Global PEO Services (GPS) helps companies hire employees in the United Kingdom (UK) without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by our UK PEO, while the new hires and headquarter teams focus on your business goals. Using a UK PEO is the fastest and most efficient way to develop a workforce in the UK.
When hiring employees in the UK, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with UK labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in the UK. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
United Kingdom - Country Overview
The United Kingdom consists of Scotland, England, Wales, and Northern Ireland, with the larger entity known as Great Britain and Northern Ireland. It is the fifth-largest economy in the world and the second-largest in Europe in terms of GDP. The UK ranks high in the World Bank’s Ease of Doing Business Rankings.
Pound Sterling (£)
Employment Contracts in the United Kingdom
Under the Employment Rights Act 1996, employers must provide employees with a written employment contract in the United Kingdom. Employers and employees can agree to the terms of an employment contract, but British law imposes several obligations, and rights that may overrule the agreement terms.
Some of the details typically mentioned in the written employment contract in the United Kingdom include:
- Probationary period
- Other benefits such as lunch and childcare vouchers
- Mandatory training, regardless of whether the employer pays for it
- and more
The different types of employment relationships are:
- Permanent Employment: A permanent employee works at least 35 hours per week full-time. Employees on a fixed-term contract are not considered permanent.
- Fixed-Term Contracts: Fixed-term contracts intend to make employment under specific contracts temporary rather than permanent.
- Temporary Employment: Temporary employment agencies can help employers in the UK find temporary workers.
In the United Kingdom, a probationary period is typically 30 days for job tenures of 6 months or more.
Working Hours in the United Kingdom
According to labor law, the standard workweek is 48 hours, averaging over 17 weeks. The UK maintained its opt-out on working time, but employees can opt back in. In the UK, employees can work 8 hours per night shift and are entitled to free health and safety checks.
Employee Leave in the United Kingdom
Employees are entitled to the following leaves:
- Annual leave in the United Kingdom: Per the Working Time Regulations, full-time employees receive 5.6 weeks (28 days) of annual paid vacation, including public holidays.
- Paternity leave in the United Kingdom: Eligible employees can take two consecutive weeks’ paid paternity leave within eight weeks of a child’s birth or adoption.
- Maternity leave in the United Kingdom: In the United Kingdom, statutory maternity leave is 52 weeks long and includes:
- Ordinary maternity leave: first 26 weeks
- Additional maternity leave: remaining 26 weeks.
- 39 weeks of this is payable: the first six weeks at 90% of average pay and the remaining 33 weeks at statutory. The amount changes each tax year.
- Sick leave in the United Kingdom: Employees in the United Kingdom have the right to work off due to illness, including non-working days such as weekends and bank holidays. There is no legal limit to the number of sick days an employee can take in the UK. Employees receive up to 28 weeks of statutory sick pay on the provision of a fit note (sickness certificate).
There are eight statutory national holidays in the United Kingdom; however, they differ per jurisdiction. For example, England and Wales have eight listed public holidays, Scotland has 9, and Northern Ireland has 10.
Following are national holidays in the United Kingdom that are not legally required to be observed by employers:
There is an additional day’s holiday for the Queen’s platinum jubilee in 2022 on Friday, June 3.
Employee Termination in United Kingdom
Employers and employees can terminate an employment contract in the United Kingdom by giving reasonable notice. The statutory notice period in the United Kingdom for dismissal due to redundancy is as follows:
- less than two years of continuous employment – at least one week’s notice
- for employment between 2 to 12 years – at least 1 week’s notice for each year
- after 12 years of employment – no less than 12 weeks
If the employee has been working for less than one month (unless the employment contract specifies otherwise), no notice is required.
In most cases, the employment contract specifies the notice period for individual dismissal.
Global Mobility in United Kingdom
There are typically the following categories of visas in the United Kingdom, with numerous forms of visa types within each category:
- Work visas – Tier 1, Tier 2, and Tier 5
- Study visas
- Family visas
- Visitor visas
There are specific requirements for issuing work permits in the United Kingdom. Employees must obtain Skilled Worker visas that allow them to stay in the UK for five years. Extension of up to 5 years is possible. Visa holders can apply to settle permanently in the UK after five years, with the right to live, work, and study for an indefinite period and access to benefits.
Employee Benefits in the United Kingdom
Since April 1, 2017, all employers in the United Kingdom have enrolled their employees in a pension plan. It covers all employers, even if they have only recently been required to remit withheld income tax to the UK government. Employers can use the National Employment Savings Trust (NEST) or their own defined contribution or benefit plan.
Auto-enrolment/NEST is in addition to existing state pensions in the United Kingdom:
- Basic State Pension, which the National Insurance contributions (NICs) fund
- State Second is a supplement to the basic State Pension funded by NICs.
The UK’s unemployment insurance scheme is called Jobseeker’s Allowance, and it’s funded by employees’ contributions to the National Insurance program. Contribution rates range from 2% to 12% of wages, depending on compensation. Employers in the UK withhold contributions from employees’ pay and remit them to the government but do not contribute themselves.
Employers in England, Scotland, and Wales are required to insure their employees in case of injury, illness, or death while working.
Mandatory Employee Benefits in the United Kingdom
Social security in the United Kingdom includes the National Insurance Scheme (NIS), which provides cash benefits for unemployment, retirement, death of a partner, sickness, etc.
Some examples of social insurance programs are:
- Dependents’/Survivors Benefit – The Widowed Parent’s Allowance (WPA) intends to assist parents who have lost a spouse’s income and are experiencing financial hardship due to this loss.
- Life and Disability Insurance/Benefit – There are three types of disability benefit programs:
- Disability Living Allowance (DLA)/Personal Independence Payment (PIP)
- Attendance Allowance
- Employment & Support Allowance
Along with the State pension, employers in the United Kingdom must contribute a minimum of 3% of each employee’s salary to a pension plan. This legislation was introduced in 2008.