The United Kingdom

The United Kingdom remains a leading global economy, attracting businesses with its diverse workforce, robust legal framework, and strategic location. However, recent fiscal policies, including significant tax increases and legislative changes, have reshaped the employment landscape.
Contractor Management
EOR
Payroll
Contractor of Record
Currency
Pound Sterling (GBP)
Payroll Frequency
Monthly or biweekly, depending on employer policy
Employer Taxes
16.80%

Overview

Population
~ 67 million
Language
English
Capital
London
Currency
Pound Sterling (GBP)
Country code
+44
Min wage
12.21 £/hour for individuals aged 21 and over
Working hours
8 hours per day
Weekdays
Monday to Friday
Work hours per week
40 hours per week

Payroll

Salaried Employees
Time-Based Employees
13th Salary
Avg employer tax

16.80%

Tax Breakdown

Personal Income Tax (PIT):

Personal Allowance
£12,570 per year

Tax Bands (England, Wales, and Northern Ireland):

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):

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:

On earnings up to the Upper Earnings Limit
8%
On earnings above the Upper Earnings Limit
Additional 2%

Employer Contributions:

On earnings above £5,000 per year
15%

Employment Allowance:

Increased to £10,500 per year
Available to eligible employers

Corporate Income Tax (CIT):

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

VAT

20%

Tax Calculation for United Kingdom
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Employer cost
Total monthly cost of employment
Gross monthly salary costs
Estimated taxes and contributions
Employee cost
Net monthly salary
GBP 5,137
Gross monthly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Employer cost
Total yearly cost of employment
Gross yearly salary costs
Estimated taxes and contributions
Employee cost
Net yearly salary
GBP 5,137
Gross yearly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Request a detailed quotation
How it works

Onboarding Process

Onboarding in United Kingdom typically includes the following steps to ensure a smooth transition for new hires:

Employment Contract

Must be in writing and include job title, duties, salary, working hours, leave entitlements, and termination conditions

Registration with Authorities

Register the employee with HM Revenue and Customs (HMRC) and the National Insurance (NI) system

Payroll Setup

Ensure accurate calculation and withholding of taxes and National Insurance contributions

Employee Documentation

Collect personal identification, bank account details, and tax information

Workplace Policies

Provide access to company policies, health and safety guidelines, and any applicable collective agreements

Pre-boarding

Pre-boarding

Pre-boarding

Key Elements of an Employment Contract in United Kingdom
When drafting an employment contract for employees in United Kingdom, the following key elements should be included:

Personal Details

Name, contact information, and role of the employee.

Employee Leave Policies

Sick days
  • Statutory Sick Pay (SSP) of £118.75 per week for up to 28 weeks
Maternity leave
  • Up to 52 weeks; Statutory Maternity Pay (SMP) of £187.18 per week for up to 39 weeks
Paternity leave
  •  Up to 2 weeks; Statutory Paternity Pay (SPP) of £187.18 per week

Parental Leave:

  • Up to 18 weeks for each child under 18; unpaid

Bereavement Leave:

  • Not required by law; varies by employer

Neonatal Care Leave:

  • Up to 12 weeks; Statutory Neonatal Care Pay (SNCP) of £187.18 per week 

Annual Leave
  • Minimum of 28 days per year, including public holidays
8 Public holidays in United Kingdom

Note: Public holidays may vary in Scotland and Northern Ireland.

1st
New Year's Day
7th
Good Friday
10th
Easter Monday
1st
Early May Bank Holiday
29th
Spring Bank Holiday
28th
Summer Bank Holiday
25th
Christmas Day
26th
Boxing Day
  • 1 Jan: New Year's Day
  • 3 Jan: New Year Holiday
  • 15 Apr: Good Friday
  • 18 Apr: Easter Monday
  • 2 May: May Day
  • 2 Jun: Late May Bank Holiday
  • 3 Jun: Her Majesty The Queen’s Platinum Jubilee
  • 29 Aug: August Bank Holiday
  • 25 Dec: Christmas Day
  • 26 Dec: Boxing Day
  • 27 Dec: Christmas Holiday

Termination Process

Notice Period

Minimum of 1 week for employees with less than 2 years of service; 1 week for each year of service up to 12 years; 12 weeks for 12 years or more

Severance Pay

Not mandatory; subject to employment contract

Final Paycheck

Must be provided immediately upon termination; includes all earned wages and accrued holiday pay

Probation Period

  • Maximum Duration: Typically 3 to 6 months
  • Extension: Permitted if agreed upon by both parties
  • Termination During Probation: Either party can terminate with appropriate notice

Personal Details

Name, contact information, and role of the employee.

