The UK is an advantageous location for multinational companies looking to expand. The UK offers access to a large and affluent consumer market and is known for its ease of doing business. In addition, its various international** agreements allow companies to easily enter other foreign markets.
In addition, the UK has a well-established legal system, transparent regulation, tax incentives, and a strong financial infrastructure. In fact, London is the world's top fintech hub and one of the world's leading tech startup hubs.
Below, we highlight the basic UK employment laws to consider before entering the country and hiring remote talent there. Plus, learn how to streamline hiring and ensure compliance with the right global partners.
In the UK, employers are not legally obligated to provide employees with a written employment contract.
However, under the law (Employment Rights Act 1996), anyone legally classified as a worker or employee is entitled to a written statement of employment details within two months from the date the employee starts working.
The written statement must include specific terms and conditions of employment, such as the employer and employee's name, job title, pay rate and interval, hours worked, and information about sick pay and paid time off.
The UK allows for many types of employment contracts, and employers have flexibility in structuring the employment relationship. The choice of agreement depends on factors such as the nature of the work, the duration of employment, and the needs of both the employer and the employee.
Common employment contracts in the UK are indefinite, temporary, fixed-term, and zero-hour contracts.
The UK has a comprehensive employment law framework that covers a variety of employee rights such as working hours, minimum wage, statutory benefits, retirement, and leave. We will discuss these in detail below.
Working hours. The Working Time Directive protects employees in the UK. The directive states that an individual may not work more than 7 hours in a 48-day period, including overtime.
Employees may opt out of the 48-hour workweek by documenting this agreement in writing.
National minimum wage.
The minimum wage, or National Living Wage, in the UK varies depending on the age of the employee. From April 2024, the minimum wage rate will change as follows:
National Living Wage for persons aged 21 or over: 11 per hour£44.
National minimum wage for people aged 18 to 20: 8£60.
National minimum wage under 18 years of age: 6£40.
Statutory benefits. Companies hiring in the UK must comply with local employment and labor laws, ensuring compliance with statutory employee benefits. Additionally, they must familiarize themselves with the supplemental benefits that employees typically expect from their employers.
Mandatory employee benefits in the UK include:
National Health Insurance.
Sick pay. Social security.
Pension. Supplemental employee benefits in the UK include:
Private health insurance.
Dental and vision insurance.
Life insurance. Additional retirement benefits.
Probation period. Probationary periods are allowed in the UK and usually last between one and six months. The probationary period is optional and not mandatory.
Pull the plug. The employee or employer may choose to terminate the employment contract by providing statutory notice.
Employees who have completed at least one month of service are entitled to a statutory minimum notice period. The statutory minimum notice period that an employer must communicate to an employee is:
If the probationary period and service period are less than two years, at least one week's notice will be given in advance.
If the length of service is more than two years but less than 12 years, at least one week's notice per year of continuous service.
At least 12 weeks if the length of service is 12 years or more, please note.
In the UK, it is standard practice to give one week's notice (if applicable) during the trial period. After this initial period, the notice period will be extended to one month. After completing the one-month trial period, the notice period will change to three months.
The employer must pay for any unused leave upon termination.
Severance pay. Employees in the UK are not entitled to severance pay other than contractual payments under the employment contract. However, employers who offer severance pay as part of their benefits plan gain a competitive advantage over other recruitment companies.
The only exception is when an employee who has served the same employer for more than two years is terminated due to redundancy. In this case, the following redundancy pay will apply:
Half week's salary for each full year for employees under the age of 22.
Employees over the age of 22 and under the age of 41 are paid one week for each full year.
Employees over the age of 41 are entitled to one and a half weeks' wages for each full year.
The maximum number of years of service applicable to severance pay is 20 years.
Retire. Employees usually receive a state pension to meet their basic needs, albeit in a relatively small amount. Employers must include all eligible workers in the workplace pension plan, including employees who meet the following criteria:
Be between the age of 22 and the age of receiving a state pension.
