The information on this page was current at the time it was published. Regulations, trends, statistics, and other information are constantly changing. While we strive to update our Knowledge Base, we strongly suggest you use these pages as a general guide and be sure to verify any regulations, statistics, guidelines, or other information that are important to your efforts.

 

Brexit Update:
Since the UK officially left the European Union on January 31, 2020, the relationship between the two has evolved and continues to be shaped by the ongoing implementation of the withdrawal agreement.

Key Dates:

• January 31, 2020: UK officially left the EU and entered a transition period that ended on December 31, 2020.

• December 31, 2020: The transition period ended, and the UK fully exited the EU single market and customs union.

• January 1, 2021: The UK-EU Trade and Cooperation Agreement came into effect, outlining the post-Brexit relationship between the two entities.

• 2023/2024 Current: The UK and EU are still navigating the ongoing implementation and potential revisions of their post-Brexit relationship.

It's crucial for businesses operating in either the UK or the EU to stay informed about the latest developments and adjust their operations accordingly.

 

Employment Law In The UK

UK employment laws and regulations

The Employment Rights Act 1996 is the primary legislation that governs employment in the United Kingdom. The Employment Rights Act sets out your responsibilities as an employer and the rights each employee and worker has in the UK. The Working Time Regulations 1998 regulate weekly working hours, rests, and holiday entitlements.

 

To whom and what does the Employment Rights Act apply?

In general, your responsibilities as an employer depend on the type of contract you give your employee and his employment status. Contract types include:

1. full-time and part-time contract

2. fixed-term contracts

3. agency staff

4. freelancers, consultants, and contractors

5. zero hour contracts- Additional rights and regulations related to these arrangements exist under the Workplace Regulations 2013 (a series of laws covering the topic). 

 

Full-time and part-time contracts

Your employees are entitled to:

• a written statement of employment;

• the statutory minimum level of paid holiday;

• a payslip showing all deductions;

• the statutory minimum length of rest breaks;

• Statutory Sick Pay (SSP); and

• maternity, paternity, and adoption pay and leave.

Your responsibilities include:

• making sure employees do not work longer than the maximum allowed;

• paying employees at least minimum wage;

• having employer’s liability insurance;

• providing a safe and secure working environment;

• registering with HM Revenue and Customs to handle payroll, tax, and National Insurance Contributions (NICs);

• considering flexible working requests;

• avoiding discrimination in the workplace; and

• making reasonable adjustments to your business promises for disabled employees.

 

Fixed term contracts

Fixed term employees must receive the same treatment as full-time permanent staff.

 

Agency Staff

As an employer, you are permitted to hire temporary employees through an agency. Hiring through an agency means:

• you pay the agency, including NICs and SSP;

• it is the agency’s responsibility to ensure workers’ rights under the working time regulations are upheld;

• after 12 weeks of continuous employment in the same position, agency workers are entitled to the same rights and conditions as permanent employees, including comparable pay, working hours, rest periods, night work, breaks, and annual leave;

• you must provide the agency with information about the relevant rights and conditions of your business so they can ensure workers get equal treatment after 12 weeks in the same position;

• you must allow agency workers to use any shared facilities, e.g., childcare, gym;

• you must give agency workers information about all job vacancies from the first day they work there; and

• you are responsible for their health and safety.

 

Freelancers, Consultants, and Contractors

Hiring a freelancer, consultant, or contractor means:

• they are self-employed or work for another company;

• they often look after their own taxes, including NICs;

• they might not be entitled to the same rights as workers, e.g., minimum wage; and

• you are responsible for their health and safety.

• The IR35 rules were updated in April, 2021, and can be complex. Assess any freelancer's IR35 status before entering into a contract to determine their tax and employment rights.

 

Zero hour workers

Zero hour workers are also known as casual contracts. They are usually hired for ‘piece work’ or ‘on call’ work, e.g., interpreters. In general:

• they are on call to work when you need them;

• you do not have to provide them with work;

• they are not required to accept the work you offer to or request of them;

• they are entitled to statutory annual leave and the National Minimum Wage;

• By April 2024, new regulations for calculating holiday pay for irregular workers like zero-hour staff  will take effect. It accrues at 12.07% of hours worked and can be included in regular wages or paid separately during holiday periods.

