The statutory working hours for the UK are 9am – 5pm on Monday-Friday.

Overtime is any time worked outside the hours stipulated in the employment contract. Employers are not required to pay workers for overtime. However, the employee’s pay for the total hours worked must not fall below the national minimum wage.

Employees may not be compelled to work for more than 48 hours per week on average (usually over 17 weeks including work-related training, work-related travel and work-related lunches, excluding travel to and from work, and lunch breaks).

By signing a written opt-out agreement, employees can agree to work longer than the 48-hour limit. They may cancel this opt-out agreement whenever they wish as long as they give the employer at least 7 days’ notice.

The public holidays (‘bank holidays’) in the UK for 2019 are:

• New Year’s Day (1 January)
• Good Friday (19 April)
• Easter Monday (22 April)
• Early May Bank Holiday (6 May)
• Summer Bank Holiday (26 August)
• Christmas Day (25 December)
• Boxing Day (26 December)

If a bank holiday falls on a weekend, a ‘substitute’ weekday becomes a bank holiday, normally the following Monday.

Paid leave does not have to be given on public holidays. They may be included as part of the employer’s statutory annual leave.

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

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.

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.

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

All full-time employees are entitled to at least 28 days’ paid annual leave per year. The equivalent is 5.6 weeks of holiday. Bank (public) holidays may be included as part of statutory annual leave.

Part-time employees are also entitled to 5.6 weeks of paid holiday, but the number of days is fewer than 28 because they work fewer hours per week.

Employees working irregular hours e.g. shift workers need to calculate their leave entitlement for irregular hours, which may be done here.

Whether the employee’s annual leave expires in the year it is accrued, is at the employer’s discretion. If the employee agrees, unused annual leave may be carried over the next year. 

Annual leave must be carried over into the next year if (i) illness prevents the employee from taking annual leave or (ii) the employer has agreed to it in the employment contract.

If an employee is unable to take annual leave because they are taking time off for different reasons e.g. maternity or sick leave, they may carry over some or all of the untaken leave into the next year. An employer must allow an employee to carry over a maximum of 4 weeks if the employee is absent due to sickness and unable to take their leave.

If the employee chooses not to take annual leave during sick leave, they may carry forward the untaken leave for up to 18 months from the end of the year in which the leave arises.

As soon as possible

Generally, all leave is to be taken within the year of employment. It may be paid out (or carried over into the next year) if this is provided for in the employment contract. However in this case, it must be clear that the employee has been encouraged to use their annual leave. Paying out annual leave cannot be used as an incentive for the employee not to take it.

Accrued annual leave is not paid to the employee (see above). Anything above the statutory entitlement of 5.6 weeks may be paid to the employee is this has been stated in the contract.

It is possible to transfer pre-existing annual leave to a new employer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE Regulations).

All unused accrued annual leave is paid out upon termination (unless it is transferred to the employee’s new employment).

The employee may take negative annual leave. 

In the UK, employees are entitled to Statutory Sick Pay (SSP).

Employees may receive £92.05 per week for illness-related absence from work. To qualify, the employee must have been off work sick for at least 4 days in a row (including non-working days). The first 3 days are ‘waiting days’ and are unpaid, unless the employee has already received SSP within the last 8 weeks and that included a 3-day waiting period. SSP may be paid for up to 28 weeks. 

The statutory amount stipulated above is a minimum, and the employee may be entitled to more based on the terms of their employment contract.

Statutory Maternity Leave is 52 weeks and is made up of Ordinary Maternity Leave (first 26 weeks) and Additional Maternity Leave (last 26 weeks). Employees must take 2 weeks’ leave after childbirth.

The earliest day for commencing leave is 11 weeks before the expected week of childbirth. Otherwise, leave will begin on the day after childbirth or if the employee is absent from work due to a pregnancy-related illness in the 4 weeks before the week that the baby is due. A week is Sunday to Saturday.

8 weeks’ notice must be given to the employer if the employee wishes to change the date on which they return to work.

Statutory Maternity Pay

Statutory Maternity Pay (SMP) is paid for up to 39 weeks and is equivalent to:

• 90% of the employee’s average before-tax weekly earnings for the first 6 weeks
• The lower of £145.18 or 90% of the employee’s average weekly earnings for the next 33 weeks

Tax and National Insurance are deducted from SMP.

SMP commences on the day maternity leave is taken or when the employee is absent from work due to a pregnancy-related illness in the 4 weeks before the week of expected childbirth.

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.

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.

Termination during the probation period generally requires 1 week of notice.

For employer-initiated termination on the ground of gross misconduct, no notice period is required.

For employer-initiated termination on the grounds of redundancy, poor performance or misconduct, the notice periods are:

• At least 1 week’s notice if employed between 1 month and 2 years
• 1 week’s notice for each year if employed between 2 and 12 years
• 12 weeks’ notice if employed for 12 years or more

Under limited circumstances, termination is effective immediately.

The employee is required to give a minimum of 1 week’s notice after working for 1 month. 

It is common for an employment contract to require 1 month’s notice.

The notice period may be paid out in lieu.

The length of the probation period is agreed upon between the employer and employee and is typically between 1 and 6 months.

Generally, a probation period is no longer than 6 months. However, there is no legal limit on the length of the probation period.

Every employer in the UK is required to enrol their employees in a pension scheme and make contributions. Once the employee has been enrolled for 3 months, they are automatically enrolled and have 1 month to ‘opt-out’ which means they will not receive any employer pension contributions. Contributions start in the 4th month of employment (and are not backdated).

Employers and employees are required to contribute 2% and 3% respectively to the employee’s pension scheme.If the employer contributes more than this minimum amount, the employee can contribute less, as long as the balance of 5% is met.

The pension contribution is calculated based on qualifying earnings. Qualifying earnings are all earnings between GBP6,032 and GBP46,350 for the 2018/19 tax year.

Because contributions are made on a relief at source basis (i.e. they are taken from after-tax earnings), the employee is only required to contribute 80% of the 3%, and the other 20% is claimed from the government by the pension fund. Effectively, the employee is only contributing 2.4% (80% x 3%) of their salary to the pension fund.

Employees are not required to have private pension. They may request that the employer pays contributions into a fund of their own choice.

A remote payroll in the UK is where a foreign company, i.e. a non-resident company, payrolls a resident employee in the UK.  One option for a non-resident company to payroll its employees (local and foreign) in the UK is to use a fully outsourced service like a GEO which will employ and payroll the staff on their behalf.

In some cases, a company will register their business in the UK under one of the forms available, but prefer to have another company administer its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Larger companies with a commitment to the UK may wish to run their own local payroll for all employees, foreign and local.  In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.  There will be a need for in country human resources personnel who have the background needed to manage a UK payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations.  The company will need a local accounting firm and potentially legal counsel to ensure full compliance with UK employment laws.

Companies can outsource the employment and payroll of their staff in the UK to a GEO, like Shield GEO. This is possible for both foreign workers and UK nationals. This is the easiest, fastest and safest way to payroll staff in the UK.

Shield GEO manages all aspects of payroll for workers in the UK including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.