How To Hire And Pay Employees In The UK

Emerald Technology's guide to hiring employees in the UK.

CURRENCY

Pound Sterling is the official currency of the UK. Its currency symbol is £, GBP.

CAPITAL CITY

London, the capital of England and the UK, with history stretching back to Roman times.

LANGUAGE

English is the official and national language of the UK and has over 400 million native speakers worldwide.

POPULATION The current population of the UK is 67.22 Million in 2020 based on World bank numbers.
PAYROLL FREQUENCY The payroll frequency in the UK is generally monthly and and weekly for hourly paid workers.
PUBLIC HOLIDAYS the UK has 8 official public holidays. Employers are not required to give paid leave on bank or public holidays.

GROW YOUR TEAM IN THE UK

NO ENTITY, NO PROBLEM

To start growing your team in the UK, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. 

Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.

PROS AND CONS OF HIRING IN THE UK

If you have expansion on your horizon, the UK is a rewarding location to consider. It is recognised as a highly business-friendly location due the number of start-ups and international enterprises here. Expanding to the UK allows for access to the wider region; Wales, Scotland and Northern Ireland giving your business a wider talent pool and customers, not to mention the access to Europe.

The UK is home to some of the most prestigious and top performing universities in the world, which attracts top young talent. The UK offers a largely educated talent pool full of international students, which makes the UK attractive to companies looking to expand.

The UK is also attractive to companies from its long history of immigration which has benefitted the country’s diversity, giving employers access to different skillsets and individuals with different cultures.

However, as the UK is extremely popular for expats, the country has tightened up its visa requirements and process to become stricter to deter illegal immigration, therefore gaining a work permit can be long and challenging.

WHY THE UK IS GOOD FOR REMOTE WORKERS

The UK is one of the most welcoming countries in the world for foreign workers. With a strong economy and a global reputation for excellence, the UK is an attractive destination for talented workers from around the world.

Remote working in the UK is extremely popular, with almost a third of the workforce working from home or on a hybrid model. The UK offers great benefits for remote workers who are legal residents; access to free education and access to the National Health Service at a subsidised cost which is relatively cheaper than other countries. Employees in the UK, including expats are entitled to annual leave, sick leave, and maternity/ paternity leave.

START GROWING YOUR REMOTE WORKFORCE NOW

WORKING TIME AND OVERTIME IN THE UK

The standard working week in the UK is 37.5 hours per week, typically Monday to Friday.

However, this may vary depending on the industry a person works in and also the hours set out in a Contract of Employment.

The UK has a legally mandated maximum 48 hour working week, under the ‘Working Time Regulations’. Employees can choose to opt out if they wish. However, there maybe some exceptions to this according to the industry a person is employed in.

Employees are legally entitled to a rest break of 20 minutes if they work more than 6 hours per day.

ANNUAL LEAVE AND THE UK'S PUBLIC HOLIDAYS

Full-time employees are entitled to a statutory minimum of 28 calendar days’ annual leave per annum (pro rata for part-time employees).

It is up to employers whether public holidays form part of that entitlement. There are usually 8 public holidays, and 2023 dates are listed below.

 

January 2nd: New Years Day 
April 7th: Good Friday 
April 10th: Easter Monday
May 11th: Early May Bank Holiday 
May 29th: Spring Bank Holiday 
August 28th: Summer Bank Holiday
December 25th: Christmas Day
December 26th: Boxing Day 

PROBATION PERIOD IN THE UK

Whilst there is no legal requirement for a probationary period. Employers typically set a probation period of between 3 to 6 months. It is unusual for a probationary period to be over 12 months.

RESIGNATION AND DISMISSAL IN THE UK

An employee may unilaterally terminate their employment by providing written notice to their employer. Notice periods do vary, typically this is one month.

During a probation period this can range from between one week to one month. This will be stated in the contract of employment.

Termination from the employers side can be more difficult unless the employee is within their probation period or first 2 years of service. An employee with less than 2 years of service in theory can be dismissed without the need to demonstrate a fair reason for dismissal, and with no obligation to go through a disciplinary or dismissal process.

However, it is always best practice to follow a fair process in these cases to mitigate any potential risk to the company. Contractual or statutory notice must still be given.

After 2 years an employee has more rights where they are able to make a claim against a company for unfair dismissal. Any dismissal by the company will need to show fair reason and be evidenced with a thorough investigation & disciplinary process taking place.

