This article is written as part of a continuing series aimed at helping companies expand internationally. This article looks at employing in the UK either through your own company incorporation or using a PEO provider. When looking to employ in the UK there are several considerations to take into account. Whilst the UK is open when it comes to international business there are still many good reasons to leverage a PEO solution for your business.
The UK is the fifth-largest economy in the world (IMF 2016) with a $2,629 billion GDP. This means if you are not doing business in the UK already you really should start! The UK also has a relaxed approach to employee rights when compared to mainland Europe.
To employ someone in the UK the first thing you will need is a legal entity. These come in a variety of forms, including partnerships, sole traders, limited liability partnerships (LLP) but by far the most common is the incorporation of a private limited company (Ltd or Limited). You will need to register for payroll and comply with UK law regarding accounting and bookkeeping, you may need to register for VAT dependent on your turnover and will also need to have a UK bank account. You also need to hold employer’s liability insurance, set up a company pension scheme (auto-enrolment compliant) and carry out a few other bits and pieces with Companies House. If you leverage a PEO service to employ in the UK you will have the luxury of avoiding the above.
Whether you use a UK PEO or choose to incorporate yourself the following still needs to be done when employing your team, either by you or your PEO partner. The first step when you have sourced your ideal candidate is to get them a job offer in their hand and quick! Good candidates don’t hang around. The offer would normally include an offer letter, a detailed job, a personal specification and the contract itself.
As previously mentioned the UK is fairly relaxed when it comes to making offers. There are no works councils to contend with. Collective bargaining agreements are rare and tend to only occur in public organisations.
This means you are free, subject to statutory minimums, to offer the salary, working hours and benefits you want. It should be noted that there is a minimum of 20 days holiday required plus national bank holidays to be given to all employees. The minimum wage in the UK is £7.50 per hour (April 2017). There are also increasing rules surrounding maternity/paternity leave and requirements to offer company pension schemes are now mandatory for all employers.
Common sense when employing in the UK is a good start. Most importantly make sure you don’t discriminate FOR ANYTHING!! Age, sex, race, religion, political views, disability etc. are all well covered in various employment acts and case law. It should be noted that this law also covers the interview process as well. Don’t ask a candidate anything gender-specific and make sure your questions are the same for all candidates.
Once you have all this in place it’s simply a case of running the payroll, paying HMRC (tax authorities in the UK), paying your pension provider and managing any enhanced benefits you may have agreed – oh and the holiday, don’t forget to record your employees holiday and sickness. Almost forgot, expenses, make sure you have a robust expense policy and reimburse your employees regularly.
If you want a more coherent list please look here:
PEO in the UK
We are always happy to help guide you in the right direction, feel free to get in touch.