People · 6 min read
Employing people in the UK
There is no at-will employment in the UK. A written statement of terms is due on day one, holiday is 5.6 weeks, a workplace pension is compulsory, £5m employers’ liability insurance is a legal requirement, and unfair dismissal rights are changing under the Employment Rights Act. What an overseas parent must have in place before the first UK payslip.
Key points
- A written statement of employment particulars is due on or before the first day.
- Minimum 5.6 weeks’ paid holiday (28 days including bank holidays for full time); statutory sick, maternity and paternity pay; auto-enrolment pension at 3% employer minimum.
- Employers’ liability insurance of at least £5m is a legal requirement from the first employee.
- Dismissal must be fair in reason and process; notice periods are statutory minimums and usually longer by contract. Employment Rights Act 2025 reforms phase in from 2026.
Before the first day
Register a PAYE scheme (two to three weeks), choose a workplace pension provider, buy employers’ liability insurance (£5m minimum, from a UK-authorised insurer), check the employee’s right to work in the UK and keep a copy, and issue a written statement of particulars — in practice a full contract — on or before day one. Employing through the overseas parent without a UK entity is possible but usually creates a UK taxable presence for the parent; employer of record or your own company sets out the choice.
What the contract must contain
Names, start date, pay and frequency, hours, holiday entitlement, place of work, notice periods, job title, probation terms, sick pay, pension, training requirements and any collective agreements. Most employers add confidentiality, IP assignment, restrictive covenants and a governing-law clause. English law will govern the employment of someone working in England whatever the contract says, and UK statutory rights cannot be contracted out of. We provide a compliant template; anything bespoke goes to an employment solicitor.
Pay, hours and leave
| Item | 2025/26 rule |
|---|---|
| National Living Wage (21+) | £12.21 an hour |
| Working time | 48-hour average weekly limit unless the employee opts out in writing |
| Holiday | 5.6 weeks a year, including bank holidays if the employer chooses; paid at normal pay |
| Statutory sick pay | £118.75 a week for up to 28 weeks; changing to day-one entitlement under the Employment Rights Act |
| Maternity | Up to 52 weeks’ leave; 39 weeks paid, first 6 at 90% of pay then £187.18 a week |
| Paternity | 2 weeks at £187.18 a week |
| Pension | Auto-enrolment: employer minimum 3% of qualifying earnings (£6,240–£50,270), employee 5% |
What it costs
Salary is about four-fifths of the total. Employer National Insurance is 15% of earnings above £5,000 a year, reduced by the £10,500 Employment Allowance where the group is eligible (once across all connected companies). Employer pension is at least 3% of qualifying earnings. Employers’ liability insurance is a few hundred pounds a year. For a £50,000 salary the all-in figure is roughly £58,000. Employment cost calculator.
Ending employment
There is no at-will employment. Notice is at least one week after one month’s service, rising to one week per year of service up to twelve; contracts usually specify one to three months. Dismissal must be for a fair reason (conduct, capability, redundancy, illegality or some other substantial reason) and follow a fair process. Currently employees need two years’ service to claim unfair dismissal; the Employment Rights Act 2025 is reducing that to a shorter qualifying period with a statutory probation regime, phasing in from 2026 — check the current position before dismissing anyone. Discrimination and whistleblowing claims have no service requirement and no cap on compensation.
Employees who come from head office
Secondees are taxable in the UK on UK workdays from day one and usually need UK PAYE even if paid at home. Social security stays at home for up to 24 months for EU/EEA staff and five years for US staff under the respective agreements; India, the UAE and Singapore have no agreement with the UK so National Insurance applies immediately. Visa sponsorship requires a sponsor licence — immigration law, handled with an immigration adviser. Seconded staff: payroll and tax.
Common questions
Can we employ someone in the UK without a UK company?
Is a probation period legally recognised?
How much notice must we give?
Do we need an HR policy handbook?
General information for overseas businesses considering the UK, correct to the best of our knowledge at the date shown. Not advice for your specific circumstances — rates and thresholds change, usually each April. Check with us or HMRC before acting on it.