Dismissal on the grounds of redundancy, conduct or capability for example entail different burdens of proof and notification. In the case of redundancy depending on the length of service any redundancy package can vary.

READY TO HIRE YOUR EMPLOYEES IN THE UK?

CONTRACT OF EMPLOYMENT IN THE UK

Producing a contract of employment in the UK when recruiting is a legal requirement.

Creating a strong employment contract will help pacify any compliance concerns. A contract should always include as a minimum, working hours, days of work, place of work, pay, probationary period, termination of employment, sick pay and procedures, other paid leave such as maternity/paternity, pensions, disciplinary and grievance procedures.

THE UK'S MATERNITY AND PATERNITY LEAVE

Expectant mothers in the UK are entitled to 52 weeks of statutory maternity leave. This is made up of ordinary maternity leave for the first 26 weeks and additional maternity leave for the last 26 weeks. The total 52 weeks do not need to be taken but 2 weeks leave must be taken after the birth. Usually, the earliest maternity leave can start is 11 weeks before the expected due date.

Statutory maternity pay (SMP) is paid for 39 weeks. The first 6 weeks is 90% of average earnings before tax. The next 22 weeks is £156.66 or 90% of average weekly earnings, whichever is the lowest.

Tax and national insurance will be deducted as per normal wages. 

Expectant fathers in the UK are entitled to paternity leave for up to 2 weeks. The leave cannot start before the birth and must end with 56 days of the birth.

Fathers are entitled to statutory paternity pay (SPP) which is £156.66 or 90% of average weekly earnings, whichever is the lowest.

SICKNESS LEAVE IN THE UK

If an employee is unable to attend work due to illness, a fit note also known as a sick note must be provided by a doctor after 7 consecutive days.

Employees are entitled to statutory sick pay (SSP) for 26 weeks at a rate of up to £96.35 per week. It is up to employer to ensure reasonable adjustments are made for disabled employees so as not be disadvantaged when compared to non-disabled employees.

SOCIAL SECURITY IN THE UK

The UK social security system is known as the National Insurance Scheme (NIS). The scheme pays for national health services, statutory sick pay (SSP), statutory maternity pay (SMP), statutory paternity pay (SPP), state pensions and bereavement benefit for example.

This is deducted before any NET payments are made to employees. From July 2022 employees will not pay NI on earnings below £12,570 per year. The NI rate is 13.25% and 3.25% on earnings over £50,000 per year. The employer NI contribution is 15.05%.

HEALTHCARE AND INSURANCE

The UK has the national health service (NHS) for UK residents. This is contributed to via the NHS scheme.

 

For UK visa holders there is a health surcharge, also known as the NHS surcharge payable on most UK visas valid for 6 months or longer. The costs is £624 for a year.

 

Some companies do offer private healthcare to their employees as part of their contract.

Employment of

FOREIGN NATIONALS IN THE UK

All foreign citizens require a work visa to work in the UK It has different types of work visas, which you can discover more about here.
Salary Taxes

MINIMUM WAGE IN THE UK

According to UK law, the salary paid to an employee may not be less than the current minimum wage.

Every April the UK increases minimum wage and living wage rates. From April 2022 the living wage rate will be £9.50 per hour for employees aged over 23 and £9.18 for 21-22 year olds. The living wage is for employees over the age of 23, whilst minimum wage is for those at least of school leaving age. Aged 18-20 the wage is £6.83 per hour.

THE UK'S INCOME TAX

The UK tax year runs from April to March.

Companies need to comply with the Real Time Information System (RTI). This requires all companies to report payroll information to Her Majesty's Revenue and Customs (HMRC) based on a Pay As You Earn (PAYE) on or before the date the employee is paid.

Taxes are deducted from the employees wages before the NET payment is made. Below is a table of tax thresholds for employees.

SALARY PAYMENTS IN THE UK

Salaries are typically paid on a monthly basis for salaried employees and a weekly basis of employees who are hourly paid. However, this can vary. Some companies do also pay fortnightly. Salaries must always be paid in GBP.

SOCIAL SECURITY CONTRIBUTIONS IN THE UK

Social contributions in the UK (NIS) are the sole responsibility of the employer. 

Employer contributions are currently 15.05%. The tax authorities are responsible for administering social contributions.

Employee contributions are deducted before the NET amount of a salary is paid to the employee.

WORKER MISCLASSIFICATION IN THE UK

Similar to other countries, the UK has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.

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