The United Kingdom
Know everything about hiring and compliance in the United Kingdom.
The minimum wage in the UK varies depending on age and weekly working hours. For example, employees aged 23 and above, working 40 hours a week, will receive a minimum wage of £1,806 per month.
Mandatory benefits for UK employees include National Insurance (Social Security), Employers Liability Insurance, State Pension Fund, Professional Training, and Private Healthcare (which is optional).
While overtime pay is not obligatory, employers must ensure that the average pay for all hours worked does not fall below the National Minimum Wage. The standard working hours typically consist of around 40 hours per week, from Monday to Friday.
UK employers are not legally obligated to provide bonuses to their employees. Nonetheless, many companies choose to offer annual or performance-based bonuses as part of their compensation package, which are subject to taxation as salary.
In the UK, employers usually process payroll on a monthly basis, with a preferred schedule as follows:
- Payroll cut-off date: 20th of each month
- Payment date: Last day of each month
Individual income taxes in the UK are progressive and vary from 0% to 45%, depending on the income level. The progressive tax rates are outlined below:
- Income up to £12,570: 0% tax
- Income above £12,570 and up to £50,270: 20% tax
- Income above £50,270 and up to £150,000: 40% tax
- Income above £150,000: 45% tax
Please note that additional factors like household status and the number of children may also influence tax rates. Additionally, Scotland has its own slightly different tax rates and banding.
In the UK, an employee contract should contain various essential details, including the names of the employee and employer, job title, job description, start date, contract term, and the end date for fixed-term contracts. It should also specify the salary amount and frequency of payment, working hours and days, and any relevant working hour specifications. Additionally, the contract must outline the holiday entitlement, workplace location, and details of any potential relocation or additional workplaces if applicable. The employer's address, probation period, mandatory training, termination conditions, and other benefits should also be included. All contracts must be in English.
Regarding the notice period, the minimum notice required is 1 week, but this period increases depending on the length of employment:
- 1 to 2 years of service: 1 week of notice period
- 2 to 12 years of service: 1 week of notice period for every year of service
- 12 years or more of service: 12 weeks of notice period
In case of redundancy, all terminated employees in the UK are entitled to severance pay, calculated based on the following criteria:
- Up to 22 years old: 0.5 week's pay for each year of service
- Between 22 and 40 years old: 1 week's pay for each year of service
- Above 40 years of age: 1.5 weeks' pay for each year of service
For new employees, the probationary period typically lasts no more than six months. However, for current employees transitioning to a new role, the probationary period can extend up to three months. The length of the probationary period should be explicitly detailed in the employee's employment contract.
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Frequently asked questions
What are the mandatory employee benefits in UK?
Mandatory benefits in the UK include National Insurance (Social Security), Employers Liability Insurance, State Pension Fund, Professional Training, Private Healthcare (optional).
What are the minimum wage requirements in UK?
Minimum wage varies by age and working hours. E.g., employees aged 23+ working 40 hours a week, minimum wage is £1,806 per month.
What is the maternity leave policy in UK?
"Eligible employees can take up to 52 weeks of maternity leave; 26 weeks of ordinary maternity leave and 26 weeks of additional maternity leave. Statutory Maternity Pay (SMP) for eligible employees can be up to 39 weeks, usually as follows: - first 6 weeks: 90% of their average weekly earnings (AWE) before tax. - following 33 weeks: £172.48 or 90% of their AWE (whichever is lower). - final 13 weeks: unpaid"
Do male employees have the right to paternity leave in UK?
Eligible employees are entitled to 2 weeks of paternity leave, which must be taken in one period. The employee will receive £172.48, or 90% of their average weekly earnings (AWE) during this period.
How many sick leave days are employees entitled to in UK?
Employees are entitled to an unlimited number of sick leaves. The first 3 days are paid at 100% of the salary, after which employees are entitled to employer-paid Statutory Pay Leave of up to 28 weeks for employees. Statutory Sick Pay is £109.4 per week.
What are the public holidays observed in UK?
Public holidays, also known as bank holidays, vary by region in the UK. There are 8 in England and Wales, 9 in Scotland and 10 in Northern Ireland. - New Year's Day - Good Friday - Easter Monday - Early May Bank Holidays - Spring Bank Holidays - Summer Bank Holidays - Christmas Holidays - Boxing Day Additional Regional Holidays - Scotland Day: 2nd Jan - St Patrick's Day (Northern Ireland): 17th March - The Twelfth (Northern Ireland): 12th July - St Andrew's Day (Scotland): 30th Nov
Is severance pay mandatory in UK?
In the UK, all employees who are terminated due to redundancy are entitled to severance pay. Severance pay is calculated as follows: - Up to 22 years old: 0.5 weeks pay for each year of service - 22 to 40 years old: 1 week of pay for each year of service - Above 40 years of age: 1.5 weeks pay for each year of service
What are the legal requirements for terminating an employee in UK?
Terminations in the UK can be complex. There is no at-will termination in the UK for employers outside the probation period and termination must be done for just cause. Compliant terminations include: - Fair dismissal - Unfair dismissal - Constructive dismissal - Wrongful dismissal
