus compensation, of SPP paid (depending on the size of the company).

    D.  Paternity Leave

    Employees who are the biological father or the mother’s husband/partner and expect to have responsibility for the child’s upbringing, and have completed 26 weeks’ service by the 15th week before the baby is due, are entitled to two weeks’ paternity leave. This leave must be completed within 56 days of the date of childbirth.

    Employees earning over a weekly lower earnings limit are entitled to Statutory Paternity Pay (SPP), at the same rate as Statutory Maternity Pay.

    Employers can recover either 92% or 100%, plus compensation, of SPP paid (depending on the size of the company).

    E.  Adoption Leave

    An employee with 26 weeks’ service by the week in which they are notified of an adoption are eligible for adoption leave. Employees earning over a weekly lower earnings limit for National Insurance Contributions are entitled to 26 weeks’ paid Ordinary Adoption Leave (OAL). Only one member of a couple who adopt jointly may take adoption leave.

    Statutory Adoption Pay (SAP) is paid at the same rate as Statutory Maternity Pay.

    Employers can recover either 92% or 100% plus compensation of SAP paid (depending on the size of the company).

    F.  Parental Leave

    Parents of either gender with over one year’s service and who have parental responsibility for a child can take up to 13 weeks’ unpaid parental leave per child. For disabled children the period is 18 weeks.

    The right to take parental leave normally ends when the child is 5.

  5. Pensions and Benefits:

    A.  National Insurance

    In the UK a National Insurance Scheme covers a range of funds from pension, to maternity leave and unemployment. There are different classes of National Insurance (NI) depending on the employment status and salary.

    At the lowest class of NI, employees and employers do not contribute anything, however the employee still gains the benefits of NI. From the second class onwards, the employer contributes 13.8% and the employee contributes 12%. The exact or additional can vary depending on a multitude of factors.

    B.  Pension Scheme

    Aside from the National Insurance mentioned above, any employer with 5 or more employees is required to designate a stakeholder pension scheme.   However there is no actual obligation on the employer or employees to join the scheme or contribute. Rather, the employer must simply provide access to one, and the employees may voluntarily opt to join it.  Any such contributions are deducted directly from the Employee’s earnings.

Employee Entitlements

Information Explanation
Working on Sundays ?

Sunday working – for those working in shops as well as betting workers, protection and option to opt-out of work during Sundays.

Disclosure and Confidentiality of Personal Information ?

Employees are protected from disclosure of their personal information by the General Data Protection Regulation (GDPR). Under the GDPR, employers must comply with the following principles when handling the personal data of employees:

  • Process personal data fairly, lawfully and in a transparent manner
  • Obtain data for lawful purposes and refrain from using it in a manner which is incompatible with those purposes
  • Ensure it is accurate, relevant and up to date
  • Ensure it is not kept for longer than necessary
  • Ensure it is kept secure

If a personal data breach occurs that is likely to result in a risk to the rights and freedom of an individual, the employer must inform the Information Commissioner’s Office (ICO) within 72 hours and if the risk is high, also inform the individual concerned.

Employees may lodge complaints to the ICO if they have concerns about an organisation’s information rights practices.

Employee Protection and Anti-discrimination Rights ?

Employees are protected from discrimination in the workplace by the Equality Act 2010, in matters including, but not limited to, dismissal, employment conditions, remuneration, career advancement and recruitment. 

Employers are required to protect employees from discrimination and/or other treatment, by refraining from engaging in discriminatory workplace practices. This can include not hiring someone, selecting a person for redundancy, or paying someone less than another employee, on the basis of a personal characteristic e.g. age, gender or religion.

Time Off Work ?

Almost all employees have a statutory right (conditions apply) to take paid time off work for the following:

  • To carry out duties as a trade union official
  • To carry out duties as a trade union health and safety representative
  • To look for work if faced with redundancy
  • To receive ante-natal care
  • To have a baby, take paternity leave, take adoption leave, take shared parental leave or to ask for flexible working hours

Employment Termination

Information Explanation
Severance / Redundancy Pay ?

The employee is entitled to statutory redundancy pay if they have been working for their employer for 2 or more years. Redundancy pay is equal to:

  • Half a week’s pay for each full year that the employee was under 22
  • One week’s pay for each full year that the employee was 22 or older, and under 41
  • One and a half week’s pay for each full year that the employee was 41 or older

The length of service is capped at 20 years.

The weekly redundancy pay is capped at £508 and the total is capped at £15,240.

The employee is not entitled to redundancy pay if the employer offers them suitable alternative work and the employee refuses it without good reason.

Termination of Employment ?

The process involved in terminating an employment contract depends on the reason for termination and the employee’s length of service.

An employer-initiated termination for gross misconduct requires no notice period. Gross misconduct involves a serious violation of workplace conduct. What constitutes gross misconduct depends on workplace policy and the terms of the employment contract.

An employer-initiated termination for poor performance, misconduct or redundancy requires a notice period, depending on the employee’s length of service.

If an employee seeks to resign on good terms, they are required to submit a resignation letter.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in the UK. For companies which intend to employ their staff directly through their incorporated UK entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in the UK.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into the UK.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in the UK

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in the UK

– the company needs help with tax, employment, immigration and payroll compliance in the UK

Shield GEO can contract directly with the company to employ and payroll their staff in the UK. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

United Kingdom


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