UK: Employment "At A Glance" Guide

Last Updated: 28 January 2015
Article by Robert Hill and Nick Dent

For some time, the balance of employment rights in England & Wales has fallen squarely in favour of employees. Most recently however, the introduction of employment tribunal fees in July 2013 has resulted in a 70% drop in claims, meaning that employers would appear to be less at risk of claims for technical breaches of the law. Nevertheless, most businesses are still very conscientious about wanting to be seen to be "good employers", but if not, the bottom line remains that provided they are prepared to pay sufficient compensation, employers in England & Wales can usually achieve what they wish.

Issues arising on hiring individuals


Any non-EEA national seeking entry or permission to remain in the UK for the purpose of employment may need to apply under Tier 2 of the Points Based System via an approved UK Border Agency Sponsor. EEA nationals (aside from Croatians) have the right to enter, remain in and work in the UK without a work permit.

Employment structuring and documentation

The standard type of employment contract in the UK is an "open-ended" contract terminable on notice (subject to the protection which the law provides on unfair dismissal). A contract of employment need not be in writing and may be partly written and partly oral. Although the contract itself need not be in writing, employees who have been employed for one month or more must be given a statement containing certain terms and conditions of employment within two months of commencing work with an employer.

The most common employment relationship is that of full time permanent employment but an increasing number of staff have flexible working arrangements. This may include working part time, through fixed term contracts or through an agency. UK law gives special protection for these types of workers. Zero hours contracts are becoming more common in the UK although they have been criticised recently by various political figures. There are also special rules relating to apprentices, trainees and young persons.

Issues arising during the employment relationship

Wages, annual leave and working time

Employers must pay employees and workers at least the national minimum wage. There are four hourly rates for the national minimum wage, the top rate currently being GBP 6.50 (for workers aged 21+). Employees and workers are entitled to 5.6 weeks' paid annual leave (pro-rated for part-timers). Workers may not work, on average, for more than 48 hours per week, but can agree to contract out of this working time limit.

Agency workers are entitled:

  • From day one of an assignment to the same rights as comparable permanent employees in relation to access to shared facilities and job vacancies
  • After 12 weeks of an assignment to additional rights – in particular the same basic working and employment conditions as comparable permanent employees, including those relating to pay, annual leave and working time and rest periods

Family rights

Pregnancy rights include health and safety protection and the right to reasonable paid time off for ante-natal care. Family rights to leave and pay have been subject to major reform in Great Britain with the introduction of shared parental leave and pay which will apply to all qualifying working parents of babies expected to be born or adopted from 5 April 2015. Whilst the default position of 52 weeks' maternity/adoption leave for employed mothers/adopters will remain, those employees will be entitled to give up their leave and pay and share it with their partners.

Employers with enhanced maternity pay arrangements need to consider how they will treat employees on shared parental leave. Employees with 26 weeks' service also qualify for Statutory Maternity/Adoption Pay which is calculated as follows:

  • Six weeks at 90% of salary
  • 33 weeks currently at a flat rate of GBP 138.18, or 90% of salary if that is lower. ShPP will follow the same flat rate for up to 37 weeks

Fathers/co-adopters continuously employed for 26 weeks are entitled to:

  • Two weeks' Ordinary Paternity Leave
  • Two weeks' Statutory Paternity Pay: currently at GBP 138.18, or 90% of salary if that is lower and
  • If the baby is expected to be born/adopted before 5 April 2015, 2-26 weeks' Additional Paternity Leave if their spouse has not exhausted her maternity leave

Parents/carers continuously employed for 26 weeks have the right to request flexible working, i.e. to change the hours/times they work or their work location, to care for a child or dependant. From 30 June 2014, the right to request flexible working applies to all employees with 26 weeks' continuous service, irrespective of their caring responsibilities. Although compensation for non-compliance, or for a decision based on incorrect facts, is capped at eight weeks' pay, victimisation, sex discrimination and unfair dismissal claims may also be brought following an employer's refusal to grant the employee's request.

Trade unions

It is unlawful to refuse to employ a person because they are a member of a trade union. In addition, the dismissal of an employee on union grounds will be an automatically unfair dismissal (see 'terminating employment' below). A strike, work to rule or other industrial action need not be called by a union and non-union members can participate. The action that employers can take against employees as a result of industrial action is limited. If employees are on strike, the employer does not need to pay them for the times they are not working. However, they will usually be entitled to full pay when they take industrial action short of a strike.

