Velocity Global’s United Kingdom PEO (Professional Employer Organization) solution streamlines your expansion into the UK. With accelerated global employee onboarding, you compliantly enter the UK without setting up an entity. Our simplified international expansion solution expedites your time-to-market by 90% compared to entity establishment.
With International PEO, Velocity Global becomes your Employer of Record. This means that we use our global infrastructure to compliantly hire and onboard international employees on your behalf—while you retain complete oversight of their day-to-day responsibilities. Our expansion experts coordinate and execute all payroll, compliance, and risk mitigation to provide a seamless global expansion experience.
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United Kingdom Fast Facts
Currency: Pound Sterling (£, GBP)
Capital: London, England
Population: 67.8 million
Economy: $2.83 trillion
Top Sectors: Services, manufacturing and production, and construction
- Employers are not required to pay employees on public holidays. However, holiday pay remains a common practice.
- New Year’s Day
- Good Friday
- Easter Monday
- Early May Bank Holiday & 75th Victory in Europe Day
- Spring Bank Holiday
- Summer Bank Holiday
- Christmas Day
- Boxing Day
Hiring Considerations in United Kingdom
Benefits of hiring in the United Kingdom:
- The UK is one of the easiest markets in which to do business and a top-ten market for growing tech firms, according to Velocity Global’s 2020 Global Expansion Tech Index™.
- London, the UK’s main economic generator, produces more tech startups than other European capitals. In 2019, London received more venture capital funding than Germany and France.
- The UK’s fintech sector is more developed than other markets and routinely ranks as a leading city for fintech businesses—not just startups. In terms of volume and quality of organizations, the UK’s capital region and beyond offer a rich, nationwide fintech scene.
- The UK’s tech industry is one of the world’s most diverse in terms of other sectors it supports; digital, creative, cybersecurity, communications, and agriculture organizations alike rely on the UK’s robust technology industry for innovative solutions.
Challenges when expanding into the United Kingdom:
- Brexit presents the most uncertainty for growing tech firms. With few details finalized, the UK and EU have much to complete before the transition period expires on December 31st, 2020. It is still unclear exactly how Brexit will impact trade, employment permits and visas, taxes, and other key considerations.
- Businesses reliant on imports and exports must anticipate disruptions for each, especially with EU member countries. The border between Northern Ireland and Ireland, specifically, may present prolonged headaches for trade and travelers, as few details exist on how Brexit will impact trade and movement across the border.
- The UK still offers one of the world’s premier talent pools. However, many living in the UK are EU citizens who must emigrate to their home countries if they do not apply for settled status. As of January 2020, nearly 1 million EU citizens remained inside the UK without application for settled status.
Cultural nuances and must-knows for doing business in the United Kingdom:
- Greet all meeting members with a handshake. If someone introduces themselves with their first name, or their formal title (i.e., Dr., professor, or Mr., Miss/Mrs.) introduce yourself accordingly. As a general rule, stick to formal introductions.
- Dress in formal business attire unless you receive other instruction, as different offices have unique dress codes. For men, this means suits, and either suits or conservative dresses for women. In general, it is best to dress more formally and conservatively than not.
- Be mindful of direct and indirect statements. Forceful statements may come across as arrogant or rude. Opt for more polite communication and suggestions.
- Pay attention to personal space. Britons appreciate others respecting their boundaries, and it is impolite to stand or sit too close to others when speaking or in meetings.
Employment Contracts in United Kingdom:
Minimum wages and salaries:
The United Kingdom’s National Minimum Wage and National Living Wage varies depending upon one’s age:
- 25 and over: £8.72
- 21–24: £8.20
- 18–20: £6.45
- Under 18: £4.55
- Apprentice: £4.15
- The UK allows probation periods, which are common, and typically last between three and six months. Depending on the employer, employees may not receive all contractual benefits during the probation period. However, employees remain entitled to all statutory rights during this time.