• they can find work elsewhere, even if they have a contract with you that bans them from looking for other work or accepting work from another employer.; and

• you are responsible for their health and safety.

 

Employment status and worker's rights

Employment status helps to determine your worker’s rights and your obligations as an employer. Keep in mind, employment status may be different for tax purposes. The main types of employment status are:

1. worker

2. employee

3. self-employed or contractor

 

Worker

A person is classified as a worker if:

• he has a contract or other arrangement with you to do work or services personally for a reward. The contract or arrangement does not have to be in writing;

• his reward is for money or a benefit of any kind, e.g., the promise of a contract or future work;

• he has only a limited right to send someone else to do the work, i.e., subcontract;

• he must show up for work even if he does not want to;

• you have work for him to do as long as the contract or arrangement is to last; and

• he is not doing the work as part of his own limited company in an arrangement where you (his employer) are actually a customer or client.

Workers are entitled to the following rights:

• National Minimum Wage;

• protection against unlawful deductions from wages;

• the statutory minimum paid holidays;

• the statutory minimum length of rest breaks- the specific statutory minimum is one uninterrupted 20-minute rest break in a working day of more than six hours.

• to work no more than the 48 hour average per week or to opt out of this right at their choosing;

• protection against unlawful discrimination;

• protection for whistleblowing; and

• to not be treated less favourably if they work only part-time.

Worker may also be entitled to:

• Statutory Sick Pay

• Statutory Maternity Pay

• Statutory Paternity Pay

• Statutory Adoption Pay

• Shared Parental Pay

Workers are generally not entitled to:

• minimum notice periods if their employment will be ending, i.e., dismissal by employer;

• protection against unfair dismissal;

• the right to request flexible working;

• time off for emergencies; and

• Statutory Redundancy Pay.

 

Employee

An employee is someone who works under an employment contract.

 

A person may be an employee under employment law, but have a different employment status for tax purposes. It is your responsibility to determine your workers’ status for both employment and tax law purposes.

 

 

All employees are workers, but not all workers are employees. Employees have additional employment rights and responsibilities that do not apply to workers that are not considered employees. Employees have all of the rights workers have plus:

• Statutory Sick Pay;

• statutory maternity, paternity, adoption, and shared parental leave and pay (workers are entitled to pay, but not leave);

• minimum notice periods if their employment will be ending, i.e., dismissal by employer;

• protection against unfair dismissal;

• the right to request flexible working;

• time off for emergencies; and

• Statutory Redundancy Pay.

Some of these rights require a minimum length of continuous employment before an employee qualifies for them. An employment contract may state how long this qualification period is.

 

Self-employed and contractors

A person is considered to be self-employed if he runs his business for himself and takes responsibility for its success or failure. People who are self-employed do not have the rights or responsibilities of employees.

Employment law does not apply to self-employed people in most cases because they are their own boss.

 

Self-employed people still have protection for their health and safety and in some cases against discrimination. Generally, their rights and responsibilities are set out in a contract with their clients.

 

 

How do I comply with the Employment Rights Act?

Employment Contract:

Under the Employment Rights Act 1996, although you are not required to have a written employment contract, you are required to provide your employees with a written statement of employment containing the job particulars within two months of the beginning of employment. The written statement must include:

• the name of the employee and employer;

• job title and duties;

• the date employment commenced;

• length of employment and end date, if a fixed term;

• the place of work;

• rate and periods of pay (By April 2024, the written statement should reflect the current rate of the National Living Wage if applicable);

• hours of work;

• paid holiday and vacation entitlements (By April 2024, holiday pay for irregular workers like zero-hour staff accrues at 12.07% of hours worked and can be included in regular wages or paid separately);

• sick leave and pay entitlements;

• pension entitlements, if any;

• length of notice required to terminate employment;

• disciplinary and grievance procedures; and

• whether a collective agreement applies to the employment.

 

It is important to set out your dismissal and disciplinary rules and procedures in writing. If you do not, a court can order that you compensate an employee.

