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How to Hire Employees in the UK

When hiring employees in the UK, paying attention to the legal elements, cultural factors, and the general economic environment for hiring there is crucial.  In this article, we provide key information on how to hire employees in the UK.

Key Takeaways

  • When hiring employees in the UK, it is crucial to understand UK employment laws, this includes requirements for contracts, minimum employee rights, and pay.
  • Advertise UK positions on popular job sites, newspapers, or through recruitment agencies in the UK.
  • Conduct interviews and select the suitable candidate.
  • Consider the use of a UK PEO, Employer of Record or ‘Umbrella Company’ to simplify hiring in the UK.

How to hire employees in the UK — overview

In the UK, the hiring process is governed by a comprehensive legal framework, which includes laws about discrimination, equal opportunity, and workers’ rights. These laws stipulate that employers must not discriminate based on age, gender, ethnicity, religion, disability, or sexual orientation (see the Equality Act 2010). This also encompasses job advertisements, interviews, selection tests, and offers.

Employers must also conduct right-to-work checks (Immigration, Asylum and Nationality Act 2006) to verify that candidates have the legal right to work in the UK. Furthermore, they must meet statutory requirements for contracts, working hours, and minimum wage (Employment Rights Act 1996 and National Minimum Wage Act 1998).

When it comes to hiring, UK employers tend to follow a professional and transparent recruitment process. Many companies employ competency-based interviews and psychometric testing to evaluate candidates’ suitability. Networking is often considered beneficial, and LinkedIn and other professional networking sites are popular resources for job seekers and employers. 

Hiring in the UK —  legal requirements

Before hiring employees in the United Kingdom, it is important to be familiar with the following legal aspects:

  1. Employment Laws: Understand the employment laws and regulations in the UK, which govern various aspects such as minimum wage, working hours, holiday entitlement, sick leave, maternity/paternity rights, and discrimination laws. Ensure compliance with these laws to avoid legal issues.
  2. Employment Contracts: Provide a written employment contract to your employees, outlining the terms and conditions of their employment. The contract should cover key details such as job title, responsibilities, working hours, salary, notice periods, and any applicable probationary periods.
  3. National Insurance (NI) and Pay As You Earn (PAYE): Register with HM Revenue and Customs (HMRC) to obtain an employer PAYE reference number. Deduct income tax and National Insurance contributions from your employees’ wages and make the necessary payments to HMRC.
  4. Workplace Pensions: Ensure compliance with auto-enrolment pension requirements. You must offer a workplace pension scheme and contribute towards it for eligible employees. The contribution rates and eligibility criteria may vary, so familiarize yourself with the specific requirements.
  5. Right to Work Checks: Verify that your employees have the legal right to work in the UK. Conduct thorough checks on their immigration status and identity documents to prevent employing individuals without the proper authorization.
  6. Health and Safety: Comply with health and safety regulations to provide a safe working environment for your employees. Conduct risk assessments, provide necessary training, and maintain records to ensure workplace safety.
  7. Employee Benefits: Understand the statutory benefits you are required to provide, such as sick pay, maternity/paternity pay, and holiday entitlement. Additionally, consider offering additional benefits and perks to attract and retain talented employees.
  8. Disciplinary and Grievance Procedures: Establish clear procedures for handling disciplinary issues and employee grievances. Communicate these procedures to your employees to maintain a fair and transparent work environment.
  9. Data Protection: Ensure compliance with the General Data Protection Regulation (GDPR) when handling employee data. Safeguard personal information and obtain consent when necessary. Notify employees of their data rights and the purpose of data processing.
  10. Employment Insurance: Consider obtaining employers’ liability insurance to protect your business in case of employee injury or illness at work. This insurance is mandatory in the UK, except for some limited exceptions.

Remember, this list provides a general overview, and it is always advisable to consult with a legal professional or an employment advisor to ensure full compliance with the relevant laws and regulations in the United Kingdom.

How much does it cost to hire employees in the UK?

