Expanding your business internationally and hiring employees in new countries is an exciting step in your business journey. While you’ll likely be researching the new market to understand their spending interest in your product, it’s equally necessary to familiarise yourself with the local culture, business practices, and any differences in operation.
It’s important to acknowledge the differing perspectives and practices you’ll likely come in contact with, and not just assume you’ll be able to use your same business practices in the new location.
While the UK and US are relatively similar culturally, there are some distinct differences between their working cultures. US employers should familiarise themselves with these differences when hiring UK employees.
What to Consider When Hiring a Remote Worker in the UK
The average amount of hours that a US full-time employee works are slightly higher than the average UK employee, with a UK employee averaging 42.7 hours. In contrast, an American employee will average around 47. A US employer should be aware that an employee not adhering to the standard US hours will not necessarily be a reflection of a poor working attitude. It will more likely be a reflection of the UK culture.
A US employer should also try to understand that in a day-to-day context, UK employees are generally allowed more breaks than a US employee. The British adhere proudly to the idea of a good tea break, whereas US employees are more likely to work through a full day without taking much rest. More importantly, the UK legislates at least four weeks paid time off. However, in the US, there is an expectation that employees forgo any holidays (if employers provide with any) to show commitment to the company. A US employer shouldn’t expect their UK employee to show commitment to the company by forgoing annual leave. Not only is it a legislative requirement, but it is simply not in British working culture to sacrifice any holidays, work beyond office hours, or even go into the office to work extra on the weekends.
Outside of work, UK employees tend to be more social amongst each other than in the US. Pub culture and happy hours are very popular in the UK. A US employer need not worry about employees socializing in this manner, as this form of camaraderie between employees outside of work is not unusual, even arguably the norm.
What is the time difference between the UK and the East Coast USA? West Coast USA?
London is 5 hours ahead of the East Coast in the US and 8 hours ahead of the West Coast.
How is this commonly dealt with?
Generally, there is a reasonable cross-over between the US East Coast and the UK as 2 pm in London is 9 am on the East Coast. It is slightly harder to find times to communicate from the West Coast as 5 pm in London will be 9 am on the West Coast. Communication is still possible, but meetings will need to be planned in advance as many people finish work by 5 pm in the UK.
What are the typical working hours in the UK?
Many employees work around 40 hours a week, Monday to Friday, starting at 9 am and finishing the day at 5 pm. In the United Kingdom, one cannot work more than 48 hours on average per week. However, an employer can average this over 17 weeks, so it’s not strictly set. An employee may also choose to work more hours if they opt-out of the 48-hour working week.
Regular working hours are the hours prescribed in the employment contract, and over time will be any time worked beyond these hours. Employers are not required to pay employees for overtime work, but some employers may be inclined to give ‘time off in lieu’ instead of paying it if they choose to do so.
At Shield GEO, our UK employees enjoy the benefits that come with a flexible work arrangement. By blending both the social UK work style and the reduction of long hours in the workplace, employees working remotely enjoy a healthier work-life balance with more freedom, instead of worrying about heading into work on time or staying back for long hours on end.
How do you recruit employees in the UK for a US company?
Recruiting is typically done through advertising on websites and using recruiters. There are a lot of different sites, including many catering to particular industries or job titles. Similarly, there are recruiters specialized in general recruitment, specific industries and roles.
How do you interview remote workers in the UK for a US company?
You can run the entire recruitment process, including interviews online through video or phone applications. Though the US is more video-friendly than the UK, due to Covid-19, using video is likely more normalized for both countries. A phone call is very common, and checking references is a standard part of the process.
Are UK CVs different from American resumes?
UK CVs are much longer and more detailed than US CVs. Most UK CVs will include the entire job history and have sections on interests, technical skills and education going back to high school.
Keep in mind that as there is American English and British English, a lot of words are spelled differently in the UK. Hence, a CV will not necessarily be an indication of a UK applicant’s spelling and attention to detail.
Is making an offer to an employee in the UK different from hiring in the USA?
