Employer of Record in The United Kingdom

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in The United Kingdom if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in The United Kingdom below, to avoid any compliance issues.

Employment Contract Requirements

When employing an individual in the UK, the following formalities must be adhered to:

• An employer must give employees a document known as a written statement of employment particulars, stating the main conditions of employment.
• The employment of particulars includes a principal statement and a wider written statement.
• The principal statement must include several inputs including: pay, how long the job will last, work hours, probation period length, benefits, location of work, amongst others.
• On the first day of employment, employers must provide employees info on sick pay, paid leave and notice periods.
• Within the first two months of employment, employers must provide employees with details on pensions, collections agreemment, non-compulsory training, and grievance procedures.

Onboarding Process

We can help you get a new employee started in The United Kingdom quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Probation Period in The United Kingdom

Probationary periods in the UK help mitigate risk in hiring. Employees can be subject to a probationary period that enables the employer to assess employees skills. Unless an employees collective bargaining agreement outlines increased protections, the contract can be terminated during the probationary period without cause and at no additional cost to the employer outside of providing the mandatory notice.

This probationary period is not automatic and must be provided in the employment contract. Standard probationary periods can be 3-6 months on average.

In the UK, standard working hours are typically 37.5 to 40 hours per week, spread across Monday to Friday. Employees under 18 are limited to a maximum of 40 hours per week and 8 hours per day, with no option to opt out of these limits. For adult workers, the legal maximum is 48 hours per week on average, calculated over a 17-week period.

A minimum meal interval of 20 minutes must be observed by employees who work more than 6 hours in a day. In typical working hours, Monday through Friday, the hours are 9 am to 5 pm.

Overtime in The United Kingdom

Overtime pay rates are not mandated by law in the UK. However, it's common practice for employers to offer higher pay rates for overtime, such as time-and-a-half or double time, to compensate employees for the additional hours worked. If employees work more than 40 hours in a week, their average pay for that amount of time must not fall below the National Minimum Wage.

A detailed description of any overtime pay rates and how they are calculated is normally included in an employment contract.

As of April 1 2025, the minimum wage rates in the United Kingdom are:

• National Living Wage (NLW) for workers aged 21 and over: £12.21 per hour
• Ages 18 to 20: £10.00 per hour
• Ages 16 to 17: £7.55 per hour
• Apprentices: £7.55 per hour

These adjustments are based on recommendations from the Low Pay Commission and aim to align the National Living Wage with two-thirds of median earnings, enhancing the purchasing power of lower-income workers.

Employment laws in The United Kingdom can be intricate, and even unintentional mistakes in contracts, benefits, or termination processes can carry legal and reputational consequences. With an Employer of Record, you gain a local partner that ensures every hire is compliant. The EOR takes care of drafting compliant contracts, processing accurate payroll, managing contributions to statutory benefits, and handling lawful terminations if needed, all according to local employment standards.

This level of protection is especially valuable when expanding into new or unfamiliar regions. Instead of using time and resources to build in-house legal knowledge, you gain immediate access to local expertise. The EOR keeps you ahead of regulatory updates and shields your company from potential compliance gaps, so you can confidently hire and manage employees while minimizing risk. For hiring managers and founders, it's the difference between hiring with uncertainty and building your team on a legally sound foundation.

Employers in the United Kingdom must navigate a range of payroll and employment taxes to ensure compliance, including PAYE income tax, National Insurance Contributions (NICs), the Apprenticeship Levy, and benefits-in-kind levies. Employees pay income tax according to progressive rates (20% for earnings between £12,571 and £50,270, 40% up to £125,140, and 45% above that), while employers must contribute 15% NICs on earnings over £5,000 and 0.5% for the Apprenticeship Levy if their annual pay bill exceeds £3 million.

Employers are also required to submit various reports such as Full Payment Submissions (FPS) and Employer Payment Summaries (EPS), with strict deadlines for tax payments, including NICs by the 22nd of each month. Using payroll management software, such as Playroll, can significantly simplify payroll processing by automating tax calculations, compliance tasks, and reporting, helping employers stay organized and avoid costly penalties.

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When you’re scaling quickly, setting up local payroll systems in each new country slows you down. In The United Kingdom, the administrative load can include government registration, benefits management, and accurate, on-time payment delivery. An EOR gives you a plug-and-play solution that handles all of this while your internal team stays focused on growth, not red tape.

Key Ways an EOR Supports Payroll in The United Kingdom:

• Rapid Payroll Setup: Onboards employees quickly with ready-to-go infrastructure.
• End Administration: Handles salary, tax, and benefits with no extra internal resources.
• Vendor Simplicity: Consolidates payroll across countries for centralized oversight.
• No Entity Required: Operates legally, saving your business the time and resources needed for local incorporation.

