The United Kingdom is prominent in the global economy, boasting a GDP surpassing 3 trillion USD. Fueled by its robust economic performance and strategic location, the UK has emerged as a prime destination for enterprises seeking international expansion.
The UK's workforce is marked by a high percentage of skilled and educated individuals, with around 42% holding a degree or higher qualification. This commitment to education and skill development provides a valuable resource for businesses, fostering innovation and productivity across sectors, making the UK an appealing choice for global expansion.
A firm grasp of hiring intricacies can ensure a hassle-free process and compliance with local regulations and labor laws when setting up a business or hiring in the UK.
Labor Laws in the UK
Exploring the intricacies of employment in the United Kingdom requires understanding UK labor laws. Here’s a rundown of the prominent aspects of labor laws in the UK:
Employment Rights Act 1996:
Employment Relations Act 1999:
- The Employment Relations Act of 1999 focuses on recognizing trade unions in the workplace and establishes guidelines for the processes and criteria involved.
- It facilitates collective bargaining and communication between employees and their representatives.
Maternity and Parental Leaves etc. Regulations 1999:
Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000:
The Equality Act 2010:
- The Equality Act of 2010 is an extensive legal framework for workplace and hiring discrimination based on age, disability, gender, and race.
- IR35, also known as the "off-payroll working" rule, is a tax regulation to prevent tax avoidance by individuals working as disguised employees.
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Payroll and Taxes in the UK
Employers running payroll in the UK must record their employees’ wages, salary, or other pay, including tax deductions and other payroll-related affairs.
If you’re hiring in the UK, staying informed of the following payroll contribution details will prevent hefty penalties.
Minimum Wage in the UK
The National Minimum Wages Act of 1998 established the minimum wage in the UK. Commencing April 1st, 2022, the UK has introduced a noteworthy upsurge in the national minimum wage.
- There was a separate rate for apprentices, which stood at £5.28 per hour.
Employer Tax in the UK
- Under UK tax regulations, employers must deduct National Insurance and income tax from their employees' salaries.
- Employers also contribute towards National Insurance on each employee’s earnings (above £242 weekly).
- These withheld funds should be expeditiously transmitted to HM Revenue and Customs (HMRC) in a Full Payment Submission (FPS).
Employee Benefits in the UK
Employee benefits in the UK differ with employers but typically cover the following:
Leave Policy in the UK
Here is the leave policy in the UK which each employee is eligible to receive:
Annual Leave Entitlement:
- Most full-time employees get 28 days of paid annual leave, which equals 5.6 weeks of vacation.
- Part-time and irregular-hour workers receive a proportionate amount.
- Statutory Sick Pay (SSP) is provided to employees who cannot work due to illness, paying £109.40 per week for up to 28 weeks.
- Employers may offer additional sickness pay, known as Occupational Scheme.
- Expectant mothers can receive up to 52 weeks of statutory maternity leave in the UK, with statutory maternity pay for up to 39 weeks.
- Paid paternity leave in the UK typically spans 1 or 2 weeks.
- Statutory shared parental and shared parental leave pay is also available.
In the United Kingdom, the number of public holidays, also known as bank holidays, can vary slightly depending on the region. However, on average, employees are entitled to around eight public holidays yearly.
- New Year’s Day
- St. Patrick’s Day (Northern Ireland only)
- Good Friday
- Easter Monday
- Early May bank holiday
- Coronation of King Charles III
- Spring bank holiday
- Battle of the Boyne (Northern Ireland only)
- Summer bank holiday
- St. Andrew’s Day (Scotland only)
- Christmas Day
- Boxing Day
Statutory Benefits in the UK
- Employers must provide a workplace pension scheme where both the employee and employer contribute. The pension scheme type may vary and can be automatic or voluntary.
Work-related injury compensation:
- Employees injured at work are eligible for work-related injury compensation.
Working Hours in the UK:
- Standard working hours for full-time employment in the UK are typically 35 to 40 hours per week.
- These hours can fluctuate depending on the industry and the specific terms articulated in an employment contract.
Probation Period in the UK:
- In the UK, a probation period typically spans three to six months.
- This period is valuable in ensuring a successful and mutually beneficial employment relationship.
Cost of Hiring in the UK
Expenses linked to hiring employees in the UK include recruitment, onboarding, and ongoing employment expenditures. They also cover an employee's remuneration, benefits, and various taxes and contributions disbursed by both the employer and the employee.
Establishing a Subsidiary vs. Employer of Record (EOR) in the UK
Partnering with an EOR platform like Skuad can significantly lower the upfront costs of hiring in the UK. Skuad’s established infrastructure can expedite the process while assuming employment liabilities, a risk-averse option compared to a subsidiary. Flexibility and compliance with local regulations is an added advantage.
Top Job Listing Sites in the UK
For employers in the United Kingdom, an array of job listing websites offer access to a vast pool of potential candidates:
- Adzuna is a comprehensive job search engine that aggregates listings from various sources and provides diverse options to UK job seekers.
- CV-Library is a popular platform with a vast database of CVs and job postings, offering employers access to a rich talent pool.
