Employer of Record Guide in 
United Kingdom

Navigating the UK's hiring landscape doesn't have to be overwhelming, even with its complex employment laws and regional variations. Our comprehensive guide breaks down everything you need to know to hire compliantly and confidently across England, Scotland, Wales, and Northern Ireland.

Capital City

London

Currency

British pound (£)

Languages

English

Population size

67,215,293
OVERVIEW

Key stats and facts

The UK offers a robust talent pool with high demand for tech, healthcare, and renewable energy professionals across major hubs like London and Manchester. With English as the primary language and a GDP per capita of $54,210, it's an attractive market for global expansion.

Major economic hubs

London, Manchester, Birmingham, Leeds, Edinburgh

Skills in demand

Software Developer, Cybersecurity Specialist, Healthcare Professional (Nurse, Doctor), Data Analyst, Renewable Energy Technician

Currency

British pound (£)

Language

English

GDP per Capita

$54,210.38 USD per capita

Standard Tax Rate

20% federal

Your EOR guide in 
United Kingdom

Understanding UK employment essentials—from minimum wage structures to statutory leave entitlements—is crucial for compliant hiring. This guide covers the practical details that matter most when building your UK team.

Minimum Wage

The UK has different minimum wage rates based on age and apprenticeship status, effective April 2025:

Category Rate (GBP/hour) Effective Date
National Living Wage (23+) £11.44 April 2025
21-22 Year Old Rate £11.44 April 2025
18-20 Year Old Rate £8.60 April 2025
Under 18 Rate £6.40 April 2025
Apprentice Rate £6.40 April 2025

Note: The apprentice rate applies to apprentices under 19 or those 19 or over who are in their first year.

Payroll Cycle

  • Weekly: 52 pay periods per year
  • Fortnightly: 26 pay periods per year
  • Monthly: 12 pay periods per year (most common)

Note: Employers must pay at least monthly unless otherwise agreed.

Individual Income Tax

Income Bracket (GBP) Tax Rate
Personal Allowance: Up to £12,570 0%
Basic Rate: £12,571 to £50,270 20%
Higher Rate: £50,271 to £125,140 40%
Additional Rate: Over £125,140 45%

Note: Scotland has different income tax rates and bands for Scottish taxpayers.

Tax Residency Criteria

Individuals are UK tax residents if they:

  • Spend 183 days or more in the UK during the tax year, or
  • Have their only home in the UK, or
  • Work full-time in the UK

The Statutory Residence Test provides detailed criteria for complex cases.

Employer Payroll Contributions

UK employers must make several mandatory contributions on top of employee salaries:

Contribution Type Rate Threshold
Employer's National Insurance 13.8% On earnings above £9,100 annually
Apprenticeship Levy 0.5% On annual payroll above £3 million
Pension Auto-Enrolment Minimum 3% On qualifying earnings £6,240-£50,270

Additional Considerations:

  • Employment Allowance: Reduces National Insurance by up to £5,000 annually for eligible employers
  • Statutory Payments: Employers fund Statutory Sick Pay, Maternity Pay, and other statutory benefits

Working Hours

The standard working week in the UK is typically 37.5-40 hours across 5 days, though this varies by industry and contract.

Working Time Regulations:

  • Maximum 48-hour average working week (calculated over 17 weeks)
  • Employees can opt out of the 48-hour limit with written agreement
  • Minimum 11 hours rest between working days
  • Minimum 24 hours uninterrupted rest per week

Note: Certain roles (senior managers, autonomous workers) may be exempt from working time limits.

Overtime Pay

  • No statutory requirement for overtime pay above standard rates
  • Overtime rates are contractual matters between employer and employee
  • Minimum wage compliance: Total pay divided by hours worked must not fall below minimum wage
  • Working Time Regulations: Still apply regardless of overtime arrangements

Bonus Payments

Bonuses are not legally required but are common in UK employment. Key considerations:

  • Contractual bonuses: Must be paid if specified in contract
  • Discretionary bonuses: Employer has flexibility but must exercise discretion reasonably
  • Tax treatment: Bonuses are subject to income tax and National Insurance

Employment Classifications

  • Employees: Full employment rights, including unfair dismissal protection, statutory benefits
  • Workers: Some employment rights (minimum wage, holiday pay) but not full employee protections
  • Self-employed contractors: Minimal employment rights, responsible for own tax and National Insurance

