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Country Guide

United Kingdom

Hiring in the United Kingdom at a glance

CURRENCY
£ Pound Sterling / GBP
WORKING HOURS
40-48 hours / week
PUBLIC/BANK HOLIDAYS
8 days per year
CAPITAL
London
LOCAL LANGUAGE
English
REMOTE WORKERS
4.2M
MINIMUM HOURLY SALARY
£9.50 (increasing to £10.42 on April 1st)
TAX YEAR
6th April - 5th April
DATE FORMAT
DD/MM/YYYY
MISCLASSIFICATION PENALTIES
No limit to the amount of penalties if a company is caught misclassifying workers
FUN FACT
165M cups of tea are consumed daily in the UK

Employment tax: 

3%-22.3%
National insurance 15.05% on earnings above £719
Pension 3%

Employee tax: 

5%-62%
National insurance 15.05% on earnings above £719
Pension 3%
Income tax:

England, Wales & Northern Ireland Income Tax 2022

Type
Rate
Band
Basic Rate
20%
£12,571 - £50,270
Higher Rate
40%
£50,270 - £150,000
Additonal Rate
45%
Over £150,000

Scotland Income Tax 2022

Type
Rate
Band
Starter Rate
19%
£12,571 - £14,732
Basic Rate
20%
£14,733 - £25,688
Intermediate Rate
21%
£25,689 - £43,662
Higher Rate
41%
£43,663 - £150,000
Additional Rate
46%
Over £150,000

UK Employment Cost Calculator

Use our handy calculator to understand what are all the employment costs you have to consider in the UK.

Provide us with some extra details and we will send you a full breakdown of the salary costs.

Employer of Record in United Kingdom

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An Employer of Record is the legal employer of a worker in the UK. As such, the Employer of Record takes care of all UK compliance aspects of employment, including payroll, taxes, statutory benefits, employment contracts and more.

the employer of Record is responsible for:

Ensuring their employment is compliant with local employment laws
Processing local payroll
Filing employment related taxes and returns
Issuing payslips to the employee
Distributing salary payments

How Employer of Record works

COMPANY

Maintains a direct relationship with the employee, allocates them work tasks, and manages their performance.

BOUNDLESS

Takes care of payroll, taxes, benefits, ensuring the employee and the company are compliant with all legal regulations.

EMPLOYEE

The third party to the agreement, the employee, fulfils all of their obligations as a worker for the company.

Statutory Employee Benefits

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Pension

Employers have to offer a pension scheme to all employees within three months of commencement of work on an 'automatic enrolment' base. It is up to each employee to join it or not.

Flexible working

After 26 weeks of service with their employer, every employee has the right to make one flexible working request a year

Common Non-mandatory Employee Benefits

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Private healthcare plan
Additional pension contributions
Counselling services
Dental & vision
Life assurance
Income protection
Cycle to work scheme
Gym membership
Extra time off and parental leave

Employee Rights and Protections

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Employment agreement
Protection of personal information
Union membership
Safe place of work
Whistleblower protection
Cycle to Protection against  discrimination and dismissal scheme
Redundancy payment
Paid time off: 20 days + bank holidays

Paternity leave: 1-2 weeks

Sick leave: 28 weeks

Parental leave: 18 weeks unpaid

Maternity leave: 52 weeks

Probation

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There is no law on the length of the probation period. Employers have to include the conditions of any probationary period and its duration in the contract.

Payment Frequency

Bi-weekly or monthly.

End of Employment

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A valid and justified reason for dismissal is required. If an employee believes that they have been dismissed unfairly, they can get help from a third party to mediate the situation, such as a union representative. They may also go to an employment tribunal. Notice could either be the statutory one or an enhanced contractual notice period and has to be indicated in the contract. There's no statutory requirement for severance pay.

Frequently Asked Questions

What are my options if I want to hire a worker in United Kingdom?

While there are generally four ways of employing people across borders, not all are legal or sensible. Here is an overview of each way to employ a worker in Ireland, outlining the potential cons.

 

HQ country employment & payroll

While the person is in Ireland, they are employed and payrolled directly by the company’s HQ entity.
Cons: This may appear attractive, but it generally isn't legal in the long term. HQ payroll won't be possible if the person is not a tax resident in the HQ country.

 

Independent contractor agreements

People are locally registered as sole traders or limited liability company owners in Ireland and invoice for their work. There is no direct employment relationship.
Cons: In the UK, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.

 

Direct local employer setup

The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.
Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.

 

Partnering with an Employer of Record United Kingdom/full-service Professional Employer Organisation

Employment is handled by a platform that specialises in employing people on behalf of customer companies. The Employer of Record helps to hire and pay employees.
Cons: For some countries, the ongoing costs may be higher than direct employment. Some education is needed to inform employees about how the employment relationship will work.