In the US, there is not much paperwork involved in offering jobs, and similarly, physical documentation isn’t necessary for the UK. However, an employment contract must include all the details of employment, and it must be signed. Employees must finalize this document by the time the employee starts work.
How to Pay Remote Employees in the UK
Do UK employees get paid differently than US employees?
UK payroll operates similarly to the USA where employers deduct all tax and social security (known as National Insurance) in the payroll and then transfer the net salary to the employee at the end of the month.
How often do UK employees get paid?
Most UK employees are paid every month. An employer will be able to dictate the frequency of payment in the employment contract to what their business prefers. Whereas in the USA, salaried employees are usually paid a fixed amount on a weekly or bi-weekly basis.
Shield GEO prefers to pay UK employees monthly.
What are some common benefits that US companies offer remote employees in the UK?
Remote work inherently provides many benefits, including increased productivity, shorter (if any) commute times, flexible work scheduling, and more savings for the employer and employee. Many foreign employers provide additional allowances to their employees such as payment of business expenses, internet and telecom allowances, and the ability to work from a co-working space if so desired. Employers commonly pay a stipend for reasonable expenses such as travel where necessary.
A UK Pension is a statutory benefit offered to all employees. It’s called the Workplace Pension. Some employers choose to provide a higher pension rate than the statutory minimum as a way to attract and retain their staff.
Private health insurance is less commonly offered but still an attractive benefit. The cost of private health insurance is much less than the equivalent cost in the USA because of the existence of the National Health Service (NHS). Part of the National insurance contributions goes towards funding the NHS, which provides free medical care to all British citizens.
Can US companies pay a stipend to UK employees for expenses?
At Shield GEO, we provide our remote employees in the UK with a health and wellbeing allowance. We also provide our employees with a stipend for their internet expenses and the ability to work from a co-working space, if so desired.
How is work equipment provided to remote employees in the UK?
Employers also commonly provide a stipend to remote employees for work equipment such as a laptop and other peripherals. Some employees in the UK are allowed to choose their own equipment as well, provided their employer’s approval. In this case, employers can provide a stipend up to a certain amount or pay the full amount. Employers must remember to take note that some electronics are expensive to buy locally, and some items may be difficult to ship to new employees due to customs.
At Shield GEO, we ensure our UK remote employees have the correct equipment to complete their day-to-day tasks efficiently. We provide our employees with a laptop, keyboard and mouse, and a headset for conferencing. At our employee’s primary place of work, we also provide a monitor, desk, ergonomic chair, and desk lamp.
Can employers pay remote workers in the UK in USD?
No, because employees and employers must contribute to local taxes that are all naturally in Pounds Sterling. Thus an Employees salary should be fixed in GBP.
When paying a remote employee in Pounds Sterling, the cost of USD will fluctuate as the foreign exchange rate changes. This means employers cannot control the cost of USD.
If an employer wishes to safeguard against a large amount of movement in the exchange rate, they could fix the salary in GBP and then benchmark it against USD. Effectively monitoring for any discrepancies that could be made up later in a “variable fx bonus.”
For more information, please read the related FAQ: Can we set the local salary in foreign currency?
UK Payslip Explained
An employer must provide their UK employee with a payslip, but can choose whether they are printed or electronic.
A standard UK payslip must show earnings before and after any deductions, the amount of any deductions that may change and the number of hours worked if the employee’s pay varies depending on the time worked. If there are any other deductions, this must be explained by the employer either on a payslip or in a separate written statement.
Employers will typically have to operate PAYE, which is the UK system to collect Income Tax and National Insurance. The employer will have to pay HR Revenue and Customs the tax they deduct from the employee, usually every month. The payslip will also often show the employee’s National Insurance Contribution (which is different from the Employer’s National Insurance and explained further in the Social Security section).
The payslip will also include the pension contribution, tax withholding, and how much time off an employee has accrued.
Find more information on the UK Government website.
How much paid time off do remote employees in the UK get?