Annual Leave

  • Statutory minimum: 28 days (including bank holidays) for full-time employees
  • Pro-rata calculation: Part-time employees receive proportional entitlement
  • Accrual: Leave typically accrues monthly (2.33 days per month for full-time)
  • Carry-over: Up to 8 days can be carried to next leave year (with employer agreement)

Sick Leave

  • Statutory Sick Pay (SSP): £116.75 per week for up to 28 weeks
  • Qualifying conditions:
    • Sick for 4+ consecutive days
    • Earn at least £123 per week
    • Give proper notice to employer
  • Company sick pay: Many employers provide enhanced sick pay schemes

Maternity Leave

  • Statutory Maternity Leave: Up to 52 weeks total
    • Ordinary Maternity Leave: First 26 weeks
    • Additional Maternity Leave: Further 26 weeks
  • Statutory Maternity Pay:
    • First 6 weeks: 90% of average weekly earnings
    • Next 33 weeks: £184.03 per week or 90% of earnings (whichever is lower)
    • Final 13 weeks: Unpaid

Paternity Leave

  • Statutory Paternity Leave: 1-2 weeks within 56 days of birth/adoption
  • Statutory Paternity Pay: £184.03 per week or 90% of earnings (whichever is lower)
  • Shared Parental Leave: Parents can share up to 50 weeks of leave and 37 weeks of pay

Bereavement Leave

  • Parental Bereavement Leave: 2 weeks for parents who lose a child under 18
  • Parental Bereavement Pay: £184.03 per week or 90% of earnings (whichever is lower)
  • Other bereavement: No statutory entitlement, depends on company policy

Other Leave Types

  • Time off for dependants: Reasonable unpaid time for family emergencies
  • Jury service: Paid time off (employer can reclaim from court)
  • Trade union duties: Reasonable paid time off for union representatives

Summary

Leave Type Duration Paid? Funding
Annual Leave 28 days minimum Yes Employer
Sick Leave Up to 28 weeks Yes (SSP) Employer/Government
Maternity Leave Up to 52 weeks Partially Government (SMP)
Paternity Leave 1-2 weeks Yes Government (SPP)
Bereavement (Parental) 2 weeks Yes Government
Dependant Care Reasonable time No N/A

Termination Types

Dismissal for Cause (Gross Misconduct):

  • No notice period required
  • Must follow fair procedure
  • Examples: theft, violence, serious breach of contract

Dismissal Without Cause:

  • Requires proper notice or payment in lieu
  • Must follow fair procedure
  • Includes redundancy, capability, and conduct issues

Notice Period Requirements

Statutory Minimum Notice:

Length of Employment Notice Period
1 month to 2 years 1 week
2 years to 12 years 1 week per year of service
12+ years 12 weeks maximum

Contractual Notice:

  • Often longer than statutory minimum
  • Must be clearly specified in employment contract
  • Can be paid in lieu (PILON) if contract allows

Redundancy Pay

Statutory Redundancy Pay:

  • Available after 2+ years of continuous employment
  • Calculation based on age, length of service, and weekly pay (capped at £700)
  • Maximum statutory payment: £21,000

Enhanced Redundancy:

  • Many employers offer above statutory minimum
  • Tax-free up to £30,000

Unfair Dismissal Protection

  • Qualifying period: 2 years of continuous employment
  • Compensation: Basic award plus compensatory award
  • Maximum award: £115,115 (as of April 2025)
  • Automatic unfair dismissal: Some reasons (pregnancy, whistleblowing) have no qualifying period

Final Pay Requirements

  • Final salary: Must be paid by next normal payday
  • Accrued holiday pay: Must be paid for unused annual leave
  • Notice pay: If payment in lieu is given
  • Other contractual payments: Bonuses, commission (if due)

TUPE Regulations

Transfer of Undertakings (Protection of Employment) Regulations protect employees when businesses transfer:

  • Employment contracts transfer automatically
  • Terms and conditions preserved
  • Consultation requirements with employee representatives

Bank Holidays (England & Wales)

Holiday 2025 Date
New Year's Day January 1
Good Friday April 18
Easter Monday April 21
Early May Bank Holiday May 5
Spring Bank Holiday May 26
Summer Bank Holiday August 25
Christmas Day December 25
Boxing Day December 26

Regional Variations

Scotland:

