Engage In United Kingdom

Table of Contents

About United Kingdom

Capital City

London

Population

As of March 2024, the estimated population of the United Kingdom is 67.7 million.

Currency

The currency in the United Kingdom is the Pound Sterling (GBP). The currency symbol is £.

Exchange Rate Calculator

USD

Overview

The United Kingdom, also known as the UK, is an island country located in Western Europe. It is an archipelago comprising the countries of England, Scotland, Wales, and Northern Ireland. The UK is surrounded by the Atlantic Ocean, the North Sea, the English Channel, and the Irish Sea, making it a strategic location near vital North Atlantic sea lanes. The capital city of the United Kingdom is London, which is renowned as a global center for commerce, finance, and culture. The UK has a constitutional monarchy and a Commonwealth realm, with Queen Elizabeth II as the chief of state and the Prime Minister as the head of government. With a population of over 66 million people, the United Kingdom is a diverse nation with a rich history. The country has played a significant role in shaping world history, from the establishment of the British Empire to its involvement in major global events such as World War I and World War II. Today, the United Kingdom boasts an advanced open market economy and is known for its contributions in various sectors, including finance, manufacturing, trade, and services.

Employment Relationship

Permanent Employment

In the United Kingdom, a "permanent employee" is defined as an individual employed for an indefinite duration. Employees subject to a fixed-term contract are not permanent employees. However, if the employee has been continuously employed for 4 or more years on a series of successive fixed-term contracts, they are automatically deemed to be permanent employees (that is, employed on an indefinite contract) unless the continued use of a fixed-term contract can be objectively justified. Permanent employees are entitled to the statutory minimum level of paid holiday, deductions for social security contributions, the statutory minimum length of rest breaks, statutory sick pay, as well as maternity, paternity, adoption benefits, and leave.

Fixed-Term or Specific-Purpose Contracts

In the United Kingdom, fixed-term contracts are made by employers with the intention that employment under these contracts is to be temporary, not permanent. There are four different types of fixed-term contracts which are as follows: A fixed-term contract that automatically ends on the expiration of a fixed term without the need for notice, A fixed-term contract, which contains a notice provision that allows for early termination upon notice before the expiry of the fixed term. However, if notice is not given, the contract will expire automatically at the end of the term,  A fixed-term contract that provides notice must be given before the expiry date for the fixed term to come to an end, or A contract that is stated to be for an initial fixed term, during which time notice may not be served, with this becoming an open-ended contract after the initial fixed term has expired.  A fixed-term employee has the right not to be treated by their employer less favorably than the employer treats a comparable permanent employee as regards the terms of their contract or by being subjected to any other detriment by any act, or deliberate failure to act, of their employer. There is no documented limit to fixed-term contracts' maximum duration (including renewals). However, if an employee is consistently employed for at least 4 years, they will automatically become a permanent employee, unless the employer can show there is a good business reason not to do so.

Temporary Employment Contratcs

Employers can hire temporary employees through temporary employment agencies. Such employees receive their wages from the agency. Employers pay the agency, and are also responsible for paying National Insurance contributions (NICs) and Statutory Sick Pay (SSP). It is the agency’s responsibility to make sure that their employees are compliant with regard to working time regulations. Agency employees must be allowed to use any shared facilities available at the employer's premises and be given information about job vacancies from the first day they begin work. Employers are responsible for their health and safety in the workplace. After 12 weeks of continuous employment in the same role, temporary employees are entitled to receive the same terms and conditions as permanent employees, including pay, working time, rest periods, night work, breaks, and annual leave. Employers must provide agencies with information about the relevant terms and conditions in the workplace so that the agency can ensure the employee gets equal treatment after 12 weeks in the same job. 

Probationary Period

In the United Kingdom, trial periods can be used by employers as a way to decide if the employee is a good fit for the job. The length and conditions of any applicable probationary period must be included in the principal statement given to the employee or worker when they begin working. It must last no more than 30 days for jobs lasting 6 months or more. Jobseekers receive their benefits on a work trial, but not wages. Employers can also extend the work trial with the employee's consent before starting the job.

Working Hours

In the United Kingdom, the labor law states that the standard workweek is 48 hours, averaged over a 17-week period. Night shift work cannot exceed eight hours daily. Employees under 18 years cannot work for more than 40 hours a week or eight hours a day. There are also instances in which individuals may have more than one job, in which case they may meet the 48-hour "working time directive" by: Signing an opt-out agreement Reducing hours to meet the 48-hour limit Employees are allowed to work remotely by submitting an application to their employers if they’ve worked continuously for the same employer for the last 26 weeks. The application must contain a statement that it is a statutory request and details of how the employee wants to work flexibly and when they want to start. Employers can reject the application on objective grounds.

Holidays / PTO

Statutory Holidays

New Year’s Day (1st January); Good Friday (varies); Easter Monday (varies); Early May bank holiday (varies); Spring bank holiday (varies); Summer bank holiday (varies); Christmas Day (25th); Boxing Day (26th December).

