How To Hire And Pay Employees In The UK
Emerald Technology's guide to hiring employees in the UK.
Pound Sterling is the official currency of the UK. Its currency symbol is £, GBP.
Estimated 17% of employee's salary
English is the official and national language of the UK and has over 400 million native speakers worldwide.
GROW YOUR TEAM IN THE UK
TABLE OF CONTENTS
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 Technology can hire and payroll your workers, quickly and compliantly with their ready to go entity. So no more worrying about compliantly managing your international payroll. We handle everything in over 150 countries.
Make growing your team simple with Emerald as a global partner.
Pros and Cons of Hiring in the UK
The UK is recognised as a highly business-friendly location due the number of start-ups and international enterprises here. Expanding to the UK enables access to the talent pool and customers in England, Scotland, Wales and Northern Ireland, as well as a route into Europe.
The UK is home to some of the most prestigious and top performing universities in the world, which attract top young talent from all over the world.
Its long history of immigration has benefitted the UK’s diversity, giving employers access to different cultures and skillsets.
However, due to the UK’s popularity with expats from Europe and beyond, the country has tightened its visa requirements and processes in order to deter illegal immigration, which means that gaining a work permit can be a lengthy and challenging undertaking.
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, including access to free schooling and subsidised medical care through the National Health Service. Employees in the UK, including expats, are entitled to annual leave, sick leave, and maternity/ paternity leave.
START GROWING YOUR REMOTE WORKFORCE NOW
Employer Costs
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.
| Contribution | Earnings |
| 0% | £12,570 |
| 13.25% | £50,270 |
Apprenticeship Levy
This a form of taxation in the UK aimed at helping companies offer more apprenticeships. This levy is paid by employers at the rate of 0.5% of the employer's total payroll and is collected monthly through PAYE.
Pension
All employers in the UK must offer a workplace pension and automatically enrol eligible workers. Employers must contribute at least 3% of the employee's salary and the employee must contribute at least 5% deducted after tax.
Benefits
Mandatory Benefits
UK employers are required to offer the following benefits to all full-time employees.
- Workplace pension
- Maternity and paternity pay
- Holiday / Annual leave pay
- Statutory sick pay
Additional
Some employers like to offer additional benefits to improve employee retention and satisfaction.
- Life Insurance
- Private Health Care
- Dental Care
- Training
- Discounts
Employment
Contracts
Producing a contract of employment in the UK when recruiting is a legal requirement.
Creating a strong contract will help pacify any compliance concerns. An employer must provide the following in a contract:
- Start Date
- Job title
- Job description
- Working hours
- Days of work
- Place of work
- Pay
Emerald Technology can provide a compliant contract in the UK within 24 hours.
Probation Period
Whilst there is no legal requirement for a probationary period, employers typically set a probation of 3 -6 months. It is unusual for a probationary period to exceed 12 months.
Insurance
Healthcare
The UK has a National Health Service (NHS) for its residents which is free at the point of access.
Holders of most UK visas valid for six months or longer are required to pay an annual health surcharge of £624, known as the NHS Surcharge.
Some companies offer additional private healthcare to their employees as part of their contract.
Social Security
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 (SSP), state pensions and bereavement benefit. This is deducted before any NET payments are made to employees.
Leave Policy
Maternity 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 a minimum of two 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 six weeks are paid at 90% of average earnings before tax. The following 22 weeks are paid at £156.66 or 90% of average weekly earnings, whichever is the lowest.
Tax and national insurance will be deducted as per normal wages.
Paternity Leave
Expectant fathers in the UK are entitled to paternity leave for up to two weeks. The leave cannot start before the birth and must end within 56 days of the birth.
Fathers are entitled to statutory paternity pay (SPP) which is £156.66 or 90% of weekly earnings, whichever is the lowest.
Sickness Leave
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 employers to ensure reasonable adjustments are made for disabled employees so as not to be disadvantaged when compared to non-disabled employees.
Onboarding
As the legal employer, Emerald Technology requires the following employee documents to ensure complete compliance:
- ID/Passport
- Proof of right to work
- P-45 or P-46
- National Insurance Number
Emerald Technology can onboard employees in the UK within 48 hours
Resignation and Dismissal
An employee may unilaterally terminate their employment by providing written notice to their employer. Resignation notice periods so vary but one month is typical.
In the UK, there is no at-will termination policy outside the probation period. Termination must be done with just cause. However, employees with less than two years' service can in theory be dismissed with no obligation to go through a disciplinary or dismissal process.
After two years, an employee has more rights where they can claim an unfair dismissal. Dismissal on the grounds of redundancy, conduct or capability require different burdens of proof and notification.
When dismissing an employee in the UK, employers must provide written notice by email with confirmation receipt, or via standard mail. Employers must make any due payments including severance pay if applicable and any accrued holidays. Even if severance pay is not a statutory requirement, it is often recommended.
Severance
Employees terminated because of redundancy are entitled to severance pay. Below is how it is calculated:
| Employee Age | Severance Pay |
| Up to 22 years old | 0.5 weeks pay for each year of service |
| 22 - 40 years old | 1 week pay for each year of service |
| 41+ years | 1.5 weeks pay for each year of service |
Statutory Time Off
Annual Leave
Full-time employees are entitled to a statutory minimum of 28 calendar days' annual leave per annum (pro rata for part-time employees).
Public Holidays
It is up to employers whether public holidays form part of employees' statutory annual leave entitlement. There are usually 8 public holidays.
- New Year's Day
- Good Friday
- Easter Monday
- Early May Bank Holiday
- Spring Bank Holiday
- Summer Bank Holiday
- Christmas Day
- Boxing Day
READY TO HIRE YOUR EMPLOYEES IN THE UK?
Work, Pay & Taxes
Minimum Wage
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.
| Age | Minimum Wage (hourly) |
| 18 - 20 | £7.49 |
| 21 - 22 | £10.18 |
| 23+ | £10.42 |
Working Time and Overtime
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. Overtime payment is not mandatory in the UK.
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.
Salary Payments
Salaries are typically paid on a monthly basis for salaried employees and a weekly basis for employees who receive an hourly rate. However, this can vary and other payment schedules, such as fortnightly or four-weekly, are reasonably common. Salaries must always be paid in GBP.
Bonus
Employers are not required to provide employees a bonus. Any bonuses offered are at the employer's discretion.
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.
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.