Requirements of Hiring Employees in The United Kingdom

 

Contract of hiring employees in the United Kingdom

An employment can be a “written statement of particulars,” which is for employees with contracts that last a month or more. This statement will include the main conditions of employment.

Immigration Requirements

Companies with employees that are not EU/EEA citizens must obtain a work permit by filing an application for the employee before the start of employment. The employee’s employment circumstance must be matched to a set category on the working visa.

HR & Labor

Working hours: An employee should work 48 hours a day to be considered a full-time employee. Employees may work longer hours a day, but the work day may not exceed 11 hours a day. Overtime can be paid through overtime payment but could also be paid in time off.

Minimum working age: Employees can start working full-time at age 16, but are expected to follow stricter guidelines regarding salaries and the number of hours worked. Employees will follow normal guidelines after age 18.

Payroll

Salaries are disbursed either every two weeks or every month. Payday will be the 14th of each month if payments are made on a monthly basis.

The information contained in this article is valid on November 27th, 2018. For updated information, please contact us via email at contact@nnroad.com.

 

Social Security in the United Kingdom

Social Security Deductions in the United Kingdom

Unless exempted by a reciprocal agreement or under the EEA rules, Class 1 National Insurance Contributions are payable by both the employer and employee in respect of an employee working in the United Kingdom.

Category letter

A) All employees apart from those in groups B, C, J, II, M, and Z.

B) Married women and windows entitled to pay reduced National Insurance.

C) Employees over the Station Pension age.

II) Employees who can defer National Insurance because they are already paying it in another job.

J)  Apprentice under 25.

M) Employees under 21.

Z) Employees under 21 who can defer National Insurance because they are already paying it in another job.

 

Contribution rates in the United Kingdom

Employee:

Category Letter £118 to £166 a week (£512 to £719 a month) £166.01 to £962 a week (£719.01 to £4,167 a month) Over £962 a week (£4,167 a month)
A 0% 12% 2%
B 0% 5.85% 2%
C N/A N/A N/A
H 0% 12% 2%
J 0% 2% 2%
M 0% 12% 2%
Z 0% 2% 2%

Employer:

Category Letter £118 to £166 a week (£512 to £719 a month) £166.01 to £962 a week (£719.01 to £4,167 a month) Over £962 a week (£4,167 a month)
A 0% 13.8% 13.8%
B 0% 13.8% 13.8%
C 0% 13.8% 13.8%
H 0% 0% 13.8%
J 0% 13.8% 13.8%
M 0% 0% 13.8%
Z 0% 0% 13.8%

*Note:

  • Employers pay Class 1A and 1B National Insurance once a year on expenses and benefits they give to their employees at the rate of 13.8%.

 

Individual Income Tax & Benefits in the United Kingdom

Individual Income Tax

Individual income taxes are paid annually in the United Kingdom. Most individuals in the UK pay income tax through the PAYE (Pay As You Earn System) system. An employer uses this to withhold income tax and national insurance contributions from an employee’s wages which are paid directly to HMRC (HM Revenue & Customs).

A self-assessment tax return may be required each year if an individual earned more than:

• £1,000 from self-employment
• £2,500 from other untaxed income, for example from tips or renting out a property

Income tax is charged at graduated rates, with higher rates of income tax applying to higher bands of income. Tax is charged on total income less certain deductions and allowances. This net amount is usually referred to as an individual’s taxable income. Non-residents are taxed at the same rates as residents, but they are not entitled to any UK personal allowances.

Personal Deductions

Deductions from income are limited. Below are some of the main deductions:

• Annual subscriptions to certain approved professional bodies or learned societies, where the body’s activities are relevant to the duties of the employment.

• A deduction is allowed for expenses incurred in performing the duties of an employment, such as business travel expenses (subject to meeting the detailed requirements).

• Deductions are also allowed for employee contributions to a registered pension plan, or to a foreign pension plan that satisfies certain criteria. There are both annual and lifetime contribution limits which apply to such contributions. An additional tax charge will arise if the contribution limits are exceeded so care is required and professional advice is recommended.

• A child tax credit has applied since 6 April 2003. This is a means-tested benefit paid directly (rather than through the tax system) to the individual mainly responsible for looking after the child or children. There are no personal allowances in respect of children, although children themselves are entitled to the standard personal allowance if they have income in their own right.

Personal Allowances

The personal allowance for 2017/18 is GBP11,500. This is the amount of income upon which no income tax is paid.

VAT/ GST Rates

The standard VAT rate for the United Kingdom is 20%

 

Employee Termination Policies in the United Kingdom

There are four different types of dismissal in the UK: Fair dismissal, unfair dismissal, constructive dismissal, and wrongful dismissal.

  • Fair dismissal- must have a valid reason for dismissing the employee which includes: capability, conduct, and redundancy.
  • Unfair dismissal- includes an inaccurate reason for dismissal, unfair reason, failing to give a warning about the dismissal, and discrimination
  • Constructive dismissal- an employee resigns because an employer breached the employment contract. This could be a single serious event or a series of less serious events
  • Wrongful dismissal- An employer breaks the terms of an employee’s contract in the dismissal process, eg dismissing someone without giving them proper notice

An employee who is dismissed by unfair or constructive dismissal grounds may take legal action against the employer.

Employees are entitled to minimum statutory notice under the Employment Rights Act (ERA) of dismissal. For employees with one month to two years’ service, the statutory minimum notice period is one week. For employees with more than two years’ service statutory minimum notice is one week per completed year of service up to a maximum of 12 weeks. The contract can provide for more but not less notice. It can also provide a payment in lieu of notice (PILON) clause, which allows employers to pay employees instead of requiring them to work their notice.

Severance Pay

United Kingdom Labor Law does not sustain statutory severance pay requirement in the event of non-economic dismissals.

Redundancy pay: An employee is entitled to statutory redundancy pay if he is an employee and has been working for the current employer for 2 years or more.

Redundancy pay policy:
• half a week’s pay for each full year you were under 22
• one week’s pay for each full year you were 22 or older, but under 41
• one and half week’s pay for each full year you were 41 or older
Length of service is capped at 20 years.

 

Probationary Period in the United Kingdom

The average probationary period in Canada is one day short of three (3) months. If an employee has worked for less than three months, no notice of termination or severance pay is required. After which, at least two weeks’ notice or wages in lieu of notice is required in the event of termination.

 

Rest & Holiday Leaves in the United Kingdom

Annual Leaves

A worker is legally entitled to 5.6 weeks’ paid holiday per year and can include bank holidays as part of statutory annual leave.

Public Holidays

New Year – January 1

Good Friday – March 30

Easter Monday – April 2

Early May bank holiday – May 7

Spring bank holiday – May 28

Christmas Day – Dec 25

Boxing Day – Dec 26