Paid Annual Leave

Generally, employees are legally entitled to 5.6 weeks (28 days) of paid holiday per annum. Persons working irregular hours (like shift or term-time workers) are entitled to paid time off for every hour they work. The accrual of annual leave begins at the start of employment. Employers can include bank holidays as part of statutory annual leave. Bank or public holidays do not have to be given as paid leave.  The number of leave days to be carried over to next year is specified in the employment contract. If an employee gets 28 days’ leave, they can carry over a maximum of eight days.

Sick Leave

In the UK, employees are allowed to take time off work due to sickness. If the time off work exceeds 28 days, a doctor's note must be provided. There is no legal maximum to the number of sick days an employee can take in the United Kingdom. Employees who earn an average of at least GBP 123 per week and have been sick for four days in a row are eligible to receive Statutory Sick Pay (SSP) during their sick leave. The SSP is GBP 116.75 per week and is paid by the employer for up to 28 weeks. 

Maternity Leave

Maternity leave is 52 weeks long and comprises ordinary leave for the first 26 weeks and additional leave for the remaining 26 weeks. It is paid at 90% of an employee's average weekly pretax earnings for the first 6 weeks of leave and GBP 184.03 or 90% of average weekly earnings (the lower value) for the remaining 33 weeks. If an employee does not qualify for SMP, she can get a maternity allowance for up to 39 weeks, depending on her pay level, employment status, and marital status, if she has paid Class 2 National Insurance contributions.

Paternity Leave

Employees in the United Kingdom are entitled to paternity leave if their partner is giving birth to or adopting a baby, or having a baby through a surrogacy arrangement. This includes same-sex partners. Employees can choose to take either 1 week or 2 consecutive weeks’ leave. Paternity leave cannot start before birth and must occur within 56 days of delivery. The Paternity Leave Amendment Regulations 2024 will come in effect on April 6, 2024. It is applicable in cases where the expected date of birth or adoption falls on or after April 6, 2024. It allows fathers to take their 1 or 2 weeks of paternity leave either together or in parts. This leave can be taken within 52 weeks of childbirth or adoption. The notice period required to application of this leave is 4 weeks before the expected date of childbirth. Statutory paternity pay is GBP 184.03 (British pounds) per week or 90% of the employee's average weekly rate (whichever is lower). Employees must have been continuously employed for at least 26 weeks up to any day in the "qualifying week" (the 15th week before the due date) to be eligible for statutory pay. 

Termination of Employment

Notice Period

In the United Kingdom, the notice period for individual dismissal is generally determined in the employment contract. Without an express agreement, the statutory minimum notice periods will apply. The reason for an individual’s dismissal should always be confirmed in writing, regardless of how long they’ve worked for the employer. The statutory notice periods are as follows: No less than 1 week if the employee's period of continuous employment is less than 2 years No less than 1 week for each year of continuous employment between 2 and 12 years No less than 12 weeks if employment has lasted 12 years or longer No notice is required if the employee has been working for less than 1 month (unless the employment contract provides otherwise).  Employers have to pay wages for the duration of the notice period and provide a statutory redundancy payment (if the dismissal is for the reason of redundancy and the employee is entitled to such a payment).

Severance Benefits

In the United Kingdom, an employee has the right to receive certain payments from an employer in the following cases: The employment contract is terminated for redundancy reasons, provided the employee has worked for at least 2 years with the employer; The employee's resignation is deemed constructive by an Employment Tribunal; or The dismissal is considered to be unfair by an Employment Tribunal. Pay ranges from a half-week to one and a half weeks’ worth of pay for each year of service, based on the employee's age. The length of service is capped at 20 years. The maximum statutory redundancy pay is currently GBP 21,000.

Social Security

Pension

The pension system of the United Kingdom, known as the “New State Pension,” is available to male employees born on or after April 6, 1951, and to female employees born on or after April 6, 1953, and retired after April 6, 2016. In addition to the above requirement, an employee must meet the criteria below for a minimum of 10 years: Work and pay for National Insurance To be a recipient of National Insurance credits Voluntarily pay National Insurance contributions The full amount of State Pension an employee can receive is GBP 221.20 (British pounds) per week for the tax year 2024-2025. The New State Pension is typically paid every 4 weeks. Employees may be eligible for Additional State Pension if they defer claiming the pension beyond the State Pension Age.  The New State Pension scheme is funded through employees' and employers' monthly contributions to National Insurance. The minimum income for paying contributions is GBP 123 a week. The United Kingdom introduced a new type of occupational pension plan – collective defined contribution (CDC) plans in August 2022. CDC schemes provide a target pension, if the scheme is under (or over) funded then the pensions it pays can be decreased (or increased accordingly). The Royal Mail Collective Pension Plan is the only CDC scheme authorized as of April 2024. In addition, employers can also introduce private workplace pension plans, where a certain percentage of monthly income is contributed into a pension fund and benefits are paid upon retirement. 