Tax and social insurance

The UK has a comprehensive social security system, funded from general taxation and from National Insurance Contributions. The social security system provides state benefits to cover maternity/paternity, childcare, disability and carer matters. It also administers retirement pensions. State benefits can be contractually supplemented by employers. The National Insurance Fund aims to provide subsistence level benefits to all those in need.

From 1 October 2012, employers have to ensure that workers in the UK, between the ages of 22 and state pension age, and earning over the income tax threshold (currently GBP 10,000 p/a for tax year 2014/15) are automatically enrolled into a qualifying pension scheme to which the employer must contribute. The duty is being phased in according to the size of the employer and will not be fully in force until 2018.

Employers are under an obligation to collect income tax at source from employment income, pensions and taxable state benefits under the Pay As You Earn (PAYE) system. Employed earners and their employers must also pay National Insurance Contributions. Various contributions are required to be made in respect of all UK employees. Class 1 contributions are payable in respect of earnings by both employer and employee.

Issues arising on termination of the employment relationship

Business transfers

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) applies to employees when either:

  • A business or asset is transferred from one entity to another
  • There is a change of identity in an entity providing a service (e.g. outsourcing)

The effect of TUPE is that all employees "assigned" to the economic entity or activity will transfer. In addition, the transferor's rights, powers, duties and liabilities under the employment contracts of those employees that are transferring, transfer to the transferee. The transferor and transferee have a duty to inform and consult with employee representatives of "affected employees" about the facts, implications, etc of the transfer. Employers that breach this duty may be liable for up to 90 days' pay for each "affected employee". Finally, subject to certain exceptions such as redundancy or change of location, dismissals are automatically unfair if the sole or principal reason for dismissal is the TUPE transfer.

Terminating employment

Subject to certain exceptions, unfair dismissal claims can be brought by employees continuously employed for 2+ years. Provided there is no discrimination, employers will not be liable for dismissals where:

  • They follow a fair procedure
  • The reason for dismissal is fair, e.g. redundancy, capability, misconduct

An unfair dismissal award, which is currently capped at GBP 90,494, is made up of:

  • A basic award (calculated according to the employee's age, length of service and pay) - currently capped at GBP 13,920
  • A compensatory award (a "just and equitable" amount) – currently capped at the lower of one year's gross pay (excluding pension contributions, benefits in kind and discretionary bonuses) and the overall cap of GBP 76,574

A redundancy situation arises where the business, workplace or job disappears, or fewer employees are needed. For a fair redundancy, the employer must show:

  • The reason for dismissal is redundancy
  • It is reasonable to dismiss the employee for redundancy
  • A fair procedure was followed

There must be fair selection of employees for redundancy and genuine consultation. If an employer proposes to dismiss as redundant a total of 20+ employees across any sites in the UK within a 90 day period, it must also follow a collective consultation procedure involving a minimum consultation period of 30/45 days, depending on the number of redundant employees, in addition to any individual redundancy procedure. Employers that breach these collective obligations may be liable for protective awards of up to 90 days' pay for each affected employee. Employees with 2+ years' service have the right to a statutory redundancy payment currently capped at GBP 13,920.

Lastly, it is unlawful to dismiss employees, or to subject employees or workers to a detriment, if they disclose information with a reasonable belief in its truth, about certain types of wrongdoing by the employer. The awards in whistleblowing claims are uncapped and are assessed on a similar basis to discrimination claims.


Employees and others have the right not to be discriminated against because of age, disability, gender-reassignment, marriage or civil partner status, pregnancy/maternity, race, religion/belief, sex and sexual orientation (Protected Characteristics) from the job application stage onwards.

Discrimination/victimisation/harassment relating to any of the Protected Characteristics is prohibited at any time during the employment relationship. Claims can be brought by all employees, ex-employees, job applicants, contract workers and agency workers – there is no requirement for a period of continuous service. The award is made up of:

  • A compensatory award – uncapped for past and future financial losses and career loss
  • An injury to feelings award – there are three guideline bands, with the lower and upper bands ranging from GBP 660–GBP 6600 and GBP 19,800–GBP 33,000 respectively, depending on the seriousness of the case

Men and women have the right to be paid the same for the same, or equivalent, work. Where they are paid at different rates, an employee can bring an equal pay claim and the employer must prove that the reason for this is not gender-related, or be able to objectively justify this. Any equal pay award will be made up of:

  • Compensation of arrears of pay plus interest, limited to six years
  • Revised contractual terms, including remuneration terms, so that they are the same as that of the person of the opposite sex doing the same work

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.