Employment Law in the UK

Contracts

In the United Kingdom, employment contracts can be fixed-term or permanent, depending on the nature of the job and the agreement between the employer and employee. Permanent employment contracts must include benefits such as paid annual leave, statutory sick pay, pension contributions, and protection against unfair dismissal. Fixed-term employees are entitled to the same benefits as permanent employees, and after four years of continuous service on successive fixed-term contracts, they may be considered permanent employees unless the employer can justify the continued use of fixed-term contracts.

The United Kingdom also has apprenticeship contracts, mainly for training, which are governed by national apprenticeship standards.

Termination and notice periods

In the United Kingdom, statutory laws generally require written notice for termination, with periods ranging from one week to 12 weeks based on the employee's length of service. In most cases, terminated employees are entitled to a warning and a fair hearing. Just cause for a dismissal includes the following:

• Gross misconduct
• Poor performance
• Redundancy
• Statutory illegality
• Some other substantial reason
• Capability issues
• Conduct issues  

Employees with at least two years of service may be entitled to redundancy payments, calculated based on their age, length of service, and weekly pay. As your Employer of Record (EOR) in the United Kingdom, we can assist you in managing employee terminations by providing legal guidance and a personalized process to ensure compliance with labor laws and minimize legal risks.

Probation periods

In the United Kingdom, probation periods are indirectly addressed in local law, commonly ranging from three to six months in the private sector, and up to nine months in government positions, as outlined in the Employment Rights Bill.

Working hours and overtime

The standard workweek in the United Kingdom is 40 hours, typically structured as eight hours per day, Monday through Friday. Under the Working Time Regulations, employees must not work more than 48 hours per week on average, unless they voluntarily opt out of this limit in writing.

Any hours worked beyond contracted hours may be considered overtime. Overtime pay is not mandated by law but must be clearly stated in the employment contract. Employers must comply with rest break entitlements and maintain accurate records of working hours.

Taxes

In the United Kingdom, withholding tax is known as Pay As You Earn (PAYE) and is deducted by employers before paying salaries to employees. Employers must deduct PAYE from employee salaries based on applicable income tax rates and submit it to HM Revenue & Customs (HMRC).

Employer payroll contributions

The United Kingdom's social security system requires employer contributions that are dependent on the total number of employees, and these contributions cover pensions, medical care, disability insurance, and gratuity payments. In addition, workers' compensation is financed by contributions from state governments, employers, and employees.