_'s Booming Remote Workforce

Challenges of Remote Hiring in _

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Grow Your Team in United Kingdom
with RemotePass

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

Building and expanding a global workforce is seamless with RemotePass. Our platform simplifies the complexities of hiring, payroll, and compliance across over 150 countries, including United Kingdom.

With RemotePass, you can quickly onboard international employees, manage payroll, ensure legal compliance, and provide competitive benefits—all from one place. Focus on growing your business while we handle the HR and legal intricacies.

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Hiring in UK | Payroll, Tax & Employment Guide

The United Kingdom is one of Europe's most influential talent hubs, with deep experience across a wide range of industries. This guide helps you navigate its hiring quirks, from National Insurance thresholds to unfair dismissal protections.

RemotePass makes hiring in the UK simple. We handle compliance, contracts, and payroll. You focus on building your business.

Key Takeaways for Hiring in UK

  • 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.

Quick Facts For Hiring In UK

Continent
Europe
Capital
London
Currency
Pound Sterling (GBP /£)
Language
English
Payroll Cycle
Monthly
Pay Date
27th of the month. (One banking day prior if the 27th falls on a weekend or public holiday)

UK Employment Contract Overview

Here’s how to structure compliant employment contracts in the UK that work for both you and your employee.

Contract Type
Fixed-term/ Open-ended
Local Language Required?
Not applicable
Bilingual?
Not applicable
Probation Period
This is not set by law and is entirely up to the employer’s policy.
Common durations: Three to six months. (It must be clearly stated in the employment contract)
Minimum Paid Time Off
Full time employees receive 28 days of paid annual leave each year, including public holidays, and part time employees receive the allowance on a pro rata basis.
Public Holidays
The UK observes 8 public holidays in England and Wales, and the dates vary in Scotland and Northern Ireland. Employers only need to give these as paid leave if the employment contract says so.
Notice Period
One week if employed for a month to two years
One week per year (up to 12 weeks) if employed two or more years (Employers can offer more in contracts)

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

How Does Payroll and Taxation Work in the UK?

UK payroll has a predictable rhythm. Each month you calculate PAYE, deduct National Insurance, and report everything to HMRC through Real Time Information.
Knowing how these pieces connect makes it easier to pay employees correctly. Here is what you need to know.

UK Payroll Basics

Salary currency

Pound Sterling (GBP/£)

Minimum Wage

£11.44 per hour for workers aged 21 and over (as of April 2025, National Living Wage)

Hours per Week

  • Standard full time hours: 35-40 hours per week
  • Legal maximum: Average of 48 hours per week unless the employee opts out

Payroll Frequency

Monthly

Weekdays

Monday through Friday

Mandatory Bonuses

Not required

Gross Salary Structure In UK

The United Kingdom allows employers to set gross salary structures based on their own policies rather than a national standard

What Payroll Taxes do Employers Pay in the UK?

Employer cost % (estimate):


Employer cost

Contributions Breakdown

National Insurance (NIC):

13.8% on earnings above £758/month

Pension (Auto-enrollment):

Minimum 3% of qualifying earnings.

Apprenticeship Levy (if applicable):

Employers pay a 0.5 percent Apprenticeship Levy when their annual pay bill exceeds £3 million.

Benefit in Kind (BIK):

Employers pay Class 1A National Insurance at 13.8 percent on any benefits in kind.

What Payroll Taxes Do Employees Pay In the UK?

