What does a $60,000 hire cost in the United Kingdom?
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Total annual employer cost
Full cost breakdown
Statutory contributions and typical benefits for an employee in the United Kingdom at $60,000 base salary.
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Key Takeaways for Hiring in the United Kingdom
- Employers run monthly payroll through PAYE (Pay As You Earn), deducting income tax and National Insurance from employee wages while contributing employer National Insurance and pension auto-enrollment.
- Full-time employees receive 28 days of paid annual leave (including public holidays). Healthcare is publicly funded through the NHS, so private insurance isn’t required.
- Employees gain unfair dismissal protection after two years of service, requiring employers to show fair grounds and follow proper procedures when terminating.
- Final payment is due on or before the next scheduled payday. Sponsored migrants must be reported to the Home Office within 60 days of termination.
Continent
Europe
Capital
London
Currency
Pound Sterling (GBP)
Language
English
Payroll Cycle
Monthly
Pay Date
27th of the month
VAT
20%
UK Employment Contract Overview
Here’s how to structure compliant employment contracts in the UK that work for both you and your employee.
What Do You Need To Include In A UK Employment Contract?
The UK expects employers to give staff a clear written statement of their terms, so your contract needs to cover the essentials from the beginning. Pay, hours, leave, notice, and role expectations all need to be documented.
Employee Information
- Full name
- ID number
- Role / Job title
- Start date
- Contract duration
- Working hours
- Probation and notice conditions
- Termination provisions
- Compensation details
Payroll
Average employer cost
16.80%
| Category | Details |
|---|---|
| Avg employer tax | 16.80% |
Tax Breakdown
Personal Income Tax (PIT)
| Category | Rate / Details |
|---|---|
| Personal Allowance | £12,570 per year |
Tax Bands (England, Wales, and Northern Ireland)
| Category | Rate / Details |
|---|---|
| On income up to £37,700 | 20% |
| On income from £37,701 to £125,140 | 40% |
| On income above £125,140 | 45% |
Tax Bands (Scotland)
| Category | Rate / Details |
|---|---|
| On income up to £2,827 | 19% |
| From £2,828 to £14,921 | 20% |
| From £14,922 to £31,092 | 21% |
| From £31,093 to £62,430 | 42% |
| From £62,431 to £125,140 | 45% |
| On income above £125,140 | 48% |
National Insurance Contributions (NIC)
Employee Contributions
| Category | Rate / Details |
|---|---|
| On earnings up to the Upper Earnings Limit | 8% |
| On earnings above the Upper Earnings Limit | Additional 2% |
Employer Contributions
| Category | Rate / Details |
|---|---|
| On earnings above £5,000 per year | 15% |
Employment Allowance
| Category | Rate / Details |
|---|---|
| Increased to £10,500 per year | Available to eligible employers |
Corporate Income Tax (CIT)
| Category | Rate / Details |
|---|---|
| Standard Rate | 19% |
| Small Profits Rate | 19% for profits up to £50,000 |
| Main Rate | 25% for profits over £250,000 |
| Marginal Relief | Applies to profits between £50,000 and £250,000, providing a gradual increase in the tax rate |
VAT
| Category | Rate / Details |
|---|---|
| VAT | 20% |
Mandatory Employee Benefits In the UK
The UK allows employers to hire expats through its work visa routes, so international talent can be employed when sponsorship rules are met.
| Benefits | Provider | Funded Through | Notes |
|---|---|---|---|
| Health Insurance | Government | Publicly funded via general taxation and NICs. | Healthcare is covered by the NHS in the UK, so employers do not have to provide private health insurance unless they choose to. |
| Pension/Social Security | Government | Payroll Contributions | Employers must auto-enroll eligible workers into a pension scheme. To qualify, employees must be aged at least 22 but below State Pension age and earn more than £10,000 per year. The minimum total contribution is 8% of qualifying earnings. |
National Insurance Contributions (NICs) fund:
- State Pension
- Maternity/Paternity Pay
- Statutory Sick Pay (SSP)
- Unemployment benefits
Leave And Holiday Entitlement In the UK
Annual Leave
Full time employees receive 28 days of paid annual leave each year, which equals 5.6 weeks. This allowance includes public holidays. Part time employees receive a pro rated entitlement based on their working hours. Employers can choose to include public holidays within the 28 day allowance.
