Employer of Record in the United Kingdom

With expedited time-to-market and an unparalleled international network, Velocity Global’s Employer of Record solution creates a streamlined, compliant business expansion into the United Kingdom. Grow your team in the United Kingdom with our Global Work Platform™.

Benefits of hiring in the United Kingdom

• The United Kingdom is one of the top-ten easiest markets in the world to do business, and a top-ten market for growing tech firms, according to Velocity Global’s 2020 Global Expansion Tech Index™.
• London, the U.K.’s capital and economic powerhouse, has been ranked as one of the world’s top tech startup hubs and the top global fintech hub. As reported by Yahoo! Finance, London is home to at least 80 unicorns, tech businesses worth more than one billion dollars. London also ranked among the highest for access to early-stage funding.
• The United Kingdom’s fintech sector includes more than 1,600 firms, and it’s projected to double by 2030. The sector contributes an estimated $9.18 billion and over 60,000 jobs to the U.K. economy. The United Kingdom’s fintech sector is more developed than other markets and routinely ranks as a leader for all businesses, not only startups.
• The U.K. has a long history of cutting-edge leadership, giving the world its first industrial revolution more than two centuries ago. Today, the United Kingdom shows the same pioneering spirit considering the creative, communications, digital, and agriculture industries heavily rely on the U.K.’s innovative and robust tech sector.

Challenges of hiring in the United Kingdom

• Brexit impacted trade, employment permits and visas, taxes, and other key business compliance considerations since the United Kingdom left the European Union (EU) on January 30, 2020. The true impact of Brexit on United Kingdom businesses is yet to be fully assessed, but limited trade, additional customs checks, and labor shortages are among the issues which emerged since the U.K.’s departure from the EU.
• London is one of the most expensive cities in the world to do business. Property, energy, and transportation costs are all relatively expensive compared to many other European major cities.
• Obtaining planning permission from government authorities and receiving water and sewage utilities take a considerable amount of time, and they are the costliest elements for expanding businesses in the U.K.. Registering a property is the most arduous task of starting a business in the United Kingdom, as stated in the World Bank’s Doing Business 2020 report.
• The United Kingdom offers one of the world’s premier talent pools. However, many residents and independent contractors living in the U.K. are EU citizens who must emigrate to their home countries if they do not apply for settled status. An estimated 2.1 million residents, 90% of EU residents required to have settled status in the U.K., held pre-settled status as of September 2021, reported by the Migration Observatory at the University of Oxford. These EU residents need to reapply to remain permanently due to Brexit.
• The U.K.’s tax system is notoriously complicated because the country’s legal system has grown through a piecemeal process. Local tax support is necessary for relieving this complex responsibility. An employer of record in the U.K. is another solution to help navigate these challenging legal systems.

Cultural nuances and must-knows of doing business in the U.K.

• Greet all colleagues with a handshake. If someone introduces themselves with their first name or formal title (such as Dr., professor, Miss/Mrs., or Mr.) introduce yourself accordingly. Formal introductions are commonplace.
• Dress in formal business attire unless otherwise instructed, as different offices have their own dress codes. In general, it is best to dress more formally and conservatively when doing business in the U.K..
• There is a strict separation between business and personal life in the U.K.
• Following established processes is essential in building business relationships.
• Verbal communications are usually confirmed in writing, where details are thoroughly described, and a record can be made.
• Be mindful of direct and indirect statements. Forceful statements may come across as impolite.
• There is a preference for understatement in communication, so be wary of tone during communication. For example, what might be described as “a bit expensive” may actually mean “very expensive,” or “a small issue” might actually mean “a big problem.”
• Trust, reliability, and fairness are values highly appreciated in business relationships.
• Hierarchies are not strictly vertical and tend to be more flat as duties overlap while responsibilities are loosely defined, and there are fewer distinctions between roles. The management style has a reputation for taking calculated risks since innovation is heavily regarded.
• Traditionally, the British are often perceived as emotionally neutral. Emotional restraint and courage during difficult situations is generally expected. Public displays of emotion are considered unprofessional in a business setting.

Minimum wage and salaries in the U.K.

• In the United Kingdom, the National Minimum Wage and National Living Wage varies depending on age. The minimum wages in the U.K. increase every year on April 1. As of April 1, 2022, the wages were listed as:
  • National Living Wage: £9.50
  • Age 21-22: £9.18
  • Age 18-20: £6.83
  • Age 16-17: £4.81
  • Apprentice Rate: £4.81
  • Accommodation Offset: £8.70

Probation period in the United Kingdom

• Probation periods in the U.K. are common but not required by law, and they 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.

Bonus payment in the United Kingdom

• There are no bonus requirements for employers in the U.K., but they are common. If employers pay either a cash or non-cash bonus, they must report it to Her Majesty’s Revenue & Customs (HMRC), the non-ministerial department of the U.K. government responsible for tax collection. Reporting requirements vary depending on the type of bonus.