The cost of hiring employees in the United Kingdom can vary depending on various factors such as the industry, job role, location, experience level, and the specific benefits and perks offered by the employer. Here are some key costs to consider:

  1. Salary: The amount you pay your employees will depend on factors such as the job role, skill level, and market rates. You should determine a competitive salary that aligns with industry standards to attract and retain talented employees.
  2. National Insurance Contributions (NICs): As an employer, you are required to make National Insurance contributions based on your employees’ earnings. The NICs rates vary depending on the employee’s salary and can be found on the HM Revenue and Customs (HMRC) website.
  3. Pension Contributions: Under the auto-enrolment pension scheme, you are required to contribute to your employees’ workplace pension. The minimum contribution rates are set by the government and are subject to change. Ensure you are aware of the current rates and factor them into your hiring costs.
  4. Pay As You Earn (PAYE) Taxes: You must deduct income tax from your employees’ salaries through the PAYE system. The amount of tax deducted depends on their earnings and tax code. You are also responsible for paying employer National Insurance contributions based on their salaries.
  5. Recruitment Costs: Advertising job vacancies, conducting interviews, and carrying out background checks can incur costs. This includes expenses for job board listings, recruitment agencies, background screening services, and any travel or accommodation costs associated with the hiring process.
  6. Training and Development: Investing in training and development programs for your employees may be necessary, depending on the nature of the job and the skills required. This includes costs for internal or external training, workshops, conferences, and certifications.
  7. Employee Benefits: If you choose to provide additional benefits such as healthcare plans, life insurance, gym memberships, or employee assistance programs, these will incur extra costs. The extent and cost of these benefits will depend on your company’s policies and the level of coverage offered.
  8. Employer Insurance: Employers are required to have employers’ liability insurance to cover any claims made by employees for work-related injuries or illnesses. The cost of this insurance will depend on factors such as the nature of your business, number of employees, and level of coverage required.

It is essential to consider these costs when budgeting for hiring employees in the UK. Additionally, it is advisable to consult with an accountant or HR professional to get a more accurate estimation of the costs based on your specific circumstances.

Hiring in the UK — minimum employee entitlements

When hiring employees in the United Kingdom, while considering the general legal requirements outlined earlier, it is also worth paying close attention to minimum employee rights of entitlements, including:

  1. Minimum Wage: Employers must pay their employees at least the National Minimum Wage or National Living Wage, depending on their age and whether they are an apprentice. The rates are set by the government and are regularly reviewed. It is essential to stay up to date with the current rates to ensure compliance.
  2. Statutory Employment Rights: Employees in the UK are entitled to certain statutory employment rights, including but not limited to:
    • Statutory Sick Pay (SSP): Employees who meet the eligibility criteria are entitled to receive SSP when they are unable to work due to illness.
    • Statutory Maternity Pay (SMP): Eligible employees who are pregnant or have recently given birth are entitled to receive SMP.
    • Statutory Paternity Pay (SPP): Eligible employees who are the biological father or adoptive parent are entitled to receive SPP.
    • Statutory Adoption Pay (SAP): Eligible employees who adopt a child are entitled to receive SAP.
    • Statutory Shared Parental Pay (ShPP): Eligible employees can share the leave and pay following the birth or adoption of a child.
    • Paid Annual Leave: Employees are entitled to a minimum number of paid annual leave days, which is currently 28 days (including public holidays) for full-time employees.
    • Protection against Unfair Dismissal: Employees have protection against unfair dismissal and are entitled to certain redundancy rights after a minimum period of continuous employment.
  3. Anti-discrimination Laws: Employers must comply with laws that prohibit discrimination in the workplace based on protected characteristics such as age, disability, gender, race, religion, sexual orientation, and gender reassignment. It is important to ensure fair and equal treatment of all employees and to have policies in place to prevent discrimination.

It is crucial to stay informed about changes in employment legislation and seek professional advice to ensure compliance with all relevant laws and regulations.

What is the best way to hire employees in UK?

When hiring employees in the United Kingdom, there are several ways to facilitate the process, the key mechanisms are:

  1. Direct Hiring: You can directly hire employees by conducting your own recruitment process, managing employment contracts, payroll, and HR responsibilities in-house. This approach gives you full control over the hiring process and allows you to directly manage your employees.
  2. Recruitment Agencies: Engaging with recruitment agencies can help streamline the hiring process. These agencies specialize in sourcing and screening candidates for specific job roles or industries, saving you time and effort. Recruitment agencies can handle various aspects of the hiring process, including conducting initial interviews, skills assessments, and reference checks.
  3. Professional Employer Organization (PEO): A PEO is a service provider that acts as a co-employer, assuming certain employer responsibilities such as payroll, benefits administration, and HR management. When you engage a PEO, the employees are technically employed by the PEO, who then leases them back to your company. This arrangement allows you to focus on your core business while the PEO handles administrative tasks and ensures compliance with employment regulations.
  4. Employer of Record (EOR): An EOR is similar to a PEO but typically focuses on managing international employees or employees working in multiple jurisdictions. The EOR takes on the legal and compliance responsibilities of being the official employer, handling payroll, tax withholding, benefits, and ensuring compliance with local employment laws. This solution is particularly useful when expanding into new markets or employing remote workers in the UK. Both PEO and EOR solutions are often known in the UK as ‘umbrella companies’. 
  5. Freelancers and Contractors: Depending on your business needs, you may consider hiring freelancers or contractors for specific projects or tasks. Freelancers and contractors are generally self-employed and work on a temporary or project basis. It is important to correctly classify the employment status of these workers to comply with relevant tax and employment laws, as misclassification can lead to legal issues.