Public Holidays
The United Kingdom observes eight public holidays in England and Wales, nine in Scotland and ten in Northern Ireland. Employers do not have to give these days off or pay for them unless the employment contract includes that entitlement.
Sick Leave
Employees in the United Kingdom can receive up to 28 weeks of Statutory Sick Pay. SSP is paid at 116.75 pounds per week for 2025. Employees qualify when they meet all of the following conditions:
- Have an employment contract
- Have performed work under that contract
- Be sick for at least four consecutive days, including non working days
- Earn at least 123 pounds per week on average
- Give notice of the illness
- Provide medical proof when required
Maternity Leave
Maternity leave in the United Kingdom lasts up to 52 weeks in total. Employees receive 26 weeks of Ordinary Maternity Leave followed by 26 weeks of Additional Maternity Leave.
Statutory Maternity Pay is provided for up to 39 weeks. Employees receive 90 percent of their average weekly pay for the first six weeks, then 184.03 pounds per week for the next 33 weeks. The final 13 weeks of leave are unpaid.
Paternity Leave
Eligible employees may take up to two weeks of paternity leave. Leave must be taken in full week blocks and within 56 days of the birth or adoption. Statutory Paternity Pay is 184.03 pounds per week or 90 percent of average weekly earnings, whichever is lower.
Other Types of Leave
-
Shared Parental Leave: Parents can share up to 50 weeks of leave and up to 37 weeks of pay if both meet the qualifying conditions. Pay follows the same rate as Statutory Maternity Pay after the first six weeks.
-
Unpaid Parental Leave: Employees with at least one year of service may take up to 18 weeks of unpaid parental leave for each child, with a limit of four weeks per year per child. The child must be under 18.
-
Parental Bereavement Leave: Parents who lose a child under 18 or experience a stillbirth after 24 weeks of pregnancy receive two weeks of statutory paid leave. Statutory Parental Bereavement Pay is 184.03 pounds per week or 90 percent of average earnings.
-
Compassionate Leave: Compassionate leave is not required by law except for parental bereavement. Employers may offer it at their discretion or according to policy.
-
Time Off for Dependents: Employees may take reasonable unpaid time off to handle emergencies involving a dependent, such as a child, spouse or parent. There is no set duration, but most absences last one or two days.
Termination And Offboarding in the UK
Every exit in the United Kingdom comes with a few key responsibilities for employers. You need to confirm the final working day, issue the correct documents, and settle any outstanding pay and holiday entitlement.
Here’s how to handle terminations smoothly and avoid any legal oversights:
| Type | Possible? |
|---|---|
| Termination for Cause (poor performance, misconduct, etc.) | Yes |
| Termination without Cause | Yes |
| Mutual Termination Agreement (MTA) | Yes |
| Redundancy | Not possible under the EOR setup |
UK Employee Resignation
Notice
Form
Resignation Letter
Notice period
- At least one week if the employee has between one month and two years of service
- One week for each full year of service, up to a maximum of 12 weeks, if the employee has two or more years of service
Payment in lieu of notice or notice waiver
Can be waived.
End-of-Service Benefits
Severance/Gratuity
Not applicable.
Other Benefits
- Prorated Salary: Employee is entitled to salary up to the termination date, including any worked notice period.
- Accrued but unused Leave: Employer must pay for unused statutory holiday entitlement.
Termination Documentation
- Resignation letter
- Final dues letter
Employer Termination With Cause in the UK
Acceptable grounds
Employers can issue summary dismissal for gross misconduct, which includes serious actions like theft, fraud, physical violence, gross negligence, or serious insubordination.
Notice
Form
Must be a written notice.
Notice period:
Summary dismissal means immediate termination without notice or payment in lieu.
Payment in lieu of notice or notice waiver:
Not applicable in a summary dismissal unless specified in the contract.
End-of-Service Benefits
Severance
No statutory severance applies in summary dismissals.
Other Benefits
- Prorated Salary: Employees must be paid for work up to the termination date.
- Accrued but Unused Leave: Employers are required to pay for unused statutory holiday entitlement.
- Expenses/Bonuses/Commissions: Any due contractual entitlements must be honored unless forfeited by contract.
Termination Documentation
A written notice of dismissal should be issued. If the employee has at least one year of service, they may request a written statement of reasons, which must be provided within 14 days.
