UK Labor Law Guide for Hiring Employees and Contractors
This labor law guide for the United Kingdom (UK) has important information for businesses looking to hire employees or contractors in the UK.
The United Kingdom includes England, Scotland, Wales and Northern Ireland. It is in Europe.
In 2023, the United Kingdom’s economy demonstrated moderate growth with a GDP increase of approximately 0.6%. The UK economy is one of the largest in Europe, with key sectors including financial services, manufacturing, technology, and healthcare.
The financial services sector, particularly in London, remains a global hub, while the manufacturing sector is notable for automotive production and pharmaceuticals. Technology and innovation continue to play an increasing role in the economy.
The currency of the United Kingdom is the British Pound Sterling (GBP).
Minimum Wage
£11.44 per hour
Overtime Wage
Not mandated
Meal Breaks
20 minutes after 6 hours of work
Rest Breaks
20 minutes (combined with meal breaks)
Working hours
8 hours per day, 48 hours per week (averaged over 17 weeks)
Salary Payment Cycle
Weekly, bi-weekly, or monthly
Payroll Taxes
National Insurance Contributions (NICs), Apprenticeship Levy (for larger employers)
Paid Vacation
5.6 weeks (28 days)
Overtime Hours
48 hours per week (over 17 weeks)
Night Shift Hours
Not mandated
Holidays
8 public holidays (may vary by region)
No Work Days
Saturday and Sunday
When hiring workers in the UK, businesses must adhere to specific legal requirements. A business does not necessarily need to be registered in the UK to hire workers, but it must comply with UK employment laws.
Setting up a business entity in the UK generally costs between £12 to £100 and can be done within 24 hours to a few days, depending on the method used (online or paper registration).
Employment contracts in the UK must be provided in writing within two months of the employee starting work. Contracts should include key terms such as job title, salary, working hours, holiday entitlement, and notice period.
The UK distinguishes between employees and contractors, with different rights and responsibilities under labor laws. Employers must correctly classify workers to avoid penalties.
The UK enforces a National Minimum Wage (NMW) and a National Living Wage (NLW) for workers aged 23 and over. As of April 1, 2024, the NLW is set at £11.44 per hour. The NMW varies for younger workers and apprentices:
Workers aged 21-22: £11.44 per hour
Workers aged 18-20: £8.60 per hour
Workers aged under 18: £6.4 per hour
Apprentices: £6.4 per hour
There are no exceptions to these rates, but certain sectors may have different pay structures. Employers in the UK are also required to pay holiday pay to their employees.
In the UK, the standard working hours are capped at 48 hours per week, averaged over 17 weeks. Employees can work more than 48 hours a week if they choose to opt out of the weekly limit.
Overtime pay is not statutorily required but is often agreed upon in contracts, typically at 1.5 times the regular hourly wage.
Night shift work does not have a statutory higher pay rate, but many employers offer additional compensation.
The minimum age for employment is 16 years, with specific restrictions on the type of work and hours for those under 18 to prevent child labor.
Employers in the UK must make several payroll deductions, including:
National Insurance Contributions (NICs): Employers contribute 13.8% on earnings above £9,100 per year.
Income Tax: Employers withhold income tax based on employee earnings.
The current income tax regime in the UK is progressive, with the following tax rates:
Income Level | Tax Rate |
Up to £12,570 | 0% (Personal Allowance) |
£12,571 to £50,270 | 20% (Basic Rate) |
£50,271 to £125,140 | 40% (Higher Rate) |
Over £125,140 | 45% (Additional Rate) |
Employers in the United Kingdom must provide statutory leave to their employees, including:
Paid Vacation: 5.6 weeks (28 days) for full-time employees, including public holidays.
Maternity Leave: Up to 52 weeks, with the first 39 weeks paid.
Paternity Leave: Up to 2 weeks of paid leave.
Sick Leave: Statutory Sick Pay (SSP) for up to 28 weeks.
Adoption Leave: Similar to maternity leave.
Public Holidays: Typically 8 days, depending on the region.
The following is a table of mandated public holidays in the UK:
Holiday Name | Date |
New Year’s Day | January 1 |
Good Friday | March 29 (2024) |
Easter Monday | April 1 (2024) |
Early May Bank Holiday | May 6 (2024) |
Spring Bank Holiday | May 27 (2024) |
Summer Bank Holiday | August 26 (2024) |
Christmas Day | December 25 |
Boxing Day | December 26 |
In the UK, employers must provide certain benefits to their employees, including:
National Insurance Contributions (NICs): Provides access to the National Health Service (NHS), state pension, and other benefits.
Pension Contributions: Automatic enrolment into a workplace pension scheme, with minimum contributions from both employer and employee.
Healthcare: Basic healthcare is provided by the NHS, but employers may offer private health insurance as a benefit.
Bonuses: Not mandatory but often included in employment contracts.
The UK does not follow At-Will Employment laws. Instead, termination must be based on fair reasons, such as misconduct, redundancy, or capability. Employers must provide the appropriate notice period, which varies based on the length of employment, typically 1 week per year of service, up to 12 weeks.
The termination process in the UK includes providing written notice, paying any outstanding wages or benefits, and offering a severance package if applicable. Employees have the right to challenge unfair dismissal through employment tribunals.
Employers can legally terminate an employee for reasons such as gross misconduct, consistent poor performance, or business closure. However, terminations cannot be based on discriminatory reasons, and employees are protected under various anti-discrimination laws.