- Escape the City is tailored for non-traditional career opportunities, making it a great choice for employers with unconventional roles.
- Indeed UK is a globally renowned job search engine with a vast UK audience for employers to tap into.
- Monster UK is a well-known job listing site that allows employers to post vacancies and provides various recruitment tools.
- Otta is a modern platform specializing in tech and startup job opportunities, ideal for tech companies seeking top talent.
- Reed.co.uk is a long-established job site in the UK, offering various job advertising and recruitment services for employers.
- Totaljobs (and Jobsite) are part of the same group, providing access to a large job seeker audience and recruitment tools.
- Unicorn Hunt is tailored for the startup community and is suitable for emerging businesses looking for entrepreneurial candidates.
- WorkInStartups is focused on connecting employers with startup enthusiasts, perfect for early-stage companies building their teams.
Compliance Risks of Hiring Employees in the UK
Employers must be well-versed in compliance risks of hiring in the UK to avoid penalties and legal disputes. Here’s what to keep in mind:
- Confirming Work Rights: Employers must ensure their employees have the legal right to work in the UK to prevent legal issues.
- Anti-Discrimination Regulations: UK regulations do not allow any form of discrimination. Violating these regulations can lead to expensive legal disputes.
- Employment Contracts: Employment contracts must meet legal requirements, or employers may face financial penalties. Terms related to notice periods and termination must align with the law.
- Tax and Payroll: Accurate calculation and on-time submission of income tax, National Insurance, and payroll deductions to HM Revenue and Customs (HMRC) are crucial to prevent fines.
- Data Protection: To avoid hefty fines, it is essential to handle employee data according to the General Data Protection Regulation (GDPR).
- Trade Unions: If unions are present, employers must follow legal procedures for recognition and collective bargaining.
How to Hire Employees in the UK
When hiring in the UK, it's crucial to have a transparent process. Here are the strategic approaches to hire employees in the UK:
Option 1: Set up a Subsidiary
- If you're a global company, consider the traditional approach of creating a subsidiary in the UK.
- Creating a subsidiary in the UK involves establishing a separate legal entity under a parent company.
- However, this can be time-consuming and expensive.
Option 2: Hire as a Contractor
- A flexible and cost-effective alternative to full-time employees is hiring talent on a contractual basis.
- The strategic steps involve first identifying your organization's needs and then selecting a contractor with expertise in your industry.
- Employers must ensure that contracts reflect the professional relationship accurately to avoid legal consequences and compliance risks.
Option 3: Partner With An Employer of Record (EOR) in the UK
- An increasingly popular alternative is to employ an Employer of Record (EOR) in the UK, such as Skuad.
- A practical and effective solution, Skuad simplifies hiring full-time employees and contractors in the UK.
- Skuad’s EOR manages employee payroll, benefits, and other HR tasks while ensuring regulatory compliance.
Hiring Trends in the UK in 2023
As we navigate 2023, the following trends are expected to shape how businesses approach talent acquisition and retention in the UK. Here are the key hiring trends for the year:
- Emphasis on Employer Branding: Even with reduced recruiting budgets, companies prioritize building and promoting their employer brand to attract top talent.
- Flexibility as the Norm: Flexibility in work arrangements is no longer just a perk but has become the baseline expectation for employees and job seekers.
- Skills-Based Recruitment: Recruitment strategies are increasingly focused on identifying and assessing specific skills, reflecting a shift away from traditional qualifications.
- Generative AI Assistance: Generative AI gives recruiters more time to engage in the human aspect of their roles, such as building relationships with candidates.
- Internal Mobility Focus: Internal mobility is gaining importance, leading recruiters to collaborate closely with Learning and Development (L&D) teams to foster talent growth from within.
- Alternative Talent Sources: Employers are exploring alternative talent pools, such as freelancers and gig workers, to meet their workforce needs, aligning with changing labor dynamics.
Hiring in the UK, Simplified with Skuad
In the UK’s dynamic and competitive landscape, simplifying your hiring and employment processes is critical to staying ahead. To overcome hiring hurdles in the United Kingdom, especially in the post-Brexit era, consider partnering with an Employer Of Record (EOR).
Skuad is a global employment and payroll platform designed to streamline your global employment efforts. With Skuad, you can effortlessly hire, manage, and pay employees in the UK while you focus on core business operations.
To explore how our distinctive platform can empower your global expansion, book a demo with Skuad.
Your journey to a streamlined and productive global workforce begins here!
1. Can a US company employ someone in the UK?
Yes. However, employers must ensure potential employees possess suitable work visas or permits to work in the UK.
2. How much does it cost to hire an employee in the UK?
The cost of hiring an employee in the UK varies depending on company requirements and benefits. But it typically includes salaries, national insurance contributions, pension contributions, HR costs, and additional benefits like healthcare or bonuses.
3. Can I employ foreign workers in the UK?
Yes, you can hire foreign workers in the UK, but you must follow specific rules. The UK has a points-based immigration system for foreign employees. Employers must ensure prospective employees have the proper work permits or visas. It's crucial to follow immigration and labor laws to avoid legal issues.