Individual Income Tax

PAYE income tax applies based on the employee’s annual earnings:

  • 20 percent for income from £12,571 to £50,270
  • 40 percent for income from £50,271 to £125,140
  • 45 percent for income above £125,140

Social Security


Employees contribute around 13% in total including:

  • National Insurance: 8 percent on earnings above £1,048 per month
  • Pension (auto-enrollment): 5 percent of qualifying earnings

Hiring cost calculator 

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GB
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Top Countries
Employer cost
Total monthly cost of employment
Gross monthly salary costs
Estimated taxes and contributions
Employee cost
Net monthly salary
GBP 5,137
Gross monthly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Employer cost
Total yearly cost of employment
Gross yearly salary costs
Estimated taxes and contributions
Employee cost
Net yearly salary
GBP 5,137
Gross yearly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Request a detailed quotation

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

Employee Resignations

Employee
Resignations

 Termination with Cause

Termination
with Cause

Termination without Cause

Termination
without Cause

Mutual Termination Agreement

Mutual Termination
Agreement

 Fixed Term Contract

Fixed Term
Contract

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.

Key Elements of an Employment Contract in United Kingdom
When drafting an employment contract for employees in United Kingdom, the following key elements should be included:

Personal Details

Name, contact information, and role of the employee.

_'s Booming Remote Workforce

Challenges of Remote Hiring in _

Simplifying Remote Hiring in _ with RemotePass 

Hire in the UK,Worry-Free

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

Building and expanding a global workforce is seamless with RemotePass. Our platform simplifies the complexities of hiring, payroll, and compliance across over 150 countries, including United Kingdom.

With RemotePass, you can quickly onboard international employees, manage payroll, ensure legal compliance, and provide competitive benefits—all from one place. Focus on growing your business while we handle the HR and legal intricacies.

FAQs About Hiring in UK

Got Questions? Find Answers Here

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.

Let’s Chat

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The United Kingdom

The United Kingdom remains a leading global economy, attracting businesses with its diverse workforce, robust legal framework, and strategic location. However, recent fiscal policies, including significant tax increases and legislative changes, have reshaped the employment landscape.
Contractor Management
EOR
Payroll
Contractor of Record
العملة
Pound Sterling (GBP)
تردد الرواتب
Monthly or biweekly, depending on employer policy
ضرائب أصحاب العمل
16.80%

نظرة عامة

التركيبة السكانية
~ 67 million
اللغة
English
العاصمة
London
العملة
Pound Sterling (GBP)
رمز الاتصال الدولي
+44
الحد الأدنى للأجور
12.21 £/hour for individuals aged 21 and over
ساعات العمل
8 hours per day
أيام الأسبوع
Monday to Friday
ساعات العمل اسبوعيا
40 hours per week

الرواتب

الموظفون برواتب ثابتة
الموظفون بنظام الأجر الزمني
13th Salary
متوسط ​​ضريبة صاحب العمل

16.80%

تحصيل الضرائب

Personal Income Tax (PIT):

Personal Allowance
£12,570 per year

Tax Bands (England, Wales, and Northern Ireland):

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):

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:

On earnings up to the Upper Earnings Limit
8%
On earnings above the Upper Earnings Limit
Additional 2%

Employer Contributions:

On earnings above £5,000 per year
15%

Employment Allowance:

Increased to £10,500 per year
Available to eligible employers

Corporate Income Tax (CIT):

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

ضريبة القيمة المضافة

ضريبة القيمة المضافة

20%

حساب الضريبة في The United Kingdom
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تكلفة صاحب العمل
إجمالي تكلفة التوظيف الشهرية
إجمالي تكاليف الراتب الشهري
الضرائب والمساهمات المقدرة
تكلفة الموظف
صافي الراتب الشهري

GBP 5,137
الراتب الشهري الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
تكلفة صاحب العمل
إجمالي تكلفة التوظيف السنوية
إجمالي تكاليف الرواتب السنوية
الضرائب والمساهمات المقدرة
تكلفة الموظف
صافي الراتب السنوي

GBP 5,137
الراتب السنوي الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
اطلب عرض أسعار تفصيلي
كيف تعمل الخدمة

عملية الانضمام

تشمل عملية التوظيف في The United Kingdom عادة الخطوات التالية لضمان انتقال سلس للموظفين الجدد:

Employment Contract

Must be in writing and include job title, duties, salary, working hours, leave entitlements, and termination conditions

Registration with Authorities

Register the employee with HM Revenue and Customs (HMRC) and the National Insurance (NI) system

Payroll Setup

Ensure accurate calculation and withholding of taxes and National Insurance contributions

Employee Documentation

Collect personal identification, bank account details, and tax information

Workplace Policies

Provide access to company policies, health and safety guidelines, and any applicable collective agreements

Pre-boarding

Pre-boarding

Pre-boarding

العناصر الأساسية في عقد العمل في The United Kingdom
عند إعداد عقد عمل للموظفين في The United Kingdom يجب تضمين العناصر الأساسية التالية:

Personal Details

Name, contact information, and role of the employee.

