up to 48 hours
16.8% - 18.8%
Pound Sterling (GBP)
📢 Introducing Lano 2.0!Global Employment just got a whole lot easier
📢 Introducing Lano 2.0!
Global Employment just got a whole lot easier
Employers looking to hire abroad tend to compare the pros and cons of potential candidates in terms of employment costs and other benefits. In the case of the UK, legal conditions are rather beneficial for employers and social security contributions are quite low compared to other European countries.
What’s more, the UK offers foreign employers a huge pool of young, talented workers who stream into the country from all over the world in order to complete their studies at one of the UK’s many top universities and who join the UK’s workforce after completing their degrees.
It is mandatory to provide new employees with a written statement outlining the basic terms of employment which must include:
Compensation (in GBP)
However, it is common practice for employees and employers to negotiate a proper employment contract. Although most employment agreements are concluded for an indefinite period, fixed-term agreements are also possible.
UK labour law does not regulate the length of probation periods. In practice, employers and employees usually agree on a probation period between three and six months.
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Employers may request their employees to work a standard 48-hour week. Daily working time is flexible and varies depending on business needs but a nine to five working day is standard for most employees in the UK. After six hours of continuous work, employees must take a 20-minute break.
Every hour worked beyond agreed weekly working hours counts as overtime. Employers do not have to pay their employees for overtime unless it is stated in the employment contract. However, they have to make sure that the employee’s average hourly pay is not lower than the national minimum wage.
It is common to pay employees on a monthly basis. In most cases, salaries are paid between the 25th and the 30th of each month.
Minimum wages in the UK depend on the employee’s age. While employees between 18 and 20 only receive an hourly minimum pay of GBP 6.56, those aged between 21 and 22 need to be paid at an hourly rate of at least GBP 8.36. For employees aged 23 and older, the hourly minimum wage is GBP 8.91 (as of April 2021).
From April 2022, the minimum wage rates will be as follows:
Employees aged 18 to 20: GBP 6.83 per hour
Employees aged 21 to 22: GBP 9.18 per hour
Employees aged 23 or older: GBP 9.50 per hour
The Statutory Sick Pay Scheme (SSP) rules that employers have to provide their employees with a minimum weekly sick pay of GBP 95.85 (as of 2020) for up to 28 weeks, starting with the fifth day that the employee is absent from work due to illness or injury. After seven days of absence, employees have to present a medical certificate.
There is no legal regulation on bonus payments in the UK. Therefore, it is up to the employer to decide whether or not to reward employees with a bonus based on personal performance or other factors.
Learn about tax reporting, compensation laws, registration requirements and more in our free Payroll Guide for United Kingdom.
Employees and employers in the UK are subject to the following tax and social security contribution rates (vaild for the 2022/2023 tax year):
19% corporate tax rate
20% VAT (standard rate)
up to 45%
Individual income tax rates (excluding Scotland):
0%: up to GBP 12,750
20%: up to GBP 50,270
40%: up to GBP 150,000
45%: over GBP 150,000
16.8% of employee’s salary including:
13.8% NIC (National Insurance Contributions) of weekly employee wages exceeding GBP 184 *
3% pension contribution
up to 19%%
17% to 19% of employee’s salary including:
12% NIC on weekly earnings between GBP 184 and GBP 967 *
additional 2% on weekly earnings exceeding GBP 967
5% pension scheme
* Please note: The UK government has announced a temporary 1.25% increase of the NICs for the tax year running from 6 April 2022 to 5 April 2023.
Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).
Employees in the UK are entitled to 28 paid days off per year. Public holidays may be counted as part of the employee’s annual leave entitlement. Most employers thus offer their employees up to 25 paid vacation days on top of the public holidays. For senior level positions, paid leave of up to 30 days – excluding public holidays – can be negotiated.
While England and Wales observe eight public holidays throughout the year, Scotland counts one and Northern Ireland even two additional bank holidays.
Pregnant employees can take up to 52 weeks of maternity leave. During the first 39 weeks, they are entitled to Statutory Maternity Pay which amounts to:
90% of their weekly wages during the first six weeks
90% of their weekly wages (but capped at a maximum of GBP 151.20) for the following 33 weeks (as of April 2020)
Fathers can request up to two weeks of paid paternity leave. If the mother wants to return to work before her maternity leave is over, she can transfer the remaining leave days to the child’s father.
Mothers and fathers can request up to 50 weeks of shared parental leave which must be taken within the first year after the child’s birth. However, only a maximum of 37 weeks of parental leave are paid.
It is common practice among employers in the UK to provide employees with additional benefits such as dental or life insurance.
The employment may be terminated due to one of the following reasons (non-exhaustive list):
summary dismissal due to gross misconduct
employee’s long-term illness
The statutory notice periods are defined as follows:
one week for employees who have been working for the company for a short time ranging between one month and two years
one week for each year of service for employees with a length of service between two and twelve years
twelve weeks for all employees who are dismissed after more than twelve years with the company
If notice periods are specified in the employment contract, they only need to be respected in case they are longer than the statutory minimum requirements.
Only employees who have completed at least two years of service and who are dismissed due to redundancy qualify for severance pay which is calculated as follows:
employees under 22: 50% of weekly earnings multiplied by completed years of service
employees aged 22 to 41: 100% of weekly earnings multiplied by completed years of service
employees over 41: 150% of weekly earnings multiplied by completed years of service
However, rates are capped after 20 years of service and at a maximum weekly pay of GBP 544.
This country guide is for informational purposes only and should not be construed as legal advice. The content of this guide contains general information, and although we update this guide regularly, it may not reflect current legal developments. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this country guide.
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