Onboarding in the United Kingdom

• When employing an individual in the United Kingdom, an employer must give employees a document known as a written statement of employment particulars, stating the main conditions of employment. The employment of particulars includes a principal statement and a wider written statement. According to the U.K. Government Employee Contracts Guide, the principal statement must include:
  • The employer’s name
  • The employee’s name
  • Job title
  • A description of work
  • Start date
  • How much and how often an employee will be paid
  • Work hours and days
  • Holiday entitlement and if that includes public holidays
  • Where an employee will be working and whether relocation is necessary
  • If an employee works in different places, the locations and employer’s address
  • How long a job is expected to last, and the end date if it’s a fixed-term contract
  • Probation period length, if applicable, and its conditions
  • Any other benefits such as childcare vouchers and lunch
  • Whether or not obligatory training is required and if it is paid by the employer
• On the first day of employment, the employer must also provide the employee with information about:
  • Sick pay
  • Other paid leave such as maternity leave and paternity leave
  • Notice periods
• The employer can include the information above in the principal statement or provide it in a separate document on the first day of employment.
• As stated in the U.K. Government Employee Contracts Guide, employers must give employees a wider written statement within two months of an employee’s start date. This must include information about:
  • Pensions
  • Collections agreements
  • Any rights to non-compulsory training provided by the employer
  • Disciplinary and grievance procedures

Termination and notice period in the U.K.

• Employee termination in the United Kingdom requires employers to give employees between one and 12 weeks’ notice before termination, depending on an employee’s accumulated time of service. The statutory notice periods in the U.K. include:
  • One week’s notice for employees with one month to two years’ service
  • After that, employees are entitled to receive an additional week’s notice for each complete year of service, up to a maximum of 12 weeks
• The statutory minimum notice that an employee is required to give an employer does not increase over time, and it remains fixed throughout employment at one week.
• An employee who has been continuously employed by an employer for two years is entitled to statutory redundancy pay (SRP) and payment through the notice period or payment instead of notice, depending on the circumstance. Learn more about employment termination payment details in the U.K..

Annual leave in the United Kingdom

• Nearly all workers in the U.K. receive 5.6 weeks of paid holiday each year, including agency workers, contract workers, and those with irregular hours. The U.K. Government Holiday Entitlement Guide shares that most workers who work a 5-day week must receive at least 28 days’ paid annual leave a year.
• Employers use the U.K. government’s holiday entitlement calculator for part-time and irregular hourly workers’ paid time off allotment.

Paternity and maternity leave in the U.K.

• Statutory Maternity Leave in the U.K. is set at a total of 52 weeks, where ordinary leave is defined as the first 26 weeks, and additional leave is defined as the last 26 weeks. Mothers are not required to take all 52 weeks but must use two weeks’ leave after childbirth or four weeks for factory workers.
• Statutory Maternity Pay (SMP) is paid for up to 39 weeks. Mothers receive 90% of their average weekly earnings before tax for the first six weeks. After the first six weeks, mothers receive £156.66 or 90% of their average weekly earnings, whichever is lower, for the next 33 weeks. SMP is paid either monthly or weekly, depending on how the mother is usually paid. All taxes and National Insurance contributions are deducted from SMP.
• Paternity leave in the U.K. grants fathers a choice to take one or two weeks of paid leave after childbirth. The statutory weekly rate of Paternity Pay is £156.66 or 90% of the father’s average weekly earnings, whichever is lower. Paternity Pay is paid either monthly or weekly, depending on how the father is usually paid. All taxes and National Insurance contributions are deducted from Paternity Pay.
• Parents are eligible for Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) if they’re having a baby, using a surrogate to have a baby, adopting a child, or fostering a child they’re planning to adopt. Parents can share up to 50 weeks of leave and up to 37 weeks of pay between them. They need to share the pay and leave in the first year after childbirth or after the child is placed with the family. To receive SPL and ShPP, parents must take less than the 52 weeks of maternity or adoption leave and use the rest as SPL and take less than the 39 weeks of maternity or adoption pay and use the rest as ShPP. The ShPP has the same rates and conditions as the SMP and Paternity Pay.

Sick leave in the United Kingdom

• U.K. employees must present their employer with a physician’s sick note for all illnesses lasting longer than seven consecutive days, including weekends and bank holidays.
• To qualify for Statutory Sick Pay (SSP), employees must:
  • Be classified as an employee
  • Earn an average of at least £123 per week
  • Have been ill for at least four days in a row
• Employees are eligible to receive £99.35 a week of SSP for up to 28 weeks. Employees will be paid SSP for all the days they normally would have worked, except for the first three days.

Regional and national holidays in the U.K.