سياسات إجازات الموظفين

الإجازات المرضية
  • Statutory Sick Pay (SSP) of £118.75 per week for up to 28 weeks
إجازة الأمومة
  • Up to 52 weeks; Statutory Maternity Pay (SMP) of £187.18 per week for up to 39 weeks
إجازة الأبوة
  •  Up to 2 weeks; Statutory Paternity Pay (SPP) of £187.18 per week

Parental Leave:

  • Up to 18 weeks for each child under 18; unpaid

Bereavement Leave:

  • Not required by law; varies by employer

Neonatal Care Leave:

  • Up to 12 weeks; Statutory Neonatal Care Pay (SNCP) of £187.18 per week 

الإجازة السنوية
  • Minimum of 28 days per year, including public holidays
8 عطلات رسمية في The United Kingdom

Note: Public holidays may vary in Scotland and Northern Ireland.

1st
New Year's Day
7th
Good Friday
10th
Easter Monday
1st
Early May Bank Holiday
29th
Spring Bank Holiday
28th
Summer Bank Holiday
25th
Christmas Day
26th
Boxing Day
  • 1 Jan: New Year's Day
  • 3 Jan: New Year Holiday
  • 15 Apr: Good Friday
  • 18 Apr: Easter Monday
  • 2 May: May Day
  • 2 Jun: Late May Bank Holiday
  • 3 Jun: Her Majesty The Queen’s Platinum Jubilee
  • 29 Aug: August Bank Holiday
  • 25 Dec: Christmas Day
  • 26 Dec: Boxing Day
  • 27 Dec: Christmas Holiday

عملية إنهاء العقود

Notice Period

Minimum of 1 week for employees with less than 2 years of service; 1 week for each year of service up to 12 years; 12 weeks for 12 years or more

Severance Pay

Not mandatory; subject to employment contract

Final Paycheck

Must be provided immediately upon termination; includes all earned wages and accrued holiday pay

Probation Period

  • Maximum Duration: Typically 3 to 6 months
  • Extension: Permitted if agreed upon by both parties
  • Termination During Probation: Either party can terminate with appropriate notice

Personal Details

Name, contact information, and role of the employee.

نمو سوق العمل عن بُعد _  

تحديات التوظيف عن بُعد في  _

تبسيط التوظيف عن بُعد في _ مع ريموت باس

نمِّ فريقك في The United Kingdom
مع ريموت باس

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

يصبح بناء فريق عالمي وتوسيعه مهمة سهلة مع ريموت باس. منصتنا تبسّط تعقيدات التوظيف والرواتب والامتثال القانوني في أكثر من 150 دولة، بما في ذلك The United Kingdom.

مع ريموت باس، يمكنك ضم الموظفين الدوليين بسرعة، وإدارة الرواتب، وضمان الامتثال القانوني، وتقديم مزايا تنافسية — كل ذلك من مكان واحد. ركّز على تنمية أعمالك، ودع المهام الإدارية والقانونية علينا.

تجربة مجانية لمدة 7 أيام

لا حاجة لبطاقة ائتمان

يمكنك الإلغاء في أي وقت

Hiring in UK | Payroll, Tax & Employment Guide

The United Kingdom is one of Europe's most influential talent hubs, with deep experience across a wide range of industries. This guide helps you navigate its hiring quirks, from National Insurance thresholds to unfair dismissal protections.

RemotePass makes hiring in the UK simple. We handle compliance, contracts, and payroll. You focus on building your business.

Key Takeaways for Hiring in UK

  • 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.

Quick Facts For Hiring In UK

Continent
Europe
Capital
London
Currency
Pound Sterling (GBP /£)
Language
English
Payroll Cycle
Monthly
Pay Date
27th of the month. (One banking day prior if the 27th falls on a weekend or public holiday)

UK Employment Contract Overview

Here’s how to structure compliant employment contracts in the UK that work for both you and your employee.

