Minimum Wage
General
The national minimum wage in the United Kingdom is dependent on the age of the employee:
- Employees aged 23 and over receive a minimum wage of 9.50 GBP
- Employees aged 21 – 22 receive a minimum wage of 9.18 GBP
- Employees aged 18 – 20 receive a minimum wage of 6.83 GBP
- Employees ages under 18 receive a minimum wage of 4.81 GBP
- Employees who are apprentices receive a minimum wage of 4.81GB
Payroll
Payroll Cycle
In the United Kingdom, the payroll frequency is typically monthly, with salary payments made between the 25th and 30th of each month.
13th Salary
In the United Kingdom, there are no statutory provisions for 13th-month salary payments.
Working Hours
General
The standard working week consists of 40 hours and cannot exceed a maximum of 48 hours averaged over 17 weeks.
Overtime
All work above the standard working hours a week is to be paid as overtime and is regulated by employment contract/collective agreements etc. When an employee is requested to work overtime or work on holidays, employers may request this of employees in writing.
All overtime hours in excess of 48 hours a week are paid at an overtime compensation rate; this rate is stipulated in the employment contract/collective agreements. The hourly overtime rate cannot fall below the national minimum wage.
Working Week
Monday-Friday
Leave
Paid Time Off
The annual leave entitlement is 28 days of paid leave per year for full-time employees. Bank holidays are included in the annual leave entitlement.
Employers may offer additional leave at their discretion; this must be outlined in the employment contract.
If employees were unable to take all of their entitled holiday leave for reasons related to Covid-19, they are allowed to carry it over to the next two years.
Public Holidays
There are 8 public holidays in England, Wales and Scotland, and 10 in Northern Ireland.
Sick Days
Employees can receive up to 28 weeks of paid sick leave; this is compensated at 99.35 GBP per week Statutory Sick Pay (SSP) as a minimum, this is not payable for the first three days of any sickness absence. Employers may compensation varies depending on the company’s sick pay scheme.
If the employee’s sick leave exceeds seven days, including weekends and bank holidays, the employee must provide a professional medical doctor certificate.
An employee may also be entitled to contractual sick pay (that is, pay during sick leave at a higher rate than SSP) if the employer offers this benefit.
Maternity Leave
In the United Kingdom, female employees receive 52 weeks of statutory maternity leave, 26 weeks of ordinary leave, followed by 26 weeks of additional maternity leave.
An employee is not required to use the full 52 weeks of leave; however, the employee must take at least two weeks following the child’s birth; this may vary depending on the employee’s sector.
Mothers are compensated by Statutory Maternity Pay (SMP) for up to 39 weeks at the rate of 90.00% of the employee’s average weekly earnings for the first six weeks, and 156.66 GBP or 90.00% of the employee’s average weekly earnings, whichever is lower) for the following 33 weeks.
Paternity Leave
Employees are entitled to one to two weeks of paid paternity leave, which begins after the child’s birth. Employees receive Statutory Paternity Pay of 156.66 GBP, or 90.00% of the employee’s average weekly earnings, whichever is lower, per week of leave.
Parental Leave
Parents in the United Kingdom may be entitled to Shared Parental Leave (SPL) when adopting a child or following the birth of a child. Shared Parental Leave allows parents up to 50 weeks of leave they can share; 37 weeks of pay is possible. Employees must take leave within the first year of the child’s birth.
Other Leave
Depending on the employment contract, an employee may be allowed additional leave, as approved between the employer and employee, for the following:
- Bereavement leave: In the UK in the event of the death of an immediate family member, an employee is entitled to bereavement leave of up to three days (the employment contract will stipulate whether this is paid or unpaid leave).
- Jury Service Leave: Employers to provide their full-time regularly employed employees, job-protected, unpaid leave for their duty as jurors or as a witness in a case, or acting as a plaintiff or defendant in the courts. Employees must provide a copy of the jury summons to the employer as evidence of requirement. The court will provide a specific amount of payment and the employer can choose to provide any additional payment.
- Public Duties Leave: Employees are entitled to a reasonable unpaid amount of time off to perform public duties, for example, if they are:
- a magistrate (also known as a justice of the peace)
- a school governor
- a member of any statutory tribunal
- a member of the managing or governing body of an educational establishment
Termination
Termination Process
The termination process varies according to the employment agreement and collective agreement in place and is based on the type of contract and reason for termination. Dismissals can be deemed fair or unfair depending on the reasoning and conduct of the termination.
Notice Period
In the United Kingdom, notice periods are outlined with the employment contract or the statutory minimum, whichever is longer.