- There are no bonus requirements for employers in the UK. However, if an employer pays either a cash or non-cash bonus, they must report it to HM Revenue & Customs (HMRC). Reporting requirements vary depending on the type of bonus.
- Types of bonuses include cash and vouchers exchangeable for cash and non-cash bonuses.
Termination and severance considerations:
- Employee termination in the UK requires employers to give employees between one and 12 weeks’ notice before termination.
- Statutory redundancy notice periods include:
- One week’s notice for employees with one month to two years’ service
- One week’s notice for each year’s service between two and 12 years
- 12 weeks’ notice for service lasting 12 years or longer
Employers must provide statutory redundancy pay, and either payment through the notice period, or payment instead of notice, depending on individual circumstances.
Paid Time Off & Benefits
Statutory Maternity Leave:
All expectant mothers identified as employees (not workers) and give their employers proper notice of leave qualify for Statutory Maternity Leave. Length of employment, hours worked, or income received do not impact eligibility.
- Statutory Maternity Leave lasts 52 weeks, with ordinary leave at 26 weeks, and additional leave at 26 weeks. Mothers do not have to take all 52 weeks but must use two weeks’ leave after their child’s birth, and four weeks for factory workers.
- Statutory Maternity Pay:
- Mothers receive 39 weeks’ paid leave.
- During the first six weeks, they receive 90% of their pre-taxed weekly earnings.
- After the first six weeks, mothers receive £151.20 or 90% of weekly earnings for the following 33 weeks. The lower amount applies, and all taxes and National Insurance contributions are deducted.
- Paternity leave grants fathers one or two weeks’ leave or pay, depending on eligibility.
Vacation and annual leave:
- Nearly all workers receive 5.6 weeks paid holiday each year, including agency workers, contract workers, and those with irregular hours.
- Employers use the UK government’s holiday entitlement calculator for part-time and irregular hourly workers’ paid time off allotment.
- Statutory leave caps at 28 days’ paid holiday.
- UK employees must present their employer with a physician’s sick note for all illnesses lasting longer than seven concurrent days, including weekends and bank holidays.
- Employees receive paid Statutory Sick Pay (SSP) after changing holiday leave to sick leave, counting towards the total amount of received holiday pay, unless they do not qualify for SSP, or were out of work ill and paid occupational sick leave according to their employment contract.
Tax requirements and dates:
- Send the year’s final payroll report: On or before employees’ payday
- Update employee payroll records: Beginning April 6th
- Update payroll software: From April 6th or earlier
- Provide the employee a P60 (form showing employee-paid tax): By May 31st
- Report employee expenses and benefits: By July 6th
Average workweek hours:
- Employees work up to 48 hours per week on a 17-week average but can opt-out of the UK’s 48-hour workweek and work additional hours.
- Exceptions to these rules apply, including managers and executives who set their own hours.
- Overtime in the UK is not required, and employment contracts set overtime stipulations.
- Employer contributions include 13.80% to National Insurance, and 3.00% to Workplace Pension, totaling a 16.80% burden.
- The first £702 is exempt from National Insurance, and Workplace Pension rates vary with a minimum of 3% contribution as of April 2019,
- Employee taxes:
- Personal Allowance up to £12,500: 0%
- Basic rate between £12,501 and £50,000: 20%
- Higher rate between £50,001 and £150,000: 40%
- Additional rate over £150,000: 45%
Choose Velocity Global
Growing your operations abroad is an exciting time, and partnering with a seasoned global expansion organization better positions your business for a successful expansion. With expedited time-to-market and an unparalleled international network, Velocity Global’s International PEO solution creates a streamlined, compliant expansion into the UK. As your Employer of Record, we oversee all risk mitigation, payroll, and compliance, so you remain focused on keeping your daily operations running uninterrupted.
Whether you build your UK presence through a short-term project, bring on one key employee, or hire a full team, International PEO provides the flexible, agile solution you need—at up to 60% less than of the cost of entity establishment.
If you would like to learn more about how Velocity Global changed how companies expand overseas, reach out to us today.