Labour law in the UK
British labour law offers more protection to employees in terms of social, income, and labour security than many other foreign nations, making it more demanding for employers to comply with.
Are you planning to expand your business to England, Wales, Scotland or Northern-Ireland and are interested in understanding the British labour law? Here you can find an overview of the essential regulations that affect the employment terms and social security.
To make things easier for you, we have gathered all the necessary information related to labour conditions, social security, contracts, probation/notice periods, and terminations into one document. You can request this file by filling the form and we’ll send it to you immediately.
Labour Conditions
Minimum wage
As from April 2023, the National minimum wage is £10.42 per hour for those aged 23 and over. Different rates apply for anyone under the age of 23.
Paid annual leave
Employees who work a 5-day week are entitled to 20 days of paid leave plus 8 Bank Holidays a year. An employer can choose to offer more leave than the legal minimum. If an employee starts their job part-way through a leave year, they’re only entitled to a pro rated part of their total annual leave for the current leave year.
Sick leave
Employees are eligible for Statutory Sick Pay for up to 28 weeks, paid by the employer. Sick Pay begins after the employee has been out of work for four or more days in a row and is paid at £109.40 a week. If employees are absent from work for more than 7 days, they must provide a note from their doctor, the so-called “fit note”. Employers can choose to offer additional sick pay on top of the statutory pay.
Working hours
Working hours in the UK are governed by the Working Time Regulations 1998. These limit the working week to an average of 48 hours (although there is the possibility for
employees to opt-out), and the working day to an average of 8 hours. They also guarantee employees the right to paid leave and specified rest breaks.
Social Security
Employers have to deduct Personal Income Tax and National insurance contribution from the employee’s earnings. The contributions depend on the employee’s National Insurance category letter and how much the employee earns.
Health Insurance
National Insurance is the mandatory contribution for state pension, National Health Service, maternity, jobseeker allowance and certain other services provided by the state. Employees pay obligatory National Insurance contributions. The employer’s portion of the national insurance contribution is usually 15.05% on top of total compensation. Employees pay national insurance contributions through payroll.
Pension
Every employer in the UK must put certain staff into a workplace pension and pay into it. This is called ‘automatic enrolment’. Both employer and employee contribution must total at least 8%, with the employer’s minimum contribution being 3%. If the employer decides to contribute more than the minimum amount, the employee’s contribution rate can be reduced accordingly.
Liability Insurance
Liability insurance is mandatory for every employer. It covers the cost of compensating employees who are injured at or become ill through work.
Maternity leave
Female employees can take up to 52 weeks’ maternity leave. The first 26 weeks is known as ‘Ordinary Maternity Leave’, the last 26 weeks as ‘Additional Maternity
Leave’. The earliest that leave can be taken is 11 weeks before the expected week of childbirth, unless the baby is born early. Employees must take at least 2 weeks after the birth.
Statutory Maternity Pay (SMP) for eligible employees can be paid for up to 39 weeks, usually as follows:
- The first 6 weeks: 90% of their average weekly earnings (AWE) before tax.
- The remaining 33 weeks: £156.66 or 90% of their AWE (whichever is lower).
- Tax and National Insurance need to be deducted.
- Employment terms (such as pension contributions) are protected.
Paternity leave
Partners can choose to take either 1 week or 2 consecutive weeks’ leave paternity leave. Leave cannot start before the birth. Statutory Paternity Pay for eligible employees is either £156.66 a week or 90% of their average weekly earnings (whichever is lower).
There is also the option of Shared Parental Leave which gives more choice in how two parents can care for their child.
Parental leave
Eligible employees can take unpaid parental leave. Employees are entitled to 18 weeks’ leave for each child and adopted child, up to their 18th birthday. The limit on how much parental leave each parent can take in a year is 4 weeks for each child (unless the employer agrees otherwise). Employees must give 21 days’ notice before their intended start date.
Infographic
Our team
Reach out to our experts in the UK, who are always happy to answer your questions about the British labour principles.
HR-consultants UK
Flavia Lucchetti