 

 

Advisory, Conciliation and Arbitration Services (ACAS) provides a free sample framework of the written statement you are required to provide your employees with within 2 months of their employment start date. 

Minimum Benefits and Rights:

There are a number of mandatory minimum benefits and rights conferred upon employees in the United Kingdom. That means, these minimums will override any contractual benefits that confer less.

National Minimum Wage

Most workers in the UK are entitled to be paid at least the National Minimum Wage. The minimum wage rate depends on a person’s age and whether he is an apprentice. To be entitled to the National Minimum Wage, a person must be over the leaving school age, which is 16 years of age. Worker are entitled to the minimum wage if they are:

• part time

• casual labourers

• agency workers

• workers and homeworkers paid by the number of items they make

• apprentices

• trainees, workers on probation

• disabled workers

• agricultural workers

• foreign workers

• seafarers

• offshore workers

Apprentices are entitled to National Minimum Wage if they are either under 19 years of age or over 19 years of age and in their first year of apprenticeship. Apprentices over 19 years of age who have completed their first year of apprenticeship are entitled to the minimum wage rate for their age.

The National Minimum Wage changes every April. You can find the current National Minimum Wage here.

People are not entitled to minimum wage if they are:

•  a student getting work experience as part of a higher or further education course;

• compulsory school age;

• a volunteer or doing volunteer work;

• on a government or European programme; or

• work shadowing.

 

It is a criminal offence to not pay someone the National Minimum Wage or to falsify payment records.

 

 

Hours of Work

Employers and employees are free to determine the number of hours the employee is to work up to a maximum of 48 hours per week. An employee, at his option, can choose to “opt out” of this limit.

Holiday and Vacation

Under the Working Time Regulations 1998, almost all workers are legally entitled to at least 5.6 weeks of paid holiday per year, this is known as statutory leave entitlement or annual leave. Public and bank holidays can be included in the calculation of annual leave, although an employer is not required to include these holidays in a worker’s annual leave (there are currently 8 in England and Wales).

Part-time workers are also entitled to a minimum of 5.6 weeks of paid holiday per year on a pro-rata basis. People who work irregular hours, e.g., shifts, can use this calculator to determine the number of annual leave days they are entitled to.

With regard to their annual leave, employees have the right to:

• be paid for leave;

• accrue holiday entitlement during maternity, paternity, and adoption leave;

• accrue holiday entitlement when out sick from work; and

• choose to take their holiday entitlement at the same time as sick leave.

Rest Breaks

Workers over 18 are usually entitled to three types of breaks: rest breaks at work, daily rest, and weekly rest.

Workers are entitled to one uninterrupted 20 minute rest break during their workday, if they work more than 6 hours per day.

Workers are entitled to 11 hours of rest between workdays, e.g., if they finish work at 8:00 pm, they should not start work again until at least 7:00 the next morning.

Workers are entitled to either: an uninterrupted 24 hours without any work each week or an uninterrupted 48 hours without any work every two weeks.

Employers have the discretion to determine when employees take their rest breaks as long as the break is taken at one time in the middle of the day or shift and the employee is allowed to leave her desk or workstation. If an employer asks his employee to return to work before her rest break is over, the break does not count as a rest break. Workers are not entitled to be paid for rest breaks. There are a few exceptions to the right to rest breaks and some workers are entitled to compensatory rest breaks.

Statutory Sick Pay (SSP)

An employee may be entitled to SSP for up to 28 weeks. SSP is paid for the days an employee would have normally worked. Employees are not entitled to SSP for the first three days they are out sick, unless they have been paid SSP within the past 8 weeks and are eligible again. SSP is paid by an employer like any other wages, e.g., weekly, monthly, etc. Tax and National Insurance Contributions will be deducted. To qualify for SSP, an employee must:

• be classified as an employee and have done some work for the employer;

• have been ill for at least 4 days in a row, including non-working days;

• earn at least £123 (before tax) per week; and

• have told his employer he is sick before the deadline, or within 7 days if he doesn’t have a deadline.

To claim SSP, an employee should tell her employer in writing, if they request it, and by her employer’s deadline, or within 7 days if her employer does not have a deadline.

