Employment trends and job market analysis for the United Kingdom

According to The Global City, the United Kingdom is a ‘global centre of academic excellence.’ 58.5% of the UK’s workforce are educated to at least a degree level making it one of the most skilled workforces in the world.

The UK workforce has seen a notable shift towards remote and hybrid work arrangements due to the impact of the COVID-19 pandemic. To effectively navigate this trend, consider establishing comprehensive remote work policies and ensuring open communication channels for remote teams.

Employee wellbeing has taken centre-stage in the UK, with companies placing a strong emphasis on mental health support and wellness initiatives. This trend underscores the importance of cultivating a work environment that prioritises employee mental and physical health. As you integrate into the UK market, align your wellbeing programs with local preferences and regulations.

Digital transformation has become a defining aspect of the UK business landscape, requiring a workforce skilled in digital technologies. Consider recruiting professionals with expertise in areas such as data analytics and cybersecurity. Embracing a digitally-focused approach will enable your business to thrive amidst ongoing technological advancements.

Diversity and inclusion efforts are gaining momentum in the UK, reflecting the country's multicultural makeup. As you expand, make diversity a priority in your staff hiring practices and foster an inclusive company culture. By valuing and celebrating differences, you can create a workplace that resonates with the diverse UK workforce.

Certain sectors in the UK face skill shortages, prompting businesses to offer attractive packages and development opportunities to secure local talent. Be prepared to adapt your recruitment and retention strategies to address these shortages and maintain a competitive edge.

The gig economy continues to evolve in the UK, offering both opportunities and challenges. As you expand, consider how freelancers and contract workers can contribute to your business objectives. While leveraging specialised skills, ensure compliance with relevant employment laws and provide fair treatment to all workers.

Environmental sustainability is a growing concern for employees and customers alike. To align with this trend, incorporate eco-friendly practices into your operations and company culture. Demonstrating a commitment to sustainability can positively impact your brand image and resonate with environmentally-conscious UK consumers.

Investing in upskilling and reskilling programs is essential to help your employees stay relevant in a dynamic job market. Providing training opportunities that align with both their career goals and your company's growth trajectory can foster a culture of continuous learning.

By recognising and adapting to these employment trends, you can effectively navigate the UK business landscape, attract top talent, and create a workplace that aligns with the evolving needs and expectations of the local workforce.

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Capital                                                      London

Languages spoken                                  English

Population size                                         67.22 million

Payroll frequency                                     Monthly

Currency                                                  Pound Sterling (GBP)

VAT                                                           20% 

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For more economical and fiscal information on the United Kingdom, visit the dedicated section.

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Labour laws to be aware of when contracting employees in the UK

Hiring staff in the UK requires compliance with various labor laws and regulations to ensure fair treatment of workers and a productive work environment. Here are some key labor laws to be aware of:

Employment contracts

Every employee must have a written employment contract that outlines terms and conditions of employment, including job role, pay, working hours, holiday entitlement, and notice period.

National minimum wage (NMW) and national living wage (NLW)

The UK has a minimum wage law that sets out the minimum hourly rates for different age groups. The NLW applies to workers aged 23 and over, while the NMW applies to workers aged 16 to 22.

Working time regulations

These regulations stipulate maximum working hours, rest breaks, and minimum rest periods. 

Holiday entitlement

Full-time workers are entitled to a certain amount of paid leave per year, including public holidays. Part-time workers' entitlement is calculated on a pro-rata basis. You'll find more information on holiday entitlement further on in this guide. 

Statutory sick pay (SSP)

Employees who are too sick to work are entitled to SSP, which is a set amount paid by the employer for up to 28 weeks. Eligibility criteria apply - we talk about this in more detail further on in the guide. 

Parental leave and pay

The UK offers maternity leave, paternity leave, shared parental leave, and adoption leave, along with related statutory pay schemes. Find out more about parental leave later on in the guide. 