• The United Kingdom has the following eight public holidays, which are not included in the minimum paid leave entitlement. However, employers generally give their employees all of the United Kingdom’s public holidays off of work. The 8 national holidays in the U.K. are:
  • New Year’s Day (January 1)
  • Good Friday (April, the specific day fluctuates each year)
  • Easter Monday (April, the specific day fluctuates each year)
  • Early May Bank Holiday (May, the specific day fluctuates each year)
  • Spring Bank Holiday (May, the specific day fluctuates each year)
  • Summer Bank Holiday (June, the specific day fluctuates each year)
  • Christmas Day (December 25)
  • Boxing Day (December 26)

• The U.K. benefits system provides financial assistance and support to U.K. citizens who are unemployed, raising children, retired, care for someone, require medical attention, have a disability, or have died

• The United Kingdom residence status affects whether individuals need to pay tax in the U.K. on their foreign income. The U.K. tax year is April 6 to April 5 of the following year. The U.K. Government’s Income Tax Guide shares that individuals are considered U.K. tax residents if one of the following conditions are met:
  • An individual spent 183 or more days in the U.K. in the tax year
  • An individual has their only home in the U.K., it was available to use for at least 91 days in total, and time was spent there for at least 30 days in the tax year
  • An individual worked full-time in the U.K. for any period of 365 days, and at least one of these days fell into the specific tax year
• Non-residents only pay tax on their U.K. income, not foreign income. U.K. residents usually pay tax on all their income, whether it’s from the U.K. or abroad. However, there are special rules for U.K. residents whose permanent home is abroad.

Tax thresholds in the United Kingdom

• In the United Kingdom, income tax thresholds depend upon:
  • How much income is above Personal Allowance
  • How much income falls within each tax band
• The standard Personal Allowance is £12,570. Tax is paid on the amount of taxable income remaining after the Personal Allowance has been deducted. Personal Allowance may be larger if Marriage Allowance or Blind Person’s Allowance is claimed. It’s smaller if income is over £100,000.
• Income tax bands are different in Scotland versus England, Wales, and Northern Ireland.
• According to the U.K. Government’s Income Tax Rates Guide, in England, Wales, and Northern Ireland, the following are the tax rates in each tax band if a Personal Allowance is £12,570:
  • Income of up to £12,570: 0% tax rate
  • Income of £12,571 to £50,270: 20% tax rate
  • Income of £50,271 to £150,000: 40% tax rate
  • Income of over £150,000: 45% tax rate
• The tax rates and tax bands for all U.K. countries (England, Wales, Northern Ireland, and Scotland) without a Personal Allowance can be found at the U.K. Government’s Tax Rates and Bands Guide.
• The corporate income tax rate in the United Kingdom is 19%.
• Social security contributions are payable on employees’ gross annual earnings. The contributions are shared between the employer and the employee. As of 2022, the United Kingdom’s current social security rate charged on income for employees is 27.8% in total: 14% paid by the employee and 13.8% paid by the employer.

Health insurance in the U.K.

• All U.K. residents are eligible for free public health care through the National Health Service (NHS), including hospital, physician, and mental healthcare. Health coverage in the U.K. has been universal since the founding of the NHS in 1948. Under the 1946 Act, the Minister of Health was assigned to provide a full-scale, free healthcare service, which replaces insurance and out-of-pocket payments. Non-residents with a European Health Insurance Card receive free health coverage. For others, such as visitors, only treatment in an emergency department and for infectious diseases is covered.

Pension in the U.K.

• Individuals can claim the basic State Pension in the U.K. if they’re:
  • A woman born before April 6, 1953
  • A man born before April 6, 1951
• Following the U.K. Government’s basic State Pension Guide, individuals must have paid or been credited with National Insurance contributions to receive the basic State Pension of £141.85 per week.
• Individuals born later need to claim the new State Pension.
• Individuals can claim the new State Pension if they’re:
  • A woman born on or after April 6, 1953
  • A man born on or after April 6, 1951
• The pension age is currently under review, but it’s been set at 67 or 68 years old depending on birthdate.
• Individuals need at least 10 qualifying years recorded of paying National Insurance to receive any State Pension.
• Pursuant to the U.K. Government’s new State Pension Guide, the full new State Pension is £185.15 per week.

• Easily navigate payroll laws, contributions and requirements with an employer of record in the U.K..

Tax due dates in the United Kingdom

• The U.K. tax year is April 6 to April 5 of the following year. The deadline for submitting income tax returns is October 31 for paper filings and January 31 for online filings.

Payroll cycle in the United Kingdom

• The payroll cycle in the United Kingdom is usually monthly, with payments made at the end of each month.

Average working hours in the U.K.

• Employees work up to 48 hours per week on a 17-week average but can opt-out of the U.K.’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 United Kingdom

• Overtime in the U.K. is not statutorily required. Employment contracts can set overtime conditions.