It is important to consider the specific needs of your business and the nature of the job roles when determining the best approach for hiring employees in the UK. Consulting with HR professionals or legal advisors can provide valuable guidance on the most suitable method for your organization.

What are the key steps to hire employees in the UK?

To hire employees in the United Kingdom, businesses should follow these general steps:

  1. Determine Hiring Needs: Identify the specific roles and positions that need to be filled within your organization. Define the required skills, qualifications, and experience for each role to ensure you attract suitable candidates.
  2. Job Advertising and Recruitment: Advertise the job vacancies through various channels, such as online job platforms, recruitment agencies, company website, and social media. Create detailed job descriptions and specifications to attract potential candidates. Review applications, conduct interviews, and assess candidates based on their qualifications and fit for the role.
  3. Right to Work Checks: Before making a job offer, perform right to work checks to ensure candidates have the legal right to work in the UK. Verify their identity and immigration status by examining appropriate original documents, as outlined by the Home Office.
  4. Employment Contract and Offer: Once you have selected a candidate, provide them with a written employment contract that includes essential terms and conditions of employment. Ensure the contract covers aspects such as job title, responsibilities, working hours, salary, notice periods, and any applicable probationary periods. Make the formal job offer to the selected candidate.
  5. Register as an Employer: Register with HM Revenue and Customs (HMRC) as an employer to obtain an employer PAYE reference number. This number is required for handling tax and National Insurance contributions for your employees.
  6. Tax and National Insurance Contributions: Set up a Pay As You Earn (PAYE) system to deduct income tax and employee National Insurance contributions from your employees’ wages. You will also need to make employer National Insurance contributions based on their earnings. Submit accurate payroll information to HMRC on time.
  7. Workplace Pensions: Comply with the auto-enrolment pension scheme requirements. Choose a suitable workplace pension scheme and enroll eligible employees. Make the necessary contributions to the pension scheme and manage employee opt-outs or changes in pension status.
  8. Ongoing HR Management: Once employees are hired, you need to manage their ongoing employment, including payroll processing, performance management, employee development, and handling any HR-related issues such as grievances or disciplinary matters.

Remember, these steps provide a general guideline, and it is essential to adapt them to your specific business requirements and comply with relevant employment laws and regulations in the United Kingdom. Seeking advice from HR professionals or legal advisors can help ensure proper adherence to the necessary procedures.

Hire employees in the UK — with the right partner

Hiring employees in the UK means having a details understanding of employment regulations, market conditions, and specific cultural factors that impact on employment in the UK. To streamline hiring in Singapore, many companies will benefit from a UK PEO, EOR, or Umbrella company solution. 

Check out our UK PEO and UK EOR guides to find out which providers might best suit your company. 

FAQs

Yes, employers in the UK are legally required to provide paid leave to their employees. Full-time employees are entitled to a minimum of 28 days of paid annual leave, which may include public holidays. Part-time employees are entitled to a pro-rata amount based on their working hours. It is important to ensure compliance with these leave entitlements and factor them into your employment contracts and payroll calculations.

Employers in the UK are required to conduct right to work checks on all prospective employees to ensure they have the legal right to work in the country. This involves verifying the candidate's identity and immigration status by examining original, valid documents. The Home Office provides a list of acceptable documents and guidance on conducting these checks. It is crucial to follow the correct procedures to avoid employing individuals without proper authorization.

In the UK, employers cannot dismiss employees without cause. Employees are protected against unfair dismissal under employment law. To terminate an employee's employment, employers must have a valid reason recognized by the law, such as misconduct, poor performance, redundancy, or another substantial reason. Employers must follow proper procedures and demonstrate that the dismissal was fair and reasonable. It is advisable to seek legal guidance and ensure compliance with employment legislation when considering employee terminations.

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