For redundancy the statutory notice period is at least one week’s notice if an employee has been employed for between one month and 2 years and one week’s notice for each year of service between 2 years and 12 years of employment.
In the case of gross misconduct, a dismissal without notice is possible.
Employers can pay in lieu of notice.
Severance Pay
Severance pay is only required in the case of redundancy. The amount of severance is dependent on the age of the employee, if they have served at least two years of service as follows:
- Half a week’s pay for each full year for employees under the age of 22
- One week’s pay for each full year for employees between the ages of 22 to 41 years of age
- One and half weeks’ pay for each full year for employees over the age of 41
- Length of service is capped at 20 years
- Weekly pay is capped at 571 GBP
Probation Period
There are no statutory provisions for probation periods in the United Kingdom; these are outlined in the employee’s employment contract. Commonly, probation periods last between three and six months.
Common Benefits
General
- Sick leave & disability protection insurance
- Pension contribution – It is common for employers to contribute more to pension funds.
- Employers set up a defined contribution pension plan (salary sacrifice) with an employer contribution of 7% and an employee contribution of 5% minimum. The contributions are calculated by the base salary.
- Paternity leave – Most companies provide full payment for this period.
- Health care private plans
- Dental & vision plans
- Interest-free travel loan – Employers can provide employees with an interest-free loan of up to £10,000 in any tax year – a benefit often used to allow employees to buy an annual or seasonal travel card (often cheaper than buying daily, weekly or monthly tickets).
- Life insurance
- Cycle to work scheme – Government initiative in which employers must sign up to a provider that offers employees an opportunity to get bikes and accessories tax-free.
- Gym membership
VISA
VISA
If employers want to recruit from outside the UK, workers need to meet certain requirements and apply for the appropriate visa first; each visa has different requirements. Employers need to have a sponsor license to hire most workers outside the UK – which can take several weeks to process. Following the end of the Brexit transition period, from 1 January 2021, the free movement of persons between the UK and EU has ended. The UK has introduced an immigration system that treats all applicants equally, regardless of their country. Also effective from this date, Citizens of the European Union, Switzerland, Norway, Iceland, and Liechtenstein can apply for the EU Settlement Scheme.
Foreigners can visit the UK for up to 6 months without a visa to travel, visit family and friends, undertake short-term studies, attend job interviews, etc.
For longer stays, foreigners need to apply through the UK immigration points-based system via the UK government to score the necessary points for entry eligibility criteria must be met. This system aims to prioritise skills and talent over where someone comes from. Irish citizens need not apply for a work permit to live and work in the UK, as free movement, rights, and privileges between these countries continue to be protected by the Common Travel Area arrangements. In most cases, to be eligible to come and work in the UK, a confirmed job offer is required or written confirmation of transferring to the employer’s UK office.
There are many types of work visas for the UK, for both short- and long-term stays. All require different information regarding the foreigners’ skills and qualifications depending on the job being offered/sponsorship, the type of work involved, and whether there will be a requirement to bring the family.
The most requested long-term work visas in the UK include:
Skilled Worker – allows holders of this visa to live or stay in the UK and work in a qualifying role with an approved employer. The visa is valid for up to 5 years before renewal is needed. To be able to get this type of visa, a confirmed job offer is essential. The role must also be in a reported list of eligible occupations on the government website.
Intra-company – Transfer or Graduate Trainee – these are the visas for foreigners being transferred to the UK. There’s also an intra-company visa specifically designed for graduate trainees being transferred as part of a program for managerial or specialist roles.
The role must also be in a reported list of eligible occupations on the government website. The amount of time allowed to stay depends on many factors, as detailed on the government website.
Health and Care Worker – a long-term visa designed for medical professionals coming to the UK to do an eligible job with the NHS, an NHS supplier, or adult social care. There are minimum criteria that an employee must meet to be eligible, together with a confirmed job offer. This role is valid for five years before renewal.
A ‘certificate of sponsorship’ from the Home Office, approved by an employer, is also a prerequisite for all these visas.
The process takes between 3-8 weeks, and the costs associated with applying for the right to work in the UK differ depending on the type of visa or permit but are usually made up of an application fee, a healthcare surcharge, and a minimum amount of money as initial settlement/support.
The UK government has announced the implementation of a new visa scheme for ‘high potential individuals’ to allow people from top universities to work in the UK for 2 years – or 3 years if they hold a Ph.D. – and to switch to other long-term employment visas at the end of this period if they meet certain requirements. The scheme is open to all eligible graduates, regardless of nationality, and a prior job offer is not required.
VAT
General
The standard rate of VAT in the United Kingdom is 20.00%