Earn at least £10,000 per year.
Work in the UK.
Both employers and employees contribute to pensions. Employers contribute at least 3% and employees contribute 5%. Eligible donation income includes:
Salary bonuses
Commissions over time
Statutory sick pay.
Statutory maternity leave, paternity leave, or adoption payments.
Employees can opt out of the pension plan within one month of receiving the pension details provided by the provider. Opting out during this period will result in a refund of the funds paid. After this time frame, the employee can simply terminate their active membership in the program.
There is no mandatory retirement age in the UK. The age at which people are eligible for a state pension is 65 years old (it is expected to be gradually increased to 67 years by 2028).
Employers often choose to contribute more than 3% to employees' pensions** to match employees' contributions of up to 5% to attract and retain top talent.
Leave entitlements. Employment law sets out the right to leave for UK employees, including annual leave and parental leave. Other types of leave that UK employers typically provide to employees include sick leave and bereavement leave.
Statutory annual leave. Employees in the UK are entitled to 20 days of paid annual leave.
Maternity leave. The total amount of statutory maternity leave in the UK is 52 weeks, divided into two parts:
Ordinary maternity leave, 26 weeks.
Additional maternity leave, 26 weeks.
Mothers can take maternity leave as early as 11 weeks before their due date, unless the baby is born prematurely.
Fathers can choose to take one to two weeks of paternity leave for 90% of their average earnings.
Sick leave. There is no law that allows employees to take time off when they are sick, but if an employer refuses to provide it, it is likely to violate any implied terms of trust and confidence.
However, most UK employees are entitled to 28 weeks of sick pay at $109 per week£40. The employer pays this fee.
Other types of leave.
Employees in the UK may also be allowed to take time off to:
Attend prenatal appointments.
Attend an adoption appointment.
Accompany other employees to disciplinary or grievance hearings.
Participate in trade union-related activities.
If facing layoffs, seek other employment opportunities.
Perform the duties of a pension plan trustee or receive training.
Serve as an employee representative.
Receive training or perform the duties of a security representative.
Perform the duties of a member of the European Working Council.
Take care of a family member or dependents in the event of an emergency, on official duty, or on parental leave.
Go on bereavement leave. Coping with the loss of a child or stillbirth.
Data Privacy. Employers doing business in the UK must comply with the Global Data Protection Regulation (GDPR) and the Data Protection Act 2018** to process employee data fairly and lawfully, ensuring clear purpose and strong security.
Employees should receive detailed information about data usage. The transfer of data outside the UK requires an adequate level of protection, with a fine of up to £17.5 million or 4% of annual global turnover imposed by the Information Commissioner for serious breaches of the UK GDPR.
UK employment law protects employees and workers from workplace discrimination, including direct or indirect discrimination and any type of harassment based on protected characteristics, such as age, disability, transsexuality, pregnancy, race, gender, sexual orientation, marital or civil partnership status, religion, or belief.
If the person in question of an employee has protected characteristics, then they will also be protected from certain types of discrimination.
Discrimination at all stages of the employment relationship, including recruitment and post-termination, is prohibited.
There are usually eight public holidays in the UK. However, employers are not required to designate these holidays as non-working days or provide paid time off (unless these bank holidays constitute an overall annual leave entitlement).
UK workers have the right to:
Choose to join or not to join a union.
Leave or retain union members.
Be unionized, even if the union is not a union that negotiates terms, conditions and remuneration with the employer.
Belong to multiple unions.
Employers in the UK must not:
Provide incentives for employees to leave the union.
Threats to abuse employees if they don't quit the union.
Insist that employees join or reject unions.
Insist that employees leave one union and join another.
Dismissal of employees who have or want to become members of a union.
Dismissal of employees who participate in or want to participate in union activities.
Dismissal of employees who do not join or do not want to join a union.
Employees are treated unfavorably because they are unionized.
Giving unfavourable treatment to employees for attending union meetings.
Employees are treated unfavorably because they leave the union.