Employer of Record UK
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Employing in United Kingdom
Encompassing four nations and many regions (and just as many different dialects!), the UK has a rich history and varied landscape, yet a distinctly cosmopolitan vibe — with much more to offer than just rolling countryside, tea, and Sunday roasts. Home to the fifth largest economy in the world (and the Queen, of course), the UK is the perfect place for businesses looking to expand their international hubs. London, the UK’s capital, has excellent connections to Europe and Asia, which could provide further expansion opportunities. But the other major cities also have great transport links and plenty to offer businesses across various sectors.
The UK is arguably also one of the easiest places in the world to start a business — with fewer regulations than many other countries — and is regularly ranked as one of the top locations for organisations looking to expand overseas. For one, English has become the international language of business, making it much easier for new companies to adapt. The strong market also offers a wealth of opportunities, and the regulatory system is open and transparent. Business-friendly incentives, such as low corporation tax and tax relief to encourage investment, also make the UK an attractive target for ambitious companies.
An overview of the statutory provisions
Salary
Salary in the UK is paid in 12 equal instalments throughout the year.
There’s no requirement to include variable salary in the contract of employment, and we would discourage against this being included.
Social security
Social Security Tax (National Insurance Contributions) is deducted at source from the employee’s salary (subject to minimum qualifying salary thresholds) and is paid directly to Her Majesty’s Revenue & Customs (HMRC).
Withholding tax is also deducted at source, and both these elements are paid in one payment monthly to HMRC.
Employer costs
Employers are also required to pay National Insurance Contributions. These are payable at 13.8% of the gross monthly salary, less a monthly threshold (Tax Year 2021/22 = £8,840/12 = £737). These costs are triggered when processing UK payroll and payable to HM Revenue & Customs (HMRC).
Statutory benefits
Statutory benefits in the UK include:
Pension
In addition to the state pension, all employers are now required to register eligible employees into an auto-enrolment pension scheme (TopSource Worldwide works with The Pension People).
Current statutory minimum contributions are a total of 8% (5% employee contribution/3% employer contribution). However, employers can choose to pay more than the statutory minimum. This would have the effect of reducing the contribution payable by the employee (a total of 8% being required).
Employees can opt out of the scheme, but TopSource Worldwide has an obligation to register all eligible employees during the first payroll.
Statutory sick pay
For statutory sick pay, there’s a qualifying period of four or more days in a row (including non-working days). This is paid by the employer for up to 28 weeks. Qualification criteria apply.
The current weekly eligible amount payable to employees is £96.35 per week.
Occupational sick pay
TopSource Worldwide can tailor increased coverage for your employees if you wish.
Notice periods
The statutory minimum notice periods which employees are entitled to are as follows:
Additional benefits
Additional benefits include private medical insurance and life assurance.
Private medical insurance (AXA PPP). This can be extended to employees as part of their contractual offering — either the single premium only or with an option to add spouse/partner only and/or family. It’s customary for the employer to meet the cost of the single premium and to ask employees wanting to add either their partner/spouse and/or family to meet the additional cost as a net contribution from their salary. This policy is classed as a ‘benefit-in-kind’, and the employee will be taxed on the benefit.
The employer will also be liable for additional 1A contributions on the benefit value provided (13.8%), which are payable annually following the submission of an annual P11D for expenses and benefits. Premium costs are age-related and increase with age.
Life Assurance. TopSource Worldwide provide this as standard for all UK employees meeting the qualifying criteria for a fixed amount of £100,000. There’s no benefit-in-kind implication as the cost is met in full by TopSource Worldwide.
Holiday entitlement
Statutory annual entitlement is 28 days (20 days’ annual leave plus 8 public holidays/10 public holidays in Scotland).
It’s not uncommon in the UK to provide up to a total of 33 days’ leave (25 annual plus 8/10 public holidays).
Statutory/public holidays in UK & Scotland
| New Year’s Day | 1 January | |
| Scotland Only | 2nd January | 2 January |
| Good Friday | Varies | |
| Easter Monday | Varies | |
| Early May Bank Holiday | First Monday of May | |
| Spring Bank Holiday | Last Monday of May | |
| Scotland Only | Summer Bank Holiday | First Monday in August |
| Excluding Scotland | Summer Bank Holiday | Last Monday in August |
| Scotland Only | St Andrew’s Day | 30 November |
| Christmas Day | 25 December | |
| St. Stephen’s Day/Boxing Day | 26 December |
France
Luxembourg
Netherlands