Employer Termination Without Cause in the UK
Acceptance Grounds
Termination without cause is allowed in the UK, but employers must ensure the decision isn’t discriminatory, retaliatory, or in breach of statutory protections. If the dismissal is challenged as unfair, especially when the employee has two or more years of service, the employer must be able to justify it.
Notice
Form
Email or signed letter
Notice period:
- One week for service of less than two years
- One week’s for each year of continuous service – two years of employment but less than 12 years
Payment in lieu of notice or notice waiver:
Permissible, but needs to be included as a term of the contract.
End-of-Service Benefits
Severance/Gratuity
No statutory severance is applicable in general terminations without cause.
Other Benefits
- Prorated salary for days worked until the termination date
- Prorated salary for days worked until the termination date
Termination Documentation
- Termination Notice & Termination Letter
- Final dues letter
Mutual Termination Agreements in the UK
MTA is a voluntary agreement signed by both parties (employer and employee) to terminate an employment contract by mutual consent.
Notice
Form
Included in the MTA.
Notice period:
- At least one week’s notice for service under two years,
- One week per full year of service for service between two years to 12 years,
- 12 weeks’ notice maximum for service of more than 12 years.
Payment in lieu of notice or notice waiver:
Permissible, but should be included in contract.
End-of-Service Benefits
Severance/Gratuity
- No statutory obligation to pay severance unless redundancy applies.
- However, mutual terminations often include a negotiated lump-sum payment, as a settlement sum.
Other Benefits
- Prorated Salary: Paid for work up to the termination date.
- Accrued Leave: Must be paid in full.
- Bonuses/Commissions/Expenses: Payable as per the contract.
Termination Documentation:
- Mutual Termination Agreement
- Final dues letter
Offboarding Process for the End of Fixed-term Contracts in the UK
If the Fixed-Term Contract Ends Normally
Notice
A fixed-term contract ends automatically on the agreed end date with no notice required from the employer.
End-of-Service Benefits
Severance/Gratuity
Statutory dismissal and protections:
- The non-renewal of a fixed-term contract is considered a dismissal under employment law.
- With two years’ continuous service, the employee gains the right not to be unfairly dismissed. The employer needs to show that there’s a ‘fair’ reason for not renewing the contract (eg, if they were planning to stop doing the work the contract was for).
- After one year, the employee is also entitled to a written statement of reasons if the employer doesn’t renew the contract.
If the Employer Terminates Early
Contract must allow early termination: Employers can only end a fixed-term contract early if the contract explicitly includes an early termination clause.
Notice
- If clause exists and notice is given:
- The employer must comply with the specified notice period in the contract.
- If the contract is silent on notice, statutory minimum notice applies:
- One week notice after one month of service
- One week per year of service for employees with two or more years’ service.
- Without contract provision:
- If the employer terminates early without an express clause, it may be a breach of contract.
- The employee may claim damages, often equated to salary they would’ve earned during the remainder of the contract.
Final Payment Timing & Immigration and Visa Compliance in the UK
Final Payment Deadline: Final pay on or before the next scheduled pay.
Penalty: Not statutorily provided.
Supporting Guides
Frequently Asked Questions
Do I need to provide private health insurance for UK employees?
No. Healthcare is covered by the NHS, so private health insurance isn’t mandatory. Many employers offer it as an optional benefit.
What’s the difference between PAYE and National Insurance?
PAYE (Pay As You Earn) is the system for collecting income tax from employee wages. National Insurance is a separate contribution that funds state pensions, maternity pay, and sick pay. Employers withhold both from employee salaries and make their own National Insurance contributions on top.
Can I dismiss an employee without cause in the UK?
Yes, but it’s risky. Employees with two or more years of service can claim unfair dismissal if you can’t show fair grounds. You must provide proper notice and follow fair procedures, even without cause.
What happens if an employee doesn’t serve their notice period?
You can deduct the equivalent salary from their final pay, but only if this right is clearly stated in the employment contract.
Do public holidays count toward the 28 days of annual leave?
It depends on your employment contract. You can include public holidays within the 28-day allowance or offer them as extra. The law requires 28 days total. How you structure it is up to you.
How quickly must I pay employees after termination?
Final payment is due on or before the next scheduled payday. There’s no statutory penalty for delays, but employees can take you to tribunal for unpaid wages.