Discrimination laws

The Equality Act 2010 prohibits discrimination on grounds of age, gender, race, disability, religion, sexual orientation, and more. Employers must ensure equal treatment and provide reasonable accommodations when needed.

Termination and notice periods

There are statutory notice periods that need to be adhered to when terminating an employment contract. These vary depending on the length of service of the employee. We cover employment termination later on in the guide. 

Health and safety

Employers have a legal duty to provide a safe working environment and to assess and manage risks to employees' health and safety.

Trade unions and collective bargaining

Employees have the right to join trade unions, and employers must recognise and consult with employee representatives in certain circumstances.

Data protection

The General Data Protection Regulation (GDPR) sets out rules for the collection, processing, and protection of personal data, including employee data.

It's important to note that labor laws can change, and it's recommended to consult with legal experts or relevant government resources to ensure that you have the most up-to-date information when hiring employees in the UK. 

 

Taxes and payroll in the UK

Employer contributions in the UK

The pension scheme is one of most commonly provided contribution to an employee’s salary in the United Kingdom.

• Different employers have different pension schemes so the percentage of employer contributions can vary, but 3% is the minimum employers have to pay.

• All employers must offer a workplace pension scheme by law. You, your employer and the government pay into your pension.

 

Employee taxes in the UK 

• The UK basic income tax rate is 20%.

• The deductions include National Insurance, Income Tax and Pension.

 

Minimum wage in the United Kingdom

As of April 1st 2022, the UK has increased the national minimum wage by 6.9% from £8.91 to £9.50. The UK government have said that this is the biggest ever cash increase to the minimum wage.

The rates change on April 1st every year and the average salary in the UK is £34,963 per year.

 

Average work week in the United Kingdom

The average work week in the UK is 35.9 hours, consisting of five working days per week. 

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Employee benefits in the UK

UK employers are legally obligated to provide their employees with certain basic rights and support. However, they are encouraged to develop additional policies that go beyond these fundamental requirements.

Mandatory benefits in the UK:

• Pension

• Healthcare

• Holiday pay

• Maternity/paternity pay

• Sick pay

Supplementary benefits in the UK:

• Life assurance

• Dental insurance 

• Private medical insurance

• Income protection (long-term disability)

• Health cash plan

When thinking about which optional benefits to implement, consider them from the perspective of your staff. Thinking about what is most meaningful to their needs and how you can help them at every stage of growth helps you understand what they need from you.

This will not only result in more loyal and productive employees, but it will also help you retain them and positively impact your bottom line.

 

Types of leave available in the UK

All employees in the UK are entitled to a certain number of leave requirements including annual leave, sick leave, maternity, and paternity leave.

Annual leave

Most workers in the UK who work a 5-day week must receive at least 28 days paid annual leave a year. This is the equivalent of 5.6 weeks of holiday.

An employer can include bank holidays as part of statutory annual leave.
 

UK public holidays

• New Year’s Day

• Good Friday

• Easter Monday

• Early May Bank Holiday

 

Sick leave

• Employees in the UK can get £99.35 per week Statutory Sick Pay (SSP) if they are deemed too ill to work. 

• It's paid by the employer for up to 28 weeks. 

• If an employee in the UK has been ill for more than 7 days in a row, they must give their employer a 'fit note' (sometimes called a 'sick note')

• If an employee is on sick leave, they can usually build up four weeks' statutory paid holiday time

 

Maternity leave

When an employee takes time off to have a baby, they might be eligible for:

• Statutory Maternity Leave (52 weeks)

• Statutory Maternity Pay

• Paid time off for antenatal care

• Extra help from the government (Universal Credit, Child benefit, Child Tax Credit)

Employees rights are protected while on Statutory Maternity Leave, including their right to:

• Pay rises

• Build up (accrue) holiday

• Return to work

 

Paternity leave

If an employee takes time off because their partner is having a baby (including adoption or surrogacy), they might be eligible several rights such as:

• Paternity pay

• 1-2 weeks paid paternity leave

• Shared parental leave and pay

Employees rights are protected while on paternity leave, including their right to:

• Pay rises

• Build up (accrue) holiday

• Return to work

Employees in the UK can be given time off to accompany their partner (or the surrogate mother) to 2 antenatal appointments.

