Established Workforce, Trusted Regulations

The United Kingdom offers a mature and globally connected workforce, backed by strong legal protections and well-defined employment standards. For businesses expanding into the UK, understanding its complex regulatory landscape is key to attracting talent and maintaining compliance. This guide outlines essential employment regulations, statutory benefits, and hiring practices to help employers manage workforce operations effectively in the UK.

Employment Categories and Contracts

UK employment law distinguishes between employees, workers, and self-employed individuals, each with different rights and entitlements. Employers must issue a written statement of terms and conditions (often within an employment contract) by the first day of employment. Contracts should clearly define the employment status, notice period, working hours, compensation, and entitlements.

Work Time, Leave, and Holiday Entitlements in the UK

In the United Kingdom, workers are protected by statutory rights that ensure fair working hours and paid leave. This guide outlines the key entitlements you should be aware of as an employee or employer.

Statutory Annual Leave Entitlement
Almost all workers are legally entitled to 5.6 weeks’ paid holiday per year. This is known as statutory leave entitlement and includes:

• Agency workers
• Workers with irregular hours
• ‘Part-year’ workers, such as those who do not work every week of the year

For a standard 5-day work week, this equates to 28 days of paid annual leave.

Note: Employers can choose to include bank holidays as part of the 5.6 weeks’ statutory leave.

Entitlement for Part-Time and Irregular Workers

Part-Time Workers
Part-time employees are entitled to 5.6 weeks of paid leave, pro-rated based on the number of days they work each week.

Example:
A worker who works 3 days a week is entitled to 16.8 days of annual leave (3 days × 5.6 weeks).

Irregular Hours or Part-Year Workers
Workers with irregular or part-year schedules accrue leave based on the number of hours they work in each pay period. Employers can use the UK Government’s holiday entitlement calculator to determine the accurate leave entitlement. Website: https://www.gov.uk/calculate-your-holiday-entitlement

For leave years starting before 1 April 2024, employers can calculate leave using average days or hours worked per week.

Limits on Statutory Leave

The maximum statutory paid holiday is capped at 28 days per year. This means that even if an employee works 6 days per week, their legal entitlement remains at 28 days.

Bank Holidays

Employers are not legally required to provide paid leave for bank or public holidays.

Bank holidays can be counted toward the statutory 5.6 weeks.

Additional or Enhanced Leave

Employers may choose to offer extra leave beyond the statutory minimum. These additional days are at the employer’s discretion and do not have to follow the rules governing statutory leave.

Parental Leave Entitlement

Employees have the right to unpaid parental leave if they’ve worked for the employer for at least a year. The entitlement includes:

• 18 weeks of unpaid leave for each child and adopted child, up to their 18th birthday
• The maximum leave allowed per year is 4 weeks per child, unless the employer agrees otherwise
• Leave must be taken in whole weeks (e.g., 1 or 2 weeks), not single days—unless the child is disabled or the employer agrees otherwise
• A ‘week’ is defined by the number of days the employee normally works over a 7-day period

Example:
If an employee works 3 days a week, one week of parental leave equals 3 days. If work patterns are irregular, a ‘week’ is calculated as total working days per year divided by 52.

Other Important Rights

Workers are entitled to:

• Holiday pay for their statutory leave
• Accrue holiday during maternity, paternity, adoption, and sick leave
• Request annual leave while off sick
• Carry over unused leave in specific circumstances

Resolving Disputes

Paid holiday is a legal right. If workers believe their entitlements are not being met, they can:

• Raise the issue with their employer
• Seek help through mediation
• Make a claim to an employment tribunal

For more information or to calculate entitlements, visit the official UK government holiday entitlement page.

Minimum Wages and Compensation

National Minimum Wage and Living Wage (Effective April 2025)

Employers must ensure wage compliance based on the employee’s age and role. Failure to do so may result in financial penalties and reputational damage.

Overtime and Holiday Pay
There is no statutory requirement to pay a premium for overtime unless total hours exceed the 48-hour weekly cap without an opt-out. Holiday pay must reflect regular earnings, including commissions and overtime if applicable.

Notice Period

Employees are entitled to a statutory minimum notice period:

• 1 week after 1 month of service
• 1 week per full year of service (up to 12 weeks)

Employment contracts may include longer notice periods.

Unfair Dismissal Protection

Currently, employees gain protection against unfair dismissal after 2 years of continuous service. However, exceptions apply, such as dismissals related to discrimination or whistleblowing, which are automatically unfair.

Redundancy Pay

Employees with at least 2 years of service are entitled to statutory redundancy pay, calculated based on age, length of service, and weekly pay (subject to a statutory cap). Employers must follow a fair consultation process and explore alternative options before proceeding.

To legally employ foreign nationals in the UK, companies must obtain a sponsor licence from the UK Home Office. This licence allows businesses to sponsor non-UK nationals under routes such as the Skilled Worker visa, subject to specific role, salary, and skill level requirements.

However, under current UK immigration rules, Employer of Record (EOR) providers are not eligible to act as visa sponsors. The Home Office requires sponsoring employers to have direct responsibility for the day-to-day management and supervision of sponsored employees — a requirement that the EOR model typically does not fulfil.

If your business intends to sponsor foreign workers directly, you will need to apply for a sponsor licence and ensure compliance with UK Visas and Immigration (UKVI) requirements, including:

• Issuing Certificates of Sponsorship (CoS)
• Meeting salary thresholds
• Maintaining reporting and record-keeping duties

In the UK, employers are legally responsible for ensuring accurate payroll processing, tax withholding, and timely remittance of contributions to HM Revenue & Customs (HMRC).

Key employer obligations include:

Income Tax (PAYE)

Employers must operate Pay As You Earn (PAYE), the system used to collect Income Tax and National Insurance Contributions (NICs) from employees’ wages. This includes:

• Calculating and withholding the correct amount of tax
• Providing payslips to employees
• Submitting Real Time Information (RTI) reports to HMRC each time employees are paid

National Insurance Contributions (NICs)

Employers contribute NICs on top of employees’ salaries, based on earnings thresholds. These contributions help fund state benefits like pensions and healthcare. Current employer NIC rate is generally 13.8% for earnings above the secondary threshold.

Pension Auto-Enrolment

All employers must enrol eligible workers into a workplace pension scheme and make minimum contributions. The total minimum contribution is 8%, with at least 3% contributed by the employer.

Other Statutory Payments

Employers are also responsible for administering payments such as:

• Statutory Sick Pay (SSP)
• Statutory Maternity/Paternity/Adoption Pay
• Holiday pay entitlement

In the UK, public holidays are commonly referred to as bank holidays. The term originated from the Bank Holidays Act 1871, which designated certain days when banks would close, and over time, it became the standard term used for public holidays.

If a bank holiday falls on a weekend, a ‘substitute’ weekday (usually the following Monday) is designated as the official holiday. However, employers are not legally required to give employees paid leave on bank or public holidays. Whether time off is granted depends entirely on the employment contract or company policy.

Bank holidays may also affect how and when benefits or salary payments are processed, particularly if a scheduled payment date falls on a holiday.

Please find our United Kingdom office address below:

Unit 2, 2nd Floor
39-41 High Street
New Malden, Surrey
KT3 4BY, UK

Email: info@linkcompliance.com