Contract Type
Fixed-term/ Open-ended
Local Language Required?
Not applicable
Bilingual?
Not applicable
Probation Period
This is not set by law and is entirely up to the employer’s policy.
Common durations: Three to six months. (It must be clearly stated in the employment contract)
Minimum Paid Time Off
Full time employees receive 28 days of paid annual leave each year, including public holidays, and part time employees receive the allowance on a pro rata basis.
Public Holidays
The UK observes 8 public holidays in England and Wales, and the dates vary in Scotland and Northern Ireland. Employers only need to give these as paid leave if the employment contract says so.
Notice Period
One week if employed for a month to two years
One week per year (up to 12 weeks) if employed two or more years (Employers can offer more in contracts)

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

How Does Payroll and Taxation Work in the UK?

UK payroll has a predictable rhythm. Each month you calculate PAYE, deduct National Insurance, and report everything to HMRC through Real Time Information.
Knowing how these pieces connect makes it easier to pay employees correctly. Here is what you need to know.

UK Payroll Basics

Salary currency

Pound Sterling (GBP/£)

Minimum Wage

£11.44 per hour for workers aged 21 and over (as of April 2025, National Living Wage)

Hours per Week

  • Standard full time hours: 35-40 hours per week
  • Legal maximum: Average of 48 hours per week unless the employee opts out

Payroll Frequency

Monthly

Weekdays

Monday through Friday

Mandatory Bonuses

Not required

Gross Salary Structure In UK

The United Kingdom allows employers to set gross salary structures based on their own policies rather than a national standard

What Payroll Taxes do Employers Pay in the UK?

Employer cost % (estimate):


Employer cost

Contributions Breakdown

National Insurance (NIC):

13.8% on earnings above £758/month

Pension (Auto-enrollment):

Minimum 3% of qualifying earnings.

Apprenticeship Levy (if applicable):

Employers pay a 0.5 percent Apprenticeship Levy when their annual pay bill exceeds £3 million.

Benefit in Kind (BIK):

Employers pay Class 1A National Insurance at 13.8 percent on any benefits in kind.

What Payroll Taxes Do Employees Pay In the UK?

Individual Income Tax

PAYE income tax applies based on the employee’s annual earnings:

  • 20 percent for income from £12,571 to £50,270
  • 40 percent for income from £50,271 to £125,140
  • 45 percent for income above £125,140

Social Security


Employees contribute around 13% in total including:

  • National Insurance: 8 percent on earnings above £1,048 per month
  • Pension (auto-enrollment): 5 percent of qualifying earnings

حاسبة تكلفة التوظيف

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Top Countries
تكلفة صاحب العمل
إجمالي تكلفة التوظيف الشهرية
إجمالي تكاليف الراتب الشهري
الضرائب والمساهمات المقدرة
تكلفة الموظف
صافي الراتب الشهري

GBP 5,137
الراتب الشهري الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
تكلفة صاحب العمل
إجمالي تكلفة التوظيف السنوية
إجمالي تكاليف الرواتب السنوية
الضرائب والمساهمات المقدرة
تكلفة الموظف
صافي الراتب السنوي

GBP 5,137
الراتب السنوي الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
اطلب عرض أسعار تفصيلي

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

Employee Resignations

Employee
Resignations

 Termination with Cause

Termination
with Cause

Termination without Cause

Termination
without Cause

Mutual Termination Agreement

Mutual Termination
Agreement

 Fixed Term Contract

Fixed Term
Contract

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.

Key Elements of an Employment Contract in United Kingdom
When drafting an employment contract for employees in United Kingdom, the following key elements should be included:

Personal Details

Name, contact information, and role of the employee.

_'s Booming Remote Workforce

Challenges of Remote Hiring in _

Simplifying Remote Hiring in _ with RemotePass 

Hire in the UK,Worry-Free

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

Building and expanding a global workforce is seamless with RemotePass. Our platform simplifies the complexities of hiring, payroll, and compliance across over 150 countries, including United Kingdom.

With RemotePass, you can quickly onboard international employees, manage payroll, ensure legal compliance, and provide competitive benefits—all from one place. Focus on growing your business while we handle the HR and legal intricacies.

FAQs About Hiring in UK

Got Questions? Find Answers Here

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.

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