If an employee is adopting a child, they can get time off to attend 2 adoption appointments after they have been matched with a child.

What are employee rights in the United Kingdom?

In the UK, employees are granted a range of rights to ensure fair treatment, job security, and a positive work environment. These rights cover various aspects of employment and are designed to protect employees' interests, and include:

Unfair dismissal protection

Employees with at least two years of continuous service have protection against unfair dismissal. Employers must have a valid reason (e.g., conduct, capability, redundancy) and follow a fair procedure to dismiss an employee.

Constructive dismissal protection

 Employees have the right to claim constructive dismissal if they can prove that their employer's behavior has breached the employment contract to a serious degree, forcing them to resign.

Whistleblowing protection

Employees who report wrongdoing, such as illegal activities or health and safety violations, are protected from retaliation or unfair treatment under whistleblowing laws.

Time off for dependent care

Employees have the right to take reasonable unpaid time off to deal with emergencies related to dependents (e.g., family members) and make necessary arrangements.

Maternity, paternity, and adoption rights

These include rights to maternity and paternity leave, shared parental leave, and adoption leave. Eligible employees are entitled to time off and statutory pay during these periods.

Parental leave

Employees have the right to take unpaid parental leave to care for their child's welfare, with limits on the amount of leave and notice requirements.

Time off for public duties

Employees have the right to take reasonable time off for certain public duties, such as serving as a magistrate or a member of a jury.

Rights for temporary and fixed-term workers

Employee rights vary for contract vs. permanent roles. Temporary and fixed-term workers have certain rights, including protection against less favorable treatment compared to permanent employees and access to information about permanent job vacancies.

Rights for disabled employees

Employers have a duty to make reasonable adjustments to accommodate disabled employees, ensuring they have equal access to job opportunities and facilities.

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Notice period

In the UK, an employee must be given a notice period before their employment ends. Here are the statutory redundancy notice periods for employees:

• 12 week’s notice if employed for 12 years or more

• At least one week’s notice if employed between 1 month and 2 years

• One week’s notice for each year if employed between 2 and 12 years

As well as the redundancy pay, an employer should either:

• Pay an employee through their notice period

• Pay the employee in lieu of notice depending on their circumstances

 

Severance pay

If an employee in the UK has worked at a company for 2 years or more, they should receive:

• Half a week’s pay for each full year they were under 22

• One week’s pay for each full year they were 22 or older, but under 41

• One and a half’s week’s pay for each full year they were 41 or older

If an employee is eligible, they can receive statutory redundancy pay if they have been temporarily laid off. This can be for either:

• More than 4 weeks in a row

• More than 6 consecutive weeks in a 13 week period

An employee is not entitled to statutory redundancy pay if:

• Their employer offers to keep them on

• Their employer offers them a suitable alternative work that they refuse without good reason

 

Probation period

In the UK, the most common length for a probation period is either 3 months or 6 months. These are the most common types:

• 3-month probation period: this is typically used for entry-level employees in roles where little or no previous experience is required 

• 6-month probation: this is typically used for more senior positions where more significant experience is required.

• Longer than 6 months: this is rare as probation periods do not usually last longer than 6 months. Having one this long can be considered unreasonable without justification.

If an employee fails to meet a companies’ standards or is guilty of misconduct/poor performance, there are a few options to consider before dismissal. One of which being an extension of the probation period with an outlined list of improvements for the employee to meet.

If they at the end still fail to meet these requirements, dismissal is an option.

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Do you need to hire employees in the United Kingdom?

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Talk to us

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Contact

Mrs. Emanuela Ferina

Head of Global Payroll

emanuela.ferina@studio-bcs.com

Phone 0039 0 363 360254

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