How long does it take to set up a company in United Kingdom?

Setting up a local company in the UK is relatively straightforward. However, the difficult part comes after the initial setup when payroll needs to be calculated and run every month, taxes filed, benefits extended, change of rules and regulations followed. Here is an overview of everything you will find yourself needing to do.

Can I employ people as independent contractors in United Kingdom?

While many employers practice employing remote workers as independent contractors, it's a bad practice. If an individual is giving their full and undivided attention to your company in the United Kingdom, treating them as an independent contractor is a likely breach of UK employment laws and of those in your country.
 
Your company could be liable for fines on owed holiday pay, sick pay, social welfare payments, paternity benefit, maternity benefit, or other legal measures. Since the individuals you are working with do not receive the benefit of local employment laws and protections that are often afforded to people working full-time hours.
 

What does HR compliance mean in the United Kingdom, and why does it matter?

When you hire employees in the UK, you have certain obligations as an employer. HR compliance is about ensuring your policies and procedures respect all applicable laws and regulations regarding employment and work practices. Complying with local employment law in Ireland is fundamental for the correct running of your business - not only because these laws are in place to protect employees and guarantee their rights are safeguarded, but to minimise your risk of liabilities as an employer. Being compliant means respecting and following all local labour laws, sick leave and illness benefits, annual leave, minimum wage, tax credits, working hours regulations.

How much does it cost to employ someone in United Kingdom?

As with every other country, there are certain costs associated with employing a worker in United Kingdom that come on top of the gross salary you are offering. In United Kingdom those are National insurance and pension. To view the exact percentages and amounts given the salary you are planning to offer, you can use our handy calculator tool.

What does Employer of Record mean in United Kingdom?

It means that Boundless is the legal employer of the individual, as far as the UK government, tax, and employment authorities are concerned. We are responsible for:
  • informing you about any pre-employment requirements
  • ensuring their employment is compliant with Irish employment law
  • informing you about the length of the maternity leave, paternity leave, public holidays, illness benefits, medical benefits
  • providing a locally compliant employment contract
  • processing local payroll
  • filing employment-related tax returns
  • issuing payslips to the employee
  • distributing salary payments
  • payments to the local tax authorities
Customers that work with an Employer of Record in Ireland are responsible for:
  • sourcing and recruiting their own workers
  • managing the employee’s day-to-day work load
  • contributing to the personal / professional development of the employee through their work
  • following any guidance we give on employment and HR best practices or legal obligations in the United Kingdom, such as the employment contract, public holidays, annual leave, sick leave, maternity and paternity benefits, probationary periods, overtime pay, statutory redundancy payments, liability insurance and many others
  • ensuring that payroll bills relating to their team are paid to Boundless before the cut-off point in each pay cycle

Who is responsible for filing and paying employees' taxes and social insurance contributions in the UK if employing through an Employer of Record?

Boundless as the Employer of Record UK files all pertinent taxes and social contributions as they relate to the compliant employment of an individual in their home country.

How does Boundless as an Employer of Record United Kingdom ensure HR compliance in United Kingdom?

We carefully choose employment lawyers or advisories to partner with in each country we operate in, including the UK. They ensure the UK employment contracts, and any other relevant documents required for new employees comply with the local jurisdiction. We have thorough discussions on specific norms such as payroll services, social protection, data protection, notice period or work-from-home regulations. Whenever a potentially sensitive issue arises in Ireland, our internal team contacts the relevant firm to ensure all steps are taken to resolve it promptly.

What are the legal responsibilities of a company when they use an Employer of Record service like Boundless in United Kingdom?

The company remains responsible and informs employees of the day-to-day management of the people and teams that are employed through Boundless, including any disciplinary or performance issues.
 
Boundless ensures compliance with Irish-specific procedures, practices and labour laws while employing people and teams on behalf of the company.

Do employees get all their rights and benefits when employed through an Employer of Record in United Kingdom?

Any new employee that is locally employed through an Employer of record gets full employment rights and benefits as specified in UK employment law. They get a locally compliant employment contract, statutory maternity leave, annual leave, illness benefits, any relevant tax credit, and many more. All UK-based employees receive healthcare through the public healthcare system.

What taxes do I need to pay in United Kingdom?

In United Kingdom, both employers and employees have to pay taxes. For employers, these include National insurance and pension, and for employees, they include National insurance, pension and income tax. To get a clear overview with both employee and employer taxes, use our salary breakdown calculator, submitting any additional data needed and get a downloadable pdf like this one.

Choose Boundless as your employment partner in the United Kingdom
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info@boundlessHQ.com
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