Basic Information

Minimum Wage (effective date)

The entitlement to the national minimum wage depends on the employee's age and whether they are an intern. Employees must be at least the school leaving age (16 years old in the UK, which is the last Friday in June) to qualify for the national minimum wage.

Intern standards apply to:

Those under 19 years old

Those 19 years or older in their first year of the internship

Social Contribution

Employer  Contribution

Pension: 3%  

National Insurance (NICs): 13.8% (on earnings above £758.01 per month)  

Employer’s Liability Insurance

Employee Contribution

Pension: 5%  

National Insurance (NICs): Rates vary based on salary

Personal Income Tax

The rate varies from 0% to 47% based on the employee's gross salary.

Payroll

Payroll Cycle

Salaries can be paid weekly, bi-weekly, tri-weekly, or monthly, as agreed upon by the employer and employee. Monthly payments are most common.

13 Salary

In the UK, there is no 13th-month salary, but employers may discretionary bonuses or include them as performance-related terms in the employment contract.

Working Time

Standard Working Hours (full time)

The average working time per week must not exceed 48 hours, averaged over a 17-week period. The standard workweek is 40 hours, with 8 hours per day from Monday to Friday.

Overtime

Employers are not obligated to pay overtime. However, the average hourly wage must meet or exceed the national minimum wage. Employment contracts usually specify overtime pay and its calculation.

Holidays

Public Holidays

Public holidays vary by region.

Annual Leave

Employees working 5 days a week are entitled to at least 28 days of paid annual leave. Employers may include public holidays within this leave.

Sick Leave

Employees can receive statutory sick pay (SSP) of up to £116.75 per week, with employers covering this for a maximum of 28 weeks. If sick leave exceeds 7 days (including non-working days), employees must provide relevant proof, such as fit notes and evidence of sickness. Any unused statutory leave due to illness can be carried over to the next leave year, and if employees are sick before or during their leave, it can be counted as sick leave.

Maternity Leave

Statutory maternity leave lasts 52 weeks, with the option to start up to 11 weeks before the expected due date. Eligible employees can receive Statutory Maternity Pay (SMP) for up to 39 weeks (subject to tax and National Insurance deductions), typically as follows:

For the first 6 weeks: 90% of average weekly earnings (AWE) before tax

For the remaining 33 weeks: £184.03 per week or 90% of AWE (whichever is lower)

Paternity Leave

Eligible employees are entitled to Statutory Paternity Pay for 1 or 2 weeks at £184.03 per week or 90% of average weekly earnings (whichever is lower), subject to tax and National Insurance deductions. Employees who have taken shared parental leave cannot take paternity leave.

Shared Parental Leave

Employees and their partners can share up to 50 weeks of Shared Parental Leave and up to 37 weeks of Statutory Shared Parental Pay. Shared Parental Pay is £184.03 per week or 90% of average weekly earnings, whichever is lower. Employees must take less than 52 weeks of maternity or adoption leave and use the remaining time as Shared Parental Leave. They must also receive less than 39 weeks of maternity or adoption pay (or allowance), with the remaining period covered by Shared Parental Pay.

Bereavement Leave

For 2 weeks, eligible employees can receive £184.03 per week or 90% of average weekly earnings, whichever is lower.

Holiday Carryover

There is no specific legal requirement; the details depend on the employment contract. If an employee is entitled to 28 days of leave, they can carry over up to 8 days. If the employee receives more than 28 days of leave, the employer may allow the carryover of any additional unused leave.

Labor Contract

Labor Contract Type

Labor contracts are divided into fixed-term contracts and permanent contracts.

Probation Period 

There is no fixed length for probation periods. Most are around six months.

Termination

During the probation period, employers may terminate the employment contract without providing a reason or compensation.

Notice Period

Fixed-term Contract

A fixed-term contract automatically ends without notice unless otherwise specified.

For contracts of two years or more, employers must provide a valid reason for non-renewal, and redundancy pay may be due if applicable.

Employees with fixed-term contracts of four years or more become permanent employees automatically.

Early termination depends on contract terms. If necessary, a minimum of one week's notice is required for employees with at least one month of service, and notice should match the length of service for those with two or more years.

If work continues beyond the contract term without renewal, it is assumed the employer agrees to the extension, but notice is still required to end the contract.

Permanent Contract

Notice period: As per the employment contract.

Dismissal: Requires a valid reason for termination.

Severance pay: Generally not required except in cases of redundancy, provided normal wages are paid.

All compensation and final payments must be made with the final salary at the end of the employee's notice period.

Severance Pay

Employees who have worked for an employer for two years or more are entitled to statutory redundancy pay if they are made redundant. The amount depends on the employee's age and length of service:

Employees under 22: Half a week's pay for each year of service.

Employees aged 22 to 41: One week's pay for each year of service.

Employees over 41: One and a half weeks' pay for each year of service.

Service is capped at twenty years, and weekly pay is based on the average of the last 12 weeks before redundancy notice.

From April 6, 2024, the weekly pay cap is £700, with a maximum statutory redundancy payment of £21,000.

Employees are also entitled to a written statement detailing the redundancy payment and how it was calculated.