  • St. Andrew's Day (November 30)
  • No Easter Monday bank holiday

Northern Ireland:

  • St. Patrick's Day (March 17)
  • Battle of the Boyne (July 14)

Bank Holiday Pay

  • Employees: Entitled to paid time off or day in lieu
  • Workers: May be entitled depending on contract
  • Part-time employees: Pro-rata entitlement
  • Working on bank holidays: No statutory premium, depends on contract

Additional Observances

  • Coronation Day: May be declared as additional bank holiday
  • Jubilee celebrations: Occasional additional holidays
  • Local holidays: Some regions have traditional local holidays

Required Documentation

Employment Contract Must Include:

  • Job title and description
  • Start date and place of work
  • Salary and payment frequency
  • Working hours and holiday entitlement
  • Notice periods and disciplinary procedures

Right to Work Verification:

  • All employees must provide right to work documentation
  • Acceptable documents include passport, visa, or combination of documents
  • Digital right to work checks available for some visa types

Tax and National Insurance:

  • P45 from previous employer (if applicable)
  • Starter checklist if no P45 available
  • National Insurance number verification

GDPR Compliance

Data Protection Requirements:

  • Privacy notice explaining data processing
  • Lawful basis for processing personal data
  • Employee consent for non-essential processing
  • Data retention and deletion policies

Sensitive Data:

  • Criminal record checks (DBS) where legally required
  • Health information for reasonable adjustments
  • Explicit consent required for processing

Pension Auto-Enrolment

Automatic Enrolment Requirements:

  • All eligible employees must be enrolled
  • Minimum contributions: 8% total (3% employee, 5% employer)
  • Qualifying earnings: £6,240 to £50,270 annually
  • Opt-out period: 1 month from enrolment

Probationary Periods

  • Typical duration: 3-6 months
  • Reduced notice: Often 1 week during probation
  • Performance monitoring: Regular reviews and feedback
  • Extension: Possible with employee agreement

Onboarding Timeline

Step Timeline
Offer acceptance Day 0
Right to work verification Before start date
Contract signing Before/on start date
First day induction Day 1
Pension auto-enrolment Within 3 months
Probation review Month 3-6

What the EOR Handles

Borderless AI manages:

  • Employment contract creation and compliance
  • Right to work verification
  • PAYE and National Insurance registration
  • Pension auto-enrolment
  • GDPR compliance documentation
  • Statutory payment calculations

Worker Classification

Employment Status Tests:

  • Control: How much control does the employer have?
  • Personal service: Must the individual do the work personally?
  • Mutuality of obligation: Is there ongoing obligation to provide/accept work?

IR35 Regulations:

  • Apply to contractors working through intermediaries
  • Determine whether contractor would be employee if working directly
  • Client responsible for status determination (off-payroll working rules)

Trade Unions and Collective Bargaining

Union Recognition:

  • Voluntary recognition by employer
  • Statutory recognition through Central Arbitration Committee
  • Collective bargaining rights for recognised unions

Industrial Action:

  • Legal requirements for strike ballots
  • Notice periods for industrial action
  • Protection for union members

Equality and Discrimination

Protected Characteristics:

  • Age, disability, gender reassignment, marriage/civil partnership
  • Pregnancy/maternity, race, religion/belief, sex, sexual orientation

Employer Duties:

  • Prevent discrimination, harassment, and victimisation
  • Make reasonable adjustments for disabled employees
  • Gender pay gap reporting (250+ employees)

Flexible Working

Right to Request:

  • Available to all employees from day one
  • Can request changes to hours, times, or location
  • Employer must consider reasonably
  • One request per 12-month period

Types of Flexible Working:

  • Part-time, flexitime, compressed hours
  • Job sharing, remote working
  • Term-time working

Health and Safety

Employer Responsibilities:

  • Provide safe working environment
  • Risk assessments and safety training
  • Accident reporting (RIDDOR)
  • Employers' liability insurance

Employee Rights:

  • Right to refuse unsafe work
  • Health and safety representatives
  • Consultation on safety matters

Built-in benefits packages for
United Kingdom

When the world is your competition, it pays to incentivize new hires and existing alike. Borderless AI benefits packages typically inlucde:

Medical Insurance

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Dental Insurance

United Healthcare
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Retirement Contribution

United Healthcare
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Life Insurance

United Healthcare
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Vision Insurance

United Healthcare
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