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Localised employment contracts
The UK remains one of the most attractive hiring destinations in Europe due to its highly skilled workforce and mature business environment. With their business-friendly legal infrastructure and diverse talent across sectors, the UK is a top hiring choice for international companies.
As one of the most established economies, the UK offers a skilled, English-speaking workforce and a business-friendly environment for global employers. However, the country has its own legal frameworks around employment contracts, payroll, taxes, and statutory benefits that companies must comply with.
Curious to read more about salaries, employment costs, and legal requirements for hiring in the UK? Get our full hiring guide now!
Employment contracts in the UK can be part-time or full-time based on the working hours, fixed-term or indefinite based on the duration, and zero-call contracts for project-based work. Regardless of their type, they must be in a written form and contain particulars such as working hours, wages, paid leave, notice periods, termination policies, and similar.
Notice periods: Ranging from one week to 12 weeks, depending on the length of employment.
Termination of employment: Termination can occur due to the expiry of the contract, retirement, mutual agreement, serious breach of contract, dismissal, court decision, and other reasons.
Need a full overview of employment contracts in the UK? Get our full template now!
Employers in the UK must provide mandatory employment benefits in line with the country’s labour law. Many of them also offer extra perks to stay competitive in the job market. Understanding both of them is essential to attracting and retaining talent.
Curious about all the employee benefits available in the UK?
Employers in the UK must collect income tax and National Insurance contributions (NICs) from employee wages through a PAYE system. Other tax regulations may apply depending on the nature of income, such as dividends, royalties, and VAT.
Personal income tax rate: From 0% to 45% in England, Wales, and Northern Ireland; from 19% to 48% in Scotland.
VAT: 20%
Tax allowances: Personal non-taxable allowance
Additional tax reliefs: Work-from-home allowance
Salaries in the UK can be paid weekly, monthly, or even for 10 days, with a maximum duration of 31 days. During the pay reference period, employees must receive at least the minimum statutory wage, calculated based on their age.
Salary payment deadline: By the 10th of the following month.
Taxes and contributions payment deadline: 22nd of the following month.
Payroll declarations deadline: On or before the date employees are paid.
Payroll currency: GBP
Want to explore the UK’s regulations about payroll, salaries, and contributions in more detail?
Labour laws in the UK are outlined in a range of employment laws, including the Employment Rights Act and related legislation. Such legislation governs aspects like employment types, minimum wage, working hours, statutory benefits, and similar.
Total employment cost:
Minimum wage: £12.21 per hour
Probation period: Three to six months.
Want to learn more about the UK’s regulations about employment types, employer obligations, and work conditions?
Foreign nationals looking to work in the UK must hold a valid visa or work permit suited to their job role and qualifications. The type of visa, application process, and costs will vary depending on the worker’s nationality, skill level, and employment contract.
Types of permits: Skilled worker permit
Process length: Two to three months
Process cost: £8200
Need more information on how to obtain visas and work permits in the UK? Get our full country handbook now, or click here to find out more!
With EOR services in the UK, you can legally employ workers in the country without opening your own legal entities. As an official employer, your EOR will take over all your legal responsibilities, including:
PEO services allow you to get HR and administrative support while you remain the legal employer for your team in the UK. PEO services are ideal for employers who already have legal entities but need support for managing:
Native Teams provides a payroll calculator adjusted to the UK’s local labour laws. With our calculator, you can easily estimate net and gross salaries, employer/employee contributions, and other mandatory deductions in the country.
Note: The information provided above is for general guidance only and should not be considered a substitute for legal advice. We strongly recommend consulting with qualified professionals who specialise in local labour laws before making any hiring decisions. While the data was accurate at the time of writing, labour regulations are subject to change, and it is your responsibility to stay informed about the latest developments.
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When hiring freelancers or gig workers in the UK, it’s important to clearly define the working relationship to avoid misclassification. Freelancers and gig workers are self-employed and, hence, responsible for managing their own taxes and National Insurance contributions. If the nature of work resembles that of an employee, such as fixed hours or long-term engagement, you may become subject to tax and legal responsibilities and risk penalties.
