The United Kingdom (UK), also known as the United Kingdom of Great Britain and Northern Ireland consists of England, Wales, Scotland, and Northern Ireland. It is the fifth largest economy in the world and the second largest in Europe in terms of GDP. UK ranks high in the annual Global Competitiveness Reports and the World Bank’s Ease of Doing Business Rankings. Its GDP is expected to grow from $2890 billion in 2019 to 3170 billion in 2020.
Currency: Pound Sterling (£)
Principal Language: English
Government: Constitutional Monarchy
Capital City: London
Major Cities: Manchester, Birmingham, Glasgow, Liverpool
Under the Employment Rights Act 1996, employers must provide employees a written statement with terms and conditions governing employment within 2 months of the beginning of work. Although employers and employees are free to agree to the terms governing offer of employment, British law imposes a number of obligations, protections, and rights that may override the terms of the contract. No change to employees’ contract may apply without their consent.
Under British law, certain terms are implied in contracts of employment. Implied duties of an employee include:
- fidelity (serving the employer in good faith and not acting against its interests)
- due diligence and care, and
- protecting trade secrets and confidential information.
The maximum workweek in the U.K. is 48 hours averaged over a duration of 17 weeks. Some sectors, such as transport, are exempt from this limitation of working hours, as the employees in these industries qualify as “autonomous decision makers” who can manage their time. Employees may agree to “opt out” of the 48-hour maximum limit by giving written consent. Employers are required to maintain certain records of the working time. Under the Working Time Regulations, employees receive:
- a rest break for 20 minutes after every 6 hours of continuous work
- 11 hours of rest per 24 hour period, and
- 24 hours of continuous rest every week (or 48 consecutive hours every 2 weeks).
Employees may work 8 hours per night shift and must get the facility of free health and safety checks. The average workweek is 48 hours subject to a reference period, usually 17 weeks. Employees who are 16 and 17 years old may work 8 hours a day or 40 hours per week. Their hours of work are not averaged out, and they do not have the option to opt out and work longer hours.
Overtime means any time worked after completing the normal working hours specified in an employment contract, which usually mentions overtime pay rates. However, it is not binding on employers to pay employees for overtime; the only condition is that an employee's average pay for the total number of hours worked cannot be lower than the National Minimum Wage.
An employer may provide an employee compensatory time off in place of wages for overtime, also known as “time off in lieu.” Employers need not pay employees a premium for overtime work. The only requirement is that an employee's average pay for total hours worked does not fall below the national minimum wage.
Under the Working Time Regulations, full-time employees are entitled to a minimum of 28 days of paid annual leave each year. Unless the employment contract states otherwise, the annual leave entitlement includes bank holidays. Vacation pay is usually based on the average pay over the 12 weeks before the vacation.
Employees start to accrue annual leave from the beginning of their employment. During the first year of employment, annual leave accrues at the rate of one-twelfth of 1 completed year's entitlement at the start of each month.
Employees can carry forward up to 8 unused days of annual leave into the next year. Employees who earn a minimum of the lower earnings limit (LEL) are eligible for various forms of statutory leave pay. The lower earnings limit is fixed in April every year.
Eligible employees can currently take 2 consecutive weeks' paid paternity leave within 8 weeks of a child's birth or adoption in blocks of a week at a time. To be eligible, an employee must have worked for 26 consecutive weeks, or expect to have responsibility for the upbringing of the child, and be the biological father of the child or, married to, or the civil partner of the child's mother. Paternity pay is currently 140.98 pounds per week or 90% of an employee's average weekly earnings if the latter is a lower amount.
Pregnant employees receive 52 weeks’ maternity leave, of which the first 26 weeks is known as ‘Ordinary Maternity Leave’ (OML), while the last 26 weeks as ‘Additional Maternity Leave’ (AML). Although employees do not have to take all 52 weeks of their maternity entitlement, they must take 2 weeks' leave once the baby is born.
Pregnant employees also are entitled to receive up to 39 weeks of statutory maternity pay (SMP) if they have been working for at least 26 weeks and meet minimum earnings requirements. Maternity pay is currently 90% of employees’ average earnings for the first 6 weeks’ of maternity leave, 140.98 pounds (or 90% of normal weekly earnings, if lower) for 33 weeks after that.
With effect from April 6, 2017, to April 5, 2018, to qualify for SMP, employees must also have earned at least 113 pounds of gross pay per week as averaged over 8 weeks.
England and Wales have 8 listed public holidays, while the same is 9 in Scotland and 10 in Northern Ireland.
The following are national holidays in England and Wales, but employers are not legally bound to give these days off:
|Date||Name of Holiday||England and Wales||Scotland||Northern Ireland|
|Jan. 1||New Year||Yes||Yes||Yes|
|Jan. 2||2nd January||No||Yes||No|
|March 17||St. Patrick's Day||No||No||Yes|
|Friday before Easter||Good Friday||Yes||Yes||Yes|
|Monday after Easter||Easter Monday||Yes||No||Yes|
|First Monday in May||Early May Bank Holiday||Yes||Yes||Yes|
|Last Monday in May||Spring Bank Holiday||Yes||Yes||Yes|
|July 12||Battle of the Boyne (Orangemen's Day)||No||No||Yes|
|First Monday in August||Summer Bank Holiday||No||Yes||No|
|Dec. 25||Christmas Day||Yes||Yes||Yes|
|Dec. 26||Boxing Day||Yes||Yes||Yes|
If a public holiday falls on a weekend day, a substitute weekday becomes the holiday, usually the following Monday. In the UK, bank holidays need not be paid leave. When employees work on a national holiday, they have no statutory right to extra pay.
Effective April 1, 2017, all employers, except some employers that in recent years were required to remit withheld income tax to the U.K. government for the first time, need to enroll their employees into a pension plan. Employers can use the independently run, government-backed defined contribution plan, National Employment Savings Trust (NEST), or their plan, which could be either a defined contribution plan or a defined benefit plan.
Auto-enrolment/NEST is in addition to existing state pensions:
- Basic State Pension, which the National Insurance contributions (NICs) fund
- State Second Pension, a supplement to the basic State Pension that also is funded by NICs.
The unemployment insurance scheme in the U.K. known as Jobseeker's Allowance and the contributions that employees make to the National Insurance program funds it. Contribution rates range from 2% to 12% of wages depending on compensation. Employers withhold contributions from employees’ pay and remit them to the government but do not contribute themselves.
Employers in England, Scotland and Wales, are required by the Employers' Liability (Compulsory Insurance) Act 1969 to maintain insurance for the compensation of any injury, illness, or death suffered by employees in the course of their duties.
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