Employees have a statutory right to a minimum of four weeks’ annual paid holiday, which equates to 20 days per year. In the first year, this leave accrues on a pro-rata basis. This annual leave does not include eight days of public holiday, which means UK employees have a total of 28 paid days off per year. It is up to the employer whether an employee can carry over any unused leave to the next year as this is not statutory.
An exception to this is when employees in the UK are unable to take their leave because of having to take time off for different reasons, such as maternity or sick leave. In this situation, they are legally allowed to carry some or all of the untaken leave into the next year. If an employee cannot take their annual leave due to having taken sick leave, their undertaken annual leave can be carried for up to 18 months from the end of the leave year in which the leave arises.
Generally, employees need to take all leave within the year of employment. Unused leave will expire, but the employment contract may prescribe otherwise.
Can we offer unlimited PTO in the UK?
Most UK employees already consume more leave than their US counterparts. And while an unlimited leave policy can work, it cannot be untracked leave. Because the statutory minimum leave is 20 days, an unlimited PTO policy is just providing for employees to take more than 20 days per year. Regardless of whether an unlimited PTO policy is in place or not, an employee must be paid out for any unused annual leave when their employment ends. Hence UK employers must track annual leave consumption.
Does a US company have to track annual leave?
The US company should track annual leave, as all unused accrued annual leave is paid out at the time of termination regardless of what the reason for termination is. This does not apply if there is a transfer of employment as the unused accrued annual leave will be transferred over under TUPE (Transfer of Undertakings Regulations). TUPE is the relevant regulation a US employer must refer to when an employee moves on to a new employer.
What are the sick leave entitlements in the UK?
The UK has a Statutory Sick Pay Scheme (SSP) that the US company must abide by. This scheme applies to UK employees who earn over a minimum limit. The main rule an employer should know is that the employee does not start getting SSP until after the first three days of absence and receive SSP for a maximum of 28 weeks. This payment is £95.85 per week. The employee must provide evidence of sickness (e.g. a doctors certificate).
If the employee is off work for seven days consecutively, (including non-working days), then they must supply a “fit note” from a doctor which states that they can return to their duties.
What are the national public holidays in the UK?
US employers should adhere to the public holidays in the UK.
In 2020 and 2021, the public holidays are:
New Years’ Day
Wednesday 1st January
Friday 1st January
Friday 10th April
Friday 2nd April
Monday 13th April
Monday 5th April
Early May Bank Holiday
Friday 8th May
Monday 3rd May
Spring Bank Holiday
Monday 25th May
Monday 3st May
Summer Bank Holiday
Monday 31st August
Monday 3th0 August
Friday 25th December
Monday 27th December (in lieu)
Monday 28th December
Tuesday 28th December (in lieu)
What happens if my employee works on a UK public holiday?
If your UK employee works on a public holiday, you are generally not required to pay them more loading. There is no statutory right to extra pay unless stated in the employee’s employment contract. As long as they have 28 days minimum where they don’t work a year, whether it is public holidays or annual leave, you will remain compliant. However, your UK employee would likely prefer to take UK holidays over US ones.
At Shield, our UK employees take all UK public holidays.
Social Security in the UK
Does the US company have to pay social security? What does it cover?
Yes, the employer does have to pay social security in the form of National Insurance contributions and a statutory Workplace Pension contribution. For the tax year 2020-21, employers must pay a 13.8% Employers National Insurance (ER NI) on any salary above GBP 702 per month. The salary includes allowances. The Employer’s Workplace Pension contribution is 3%.
ER NI pays for the UK social security services such as the National Health Service, state pension, unemployment benefits, maternity allowances, and disability payments.
Does the employee have to pay social security? What does it cover?
Yes, employees have to pay Employee National Insurance (EE NI), the rates of which are listed here and differ by category and earnings caps.
EE NI pays for the UK social security services such as the National Health Service, state pension, unemployment benefits, maternity allowances and disability payments. Sometimes an employee needs to demonstrate making EE NI contributions in order to access social services.
