EMPLOYER OF RECORD (EOR) IN THE UK
The UK’s economy fares going forward depends a great deal on external factors. The Covid-19 pandemic is ongoing, the Russia-Ukraine conflict contest to disrupt supply chains and there remain unresolved issues regarding Brexit.
The economy is forecast to grow, but with inflation slated to peak at its current value of 11% and a 2% fall in real wages. Nevertheless, the country is predicted to perform strongly compared to other G7 countries (Figure One) but still lags behind other OECD countries (Figure Two).
Figure One. UK growth rate compared to G7 countries.
Figure Two. EOR UK economic growth rate, inequality, and environment (taken from OECD data)
Hiring in the UK
Despite the challenges, the UK remains an attractive place to invest in, partly due to robust, company-focused regulation and employment law geared to attract a competitive and engaged workforce.
Businesses must be aware of these employment laws when it comes to hiring in the UK, especially if you are not familiar with this. Here are some of the main points:
Contracts of employment.
By law, PEO UK employment contracts can be quite brief and can even be based on a verbal agreement. Employers tend to flesh out contracts with comprehensive information, such as bonuses (even if discretionary), salary, benefits, notice period, and termination clauses etc., as this prevents misunderstandings later in someone’s service.
Working hours and holidays.
There is a maximum 48-hour working week averaged over 17 weeks (the employee can waive this in writing. All employees are entitled to a prorated 28 days’ vacation, including the eight standard public holidays in England and Wales (there are different public holidays in Scotland and Northern Ireland).
Employers must give employees notice if their employment is to be terminated. Notice period is often clarified in contracts (usually starting at one month and increasing with service), but minimum legal notice periods are as follows:
- one week notice for one month and less than two years of service.
- one week notice for each year for between two and 12 years of service.
- 12 weeks notice for 12+ years of service.
Sick leave and parental leave.
Statutory sick pay is paid at 99.35 pounds per week (as of 2021), up to a maximum of 28 weeks, and is paid out after the third day of absence.Â There can be discretionary company sick pay on top of this.
Maternity Leave can be taken for up to 52 weeks. A minimum of two weeks must be taken after the baby is born, which is extended to four weeks for factory workers. Statutory Maternity Pay (for employees who do not qualify for any discretionary company enhanced leave) is paid for up to 39 weeks as follows:
- 90% of average weekly earnings (before tax) for the first 6 weeks.
- £156.66 or 90% of average weekly earnings (whichever is lower) for the next 33 weeks (as of 2022).
Fathers can take up to two weeks of Paternity Leave, however maternity can be shared between both parents (Shared Parental Leave). Adoption Leave is covered in the same way.
All employers in the UK must deduct income tax from their employees wages (how much tax your employee pays depends on their level of earnings). In addition to this, there are employer and employee contributions to National Insurance (NI) which is similar to social security. All tax and NI is deducted via the UK governmental tax office (HMRC), via an automated system called Pay As You Earn (PAYE).
The UK mandates an ‘auto enrolment’ pension scheme that requires employees to contribute 3% towards their employee’s pension (employees can opt out of this pension). Pensions aside, there is not much statutory right to benefits in the UK; this includes private healthcare. Employers will generally offer a suite of benefits which may include healthcare, although NI is connected to funding the NHS, the UK free healthcare service. Given the competitive labour market in the EOR UK, benefits are an important aspect of job offers.
The UK is weathering many economic challenges but remains an attractive business environment, partly due to it sustaining a skilled workforce through many means, including robust employment law.
Acvian can help your business navigate this landscape. As a dependable and comprehensive partner PEO UK, Acvian offers high quality solutions across the entire employee lifecycle. This means that you can focus your energies on driving your business forwards, while Acvian’s expertise ensures your teams are looked after and supported in every way.