Dependents/Survivors Benefit

In the United Kingdom, the Widowed Parent's Allowance (WPA) is designed to support parents who have lost a spouse's income and experience a financial burden due to this loss. Eligibility to receive the WPA is contingent on the following: The spouse must have died before April 6, 2017. The individual must have been below the state pension age. The deceased spouse must have been a parent of a child and entitled to the Child Benefit. The spouse paid National Insurance contributions or died of a work-related accident/disease. If a person's spouse or civil partner died on or after April 6, 2017, they are eligible for the Bereavement Support Payment, provided the deceased had paid at least 25 weekly contributions or died of a work-related accident or disease and the spouse is under retirement age. The benefit is paid as a lump-sum payment and then 18 monthly payments. If a person is entitled to receive the Child Benefit, the first payment is GBP 3,500, and the monthly payment is GBP 350. If they are not entitled to receive the Child Benefit, the first payment is GBP 2,500, and the monthly payment is GBP 100. If the beneficiary reaches State Pension age within 18 months of their partner’s death, they may get fewer monthly payments. The claim for this benefit must be made within 21 months from the death of the partner. 

Invalidity Benefit

In the United Kingdom, there are 3 types of disability benefit programs: Disability Living Allowance (DLA)/Personal Independence Payment (PIP) Attendance Allowance Employment & Support Allowance. The DLA is comprised of 2 parts: a care component, and a mobility component. Only people younger than 16 years can apply for DLA. When the person reaches the age of 16, they must apply for a Personal Independence Payment (PIP), which covers disabled people between the ages of 16 and 64. PIP also has two components: Daily Living Part and Mobility Part. Attendance Allowance is granted to people who have a severe disability and must have someone to look after them. Employment and Support Allowance (ESA) is provided to people who have a disability or health condition that affects their work capacity. Employed, self-employed and unemployed people under the State Pension age can apply for this benefit. 

Taxation of Compensation and Benefits

Personal Income Tax

In the United Kingdom, residents are liable to pay income tax on all income, whether from the UK or abroad. Non-residents pay taxes only on their income from sources within the UK. Persons who stay in the UK for more than 183 days in a tax year are automatically considered residents. The tax year in the UK runs from April 6 through April 5 of the following year. Income tax in the United Kingdom depends on the individual taxpayer's personal allowance and the income above it. The individual's personal allowance is the segment of their income that is tax-free. The current statutory personal allowance (applicable from April 2023) is GBP 12,570 (British pounds) This may be increased if an individual claims a marriage allowance or a blind person's allowance. The United Kingdom allows GBP 3,070 for a blind person's allowance and GBP 1,260 for a married couple's allowance. The personal allowance decreases by GBP 1 for every GBP 2 of income above GBP 100,000, and can go down to zero. Income Tax rates range from 20-45% after allowances. Scotland has introduced an additional band, "Advanced Rate" for 2024-25  and its tax rates will change from April 6, 2024, ranging from 19-48%.

Immigration

Types of Visas

There are several different visa categories in the United Kingdom, with multiple varieties of visa types within each category, including: Work visas – Tier 1, Tier 2, and Tier 5  Study visas – issued to individuals who wish to study in the UK. The visa allows students to stay in the UK for six months for any short course and 11 months if the applicant is 16 years or older and enrolled in an English language course. Family visas – issued to individuals from outside of the UK to join a family member or civil partner who is permanently living in the UK Visitor visas – issued for a stay of up to six months for tourism, sports, creative events, conferences, or medical treatment. Persons may not do paid or unpaid work on this visa. Other visas (Indefinite Leave to Remain, UK Settlement, Right of Abode, EEA resident permit)

Work Permit

Because the UK has left the EU, freedom of movement between the UK and EU has ended and the UK has introduced a points-based immigration system. Under the points-based immigration system, with the exception of Irish citizens, anyone coming to the UK for work must meet a specific set of requirements for which they will score points. A total of 70 points is needed to be able to apply to work in the UK. Persons who want to be employed in the UK are required to obtain a Skilled Worker visa that allows employees to stay for a maximum of 5 years. This type of visa is issued to individuals who have been offered a skilled job in the UK. Employees must be hired by a licensed sponsor to be able to apply for a work permit in the UK. This visa can be extended for up to 5 years, as long as the total stay does not exceed 6 years. After 5 years, visa holders are able to  apply to settle permanently in the UK with the right to live, work and study indefinitely, and apply for benefits. Employers must check that a job applicant is allowed to work in the UK before they are employed. A right-to-work check must be conducted before an employer hires an employee, to ensure the employee is legally allowed to do the work in question. Employers may face civil penalties if they employ an illegal employee and have not carried out a correct right-to-work check.

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