In the United Kingdom, work permits and visas are essential for employers looking to hire foreign workers or relocate talent. Employers must ensure compliance with the UK's immigration rules, which include obtaining a sponsorship license and meeting salary, skill, and language requirements for various visa categories.

The most common work visas include the Skilled Worker Visa, Temporary Worker Visa, Global Talent Visa, and Start-up Visa. Each visa type has its own eligibility criteria and application process, and employers must ensure they meet all legal obligations when sponsoring international employees.

Mandatory Leave Entitlement in The United Kingdom

The annual leave entitlement in The United Kingdom is 8 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In The United Kingdom

Public holidays, also known as bank holidays, vary by region in the United Kingdom. There are 8 bank holidays in England and Wales, 9 in Scotland, and 10 in Northern Ireland.

Paid Time Off in The United Kingdom

Full-time employees are entitled to 20 day of paid time off (PTO) a year plus an additional eight public holidays. PTO (Including public holidays) accrues at 5.6 weeks (28 days) proportioned to the number of days a week the employee works.

Maternity Leave In The United Kingdom

Eligible employees can take up to 52 weeks of maternity leave: 26 weeks of Ordinary Maternity Leave and 26 weeks of Additional Maternity Leave. Statutory Maternity Pay (SMP) for eligible employees can be paid for up to 39 weeks, usually as follows:

• First 6 weeks: 90% of their average weekly earnings (AWE) before tax.
• Following 33 weeks: 187.18 GBP or 90% of their AWE (whichever is lower).
• Final 13 weeks of maternity leave are unpaid.

Paternity Leave In The United Kingdom

Eligible employees are entitled to two weeks of paid paternity leave. The leave must be taken in one period. The employee will receive 184.03 GBP, or 90% of their average weekly earnings (whichever is lower) during this period.

Sick Leave In The United Kingdom

Employees are entitled to an unlimited number of sick days. The first 3 days of leave are paid at 100% salary by the company. After 3 days of sick leave, employees are entitled to employer-paid Statutory Pay Leave of up to 28 weeks for eligible employees. Statutory Sick Pay is 118.75 GBP per week.

Parental Leave In The United Kingdom

The United Kingdom has a shared parental leave (SPL) policy that allows parents to share leave following the birth or adoption of a child. Parents can share up to 50 weeks of leave and up to 37 weeks of statutory shared parental pay. Shared parental leave is available to employees who have worked with their employer for at least 26 weeks by the 15th week before the child is due (or adoption placement). Parents may be eligible for Statutory Shared Parental Pay (ShPP) if they meet certain criteria, including average earnings and employment status. This pay is set at 187.18 GBP per week or 90% of the parent's average weekly earnings, whichever is lower.

For startups and small teams, managing global employee benefits isn’t just complex, it’s a full-time job. In The United Kingdom, understanding what benefits are required, how to deliver them, and how to stay compliant can be overwhelming, especially without local HR expertise. An Employer of Record removes that pressure by taking complete ownership of benefits administration, so you don't have to become an expert in local employment law.

Whether it’s healthcare contributions, pension enrollment, or statutory leave, the EOR ensures everything is delivered accurately and on time. They navigate any country-specific nuances, keep up with legal changes, and ensure each benefit is properly tracked and documented. For founders, that means fewer distractions and more time to focus on growth. Your employees get the security and support they expect from a local employer, and you get to scale your team in The United Kingdom without building complex infrastructure or worrying about compliance missteps.

Termination Process in The United Kingdom

Employees who have been continuously employed by an employer for 2 years or more have a right not to be unfairly dismissed. According to the UK employment law, there are 5 statutory reasons for dismissal, which are listed below. Upon dismissal, the employer will have to prove that one applies and that they acted reasonably and legally in treating the reason as sufficient to justify dismissal of the employee.

1. Conduct
2. Capability
3. Redundancy
4. Breach of a statutory restriction
5. Some other substantial reason

Notice Period in The United Kingdom

Notice periods in the UK depend on the length of the employment relationship, as well as whether the notice is being given by the employee or the employer. For employees who have worked for more than one month, the minimum notice period is 1 week. For employers, the minimum notice periods are as follows:

1. 1 month - 2 years of service: 1 week
2. 2 - 12 years of service: 1 week per year of employment
3. Over 12 years of service: 12 weeks

Severance in The United Kingdom

In the UK, all employees who are terminated due to redundancy are entitled to severance pay. Severance pay is calculated as follows.

1. 0.5 weeks pay for each year of service where the employee was below the age of 22
2. 1 weeks pay for each year of service where the employee was between 22 to 40 of age
3. 1.5 weeks pay for each year of employment where the employee was 41 and over