How does pension work in the UK?
In the UK there are two types of pension.
- The Workplace Pension Scheme is a statutory requirement and must be provided through the payroll. The difference between this and a 401k is that every employer must offer the Workplace Pension. The employee can choose to opt-out but cannot be influenced by the employer in making this decision. It is very rare for employees to opt-out.
The employer chooses a pension scheme for employees to auto-enroll. The employee can also choose for their pension contributions to go into a different pension scheme that the employee nominates.
Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it, known as auto-enrolment. Auto-enrolment legislation under Workplace Pension regulations. The employer can delay enrolment for up to three months. GEO employees will be automatically postponed for three months.
When they have been employed for three months, they will be automatically enrolled, and they have one month to ‘opt-out’ of their workplace pension. Opting out means they are choosing not to get any employer pension contributions at all. We do not recommend opting out. In order to opt-out, they must inform the workplace pension provider directly by phone or email (submitting a form). Assuming they want to ‘opt-in,’ they can opt-in at any point during the three months, or they can do nothing and be automatically enrolled.
The Workplace Pension must total 8% minimum contribution on salary (which includes all salary components such as commissions and bonuses). This 8% is made up of contributions by the employer and employee. The employer must contribute a minimum of 3%, and the employee pays the remaining 5%. If the employer chooses to offer more than 3%, the employee can still pay 5% or reduce their contribution to the delta between the employer contribution and the 8% minimum. (e.g. the employer can pay 6%, and the employee only has to pay 2%).
- Private pension scheme. This method is declining in popularity since the introduction of the compulsory workplace pension scheme.
Find more information in this guide on workplace pension in the UK.
Do UK employees need health insurance? What does it usually cost?
In the UK, there is free healthcare under the National Health Service (NHS). The National Insurance contributions by the employer and employee ensure everyone is covered.
Private healthcare is a fairly common benefit offered to employees. The average cost of private healthcare is about £1,200 per person per year, age-dependent. This is much less than in the USA.
Terminating Remote Employees in the UK
Are there probation periods in the UK?
A US employer does not have to adhere to a probationary period prescribed by law. However, there is an expectation for an employer to provide one. It is typical for the period to last between one to six months. If the employee is moving to a new post internally, the period will usually last for three months. Employees only enjoy protection from unfair dismissal after two years of employment.
Is there ‘at will’ termination in the UK?
If the employee has not given a cause for termination, notice is required. Employees are entitled to a minimum of one week’s notice after working for four weeks. After two years of service, this will increase to two weeks’ notice, with an additional week for each year of service. The maximum amount of weeks’ notice one can accumulate is 12 weeks. A different notice period can be agreed upon mutually, provided that it is more generous than the statutory minimum. US employers should note that it is commonplace for the notice period to be one month once the employee has completed their probation period.
When terminating an employee, the US employer must follow reasonable cause with due procedure. This procedure will vary according to business and the circumstance of dismissal, so we recommend seeking professional or legal advice.
An employer can end employment without notice if ‘payment in lieu of notice’ is included in the employment contract. The US employer will need to pay instead of providing the notice period.
Do US companies have to pay severance in the UK?
In the UK, aside from unpaid benefits (e.g. accrued minimum leave entitlement in lieu), there are no statutory requirements for severance pay except for economic dismissals (e.g. redundancies).
Is it difficult to terminate an employee in the UK?
In comparison to the US, it is harder to terminate in the UK because there is no ‘at will’ termination. While unfair dismissal protections only apply once an employee has completed two years of service, there are still significant regulations about employment termination. It is typically free for an employee to challenge the loss of their employment via an Employment Tribunal. ACAS (Advisory, Conciliation and Arbitration Service) publishes guidelines regarding managing performance, delivering official warnings and implementing performance improvement. US companies should follow these guidelines closely in order to avoid an employment tribunal, especially for terminations relating to employee performance.
Find more information at https://www.acas.org.uk/.
The information in this article is subject to changes in local legislation.