Maternity, Paternity, Adoption, and Shared Parental Leave and Pay

Maternity Leave: Eligible employees are permitted 52 weeks of maternity leave. 

Statutory Maternity Pay: SMP is available to eligible employees for 39 weeks. SMP rates can be found here.

 

You can use the Maternity and Paternity Pay calculator to help you determine the amount your employees are entitled to.

 

 

Paternity Leave: Employees may be entitled to Statutory Paternity Leave and Pay if they and their partner are:

• having a child

• adopting a child

• having a baby through a surrogacy arrangement

Employees may choose to take either one or two consecutive weeks of leave. Leave cannot start before the childbirth. The start date must be one of the following:

• the actual date of birth

• an agreed number of days after the birth

• an agreed number of days after the expected week of childbirth

Leave must end within 56 days of the birth (or due date if the child is early).

Paternity Pay: Statutory Paternity Pay may be available for eligible employees who are having a baby, adopting a baby, or having a baby through a surrogacy arrangement.

Adoption Leave: Eligible employees are permitted 52 weeks of adoption leave. 

Adoption Pay: SMP may also be available to eligible employees for 39 weeks. Tax and NIC must be deducted.

Shared Parental Leave and Statutory Shared Parental Pay: Employees may be entitled to SPL and Statutory Shared Parental Pay (ShPP) if:

• their baby is due on or after April 5, 2015

• they adopt a child on or after April 5, 2015

Eligible employees can start SPL if they or their partner end their maternity or adoption leave or pay early. The remaining leave will be available as SPL and the remaining pay may be available as ShPP. Employees can take SPL in up to 3 separate blocks. They are also permitted to share the leave with their partner if their partner is also eligible. Parents can choose how much SPL each will take.

Example: A mother and her partner are both eligible for SPL and ShPP. The mother ends her maternity leave and pay after only 22 weeks, leaving 30 weeks available for SPL and 17 weeks available for ShPP. The parents can decide how to split this SPL and ShPP.

SPL and ShPP must be taken between the birth of the baby and her first birthday or, in the case of adoption, within one year of the adoption. SPL and ShPP are only available in England, Scotland, and Wales.

Unpaid Parental Leave: Eligible employees are permitted to take unpaid parental leave to tend to a child’s welfare, including:

• spending more time with a child or children

• looking at new schools

• settling a child or children into new childcare arrangements

• spending more time with family, such as visiting grandparents

Employment rights (e.g., right to holiday and to return to work) are protected during unpaid parental leave. 

Dismissal (Termination)

When dismissing (firing, terminating) staff in the United Kingdom, you must do so fairly. There are four types of dismissal in the UK:

1. fair dismissal

2. unfair dismissal

3. constructive dismissal

4. wrongful dismissal

 

There is no concept of “at-will” employment under UK law. As a minimum, in the absence of gross misconduct, notice of dismissal must be given.

 

 

A dismissal is either fair or unfair based on your reason for the dismissal and your actions during the dismissal process.

Fair Dismissal: You must have a valid reason to dismiss an employee. Valid reasons include:

• the employee’s capability or conduct

• redundancy

• something prevents your employee from legally doing his job, e.g., he loses his driver’s license

For a dismissal to be considered fair, you not only need to have a valid reason for dismissal, but you must also act reasonably during the dismissal and disciplinary procedures. In this context, “reasonable” does not have a legal definition, so the courts will consider whether you:

• genuinely believed that the reason was fair;

• carried out proper investigations, where appropriate;

• followed all relevant procedures;

• told your employee why he or she was being considered for dismissal and listened to his or her views. In Northern Ireland, you must do this in writing;

• allowed your employee to be accompanied to dismissal/disciplinary proceedings;

• gave your employee a chance to appeal.

When you dismiss an employee instantly, without notice or pay in lieu of notice, usually because of gross misconduct (e.g., fraud, theft, violence), it is considered summary dismissal. Courts may determine that a summary dismissal was procedurally unfair. For example: If your employment contract says you cannot suspend an employee without pay, you should suspend the employee with full pay and open an investigation.