24 November 2020

Labour and Employment Comparative Guide

Labour and Employment Comparative Guide for the jurisdiction of UK, check out our comparative guides section to compare across multiple countries
UK Employment and HR
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1 Legal framework

1.1 Are there statutory sources of labour and employment law?

A number of integral employment rights and protections are enshrined in statute, including the following:

  • Right not to be unfairly dismissed: An employee who has two years' service may be dismissed only for one of five potentially fair reasons (conduct, capability, redundancy, statutory restriction or some other substantial reason), and only after a fair process (which varies depending on the reason for dismissal) has been followed.
  • Right not to be discriminated against: Employers must not directly or indirectly discriminate, harass or victimise job applicants or employees on the grounds of age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, sex or sexual orientation.
  • Whistleblowers who report malpractice by their employer or a third party: Workers who disclose a relevant type of wrongdoing to an appropriate person in the reasonable belief that their disclosure is in the public interest have the right not to be dismissed or subjected to any other detriment because of their disclosure.
  • Working time protections: Workers are entitled to daily and weekly rest breaks, limits on weekly working hours (subject to an opt-out) and 5.6 weeks' paid annual leave.
  • Right to receive a minimum wage: There are five different bands of national minimum wage (apprentice rate, young workers rate, development rate, standard rate and national living wage), and workers are entitled to be paid the rate applicable to them.
  • Collective consultation obligations: Where an employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days, the employer must consult on its proposal with representatives of the affected employees and notify the relevant government department.
  • Protections on the transfer of an undertaking: On a business transfer or a service provision change (eg, outsourcing, insourcing), the employees assigned to the relevant business or service will automatically transfer to the buyer or incoming service provider. In addition, various information and consultation obligations arise on such a transfer, and employees are protected against changes to their terms and conditions and dismissals connected with the transfer.

Employees also benefit from statutory protections relating to health and safety, data protection and human rights. There are also additional statutory rights for atypical workers, as outlined in question 2.5.

1.2 Is there a contractual system that operates in parallel, or in addition to, the statutory sources?

Yes – in addition to the statutory framework, employees and employers benefit from and are subject to the express and implied terms of the employment contract. The employment contract is principally governed by contract law, with certain modifications to reflect the personal nature of the employment contract – for example, that the court will not usually order specific performance of the contract.

1.3 Are employment contracts commonly used at all levels? If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information? Are implied clauses allowed?

There are no formalities for creating an employment contract beyond meeting the basic contract law requirements for the formation of a contract. In particular, there is no requirement that the contract be in writing. However, employees must be given a written statement of certain specified terms within two months of starting employment (from April 2020, this will need to be provided by no later than the first day of employment). This include details such as how much the employee is to be paid, his or her job title or a brief description of the role and holiday entitlement.

It is therefore common for written employment contracts to be used at all levels of employment in order to comply with the aforementioned requirement, to provide certainty as to terms and to provide additional protections in relation to the employer's confidential information and business interests.

The parties are free to decide what terms to include in the contract, and the form and content of the contract will vary depending on the seniority of the employee and/or the type of employment (eg, whether the employee works on a full-time or part-time basis and whether the contract is for a fixed or indefinite period). The only limitations on the express terms that may be agreed between the parties are any minimum entitlements conferred by statute (eg, in relation to holiday entitlement or minimum wage).

In addition, certain terms may be implied into the employment contract. The key term that is implied into every contract of employment is the implied term of mutual trust and confidence. This imposes a general obligation on the employer not to act in an unreasonable manner in its dealings with employees. If the employer breaches this term, the employee will be entitled to resign and claim that he or she has been constructively dismissed and bring a claim for unfair dismissal.

2 Employment rights and representations

2.1 What, if any, are the rights to parental leave, at either a national or local level?

Parents and adoptive parents benefit from paid leave on the birth or adoption of a child. Maternity or adoption leave is open to employed qualifying parents. This is a right from the first day of employment. Fathers, same-sex partners and secondary adopters are also entitled to two weeks' paternity leave. In addition, shared parental leave was introduced in 2015 to offer flexibility to parents and adoptive parents as to how they take leave in the first year after the child is born or placed for adoption. Shared parental leave effectively allows parents to share the statutory maternity or adoption leave and pay that is available to mothers under the maternity and adoption provisions.

After one year's employment, each parent is also entitled to 18 weeks' unpaid parental leave. This is per child and can be taken between the child's birth and his or her 18th birthday.

2.2 How long does it last and what benefits are given during this time?

Statutory maternity and adoption leave of up to one year can be taken (39 weeks of which are paid). Whether an employed woman is entitled to statutory maternity pay is more complicated and will depend on how long she has worked for her employer at the point she is expecting the child. If so entitled, statutory maternity/adoption pay is paid at 90% of average earnings for the first six weeks and then a flat statutory rate for the remaining 33 weeks. This rate changes annually in April and from April 2019 increased to £148.68. The primary adopter in any couple or a single adopter is entitled to the same rights to statutory leave and pay as a woman on maternity leave.

Paternity leave is paid at the flat statutory rate for two weeks.

2.3 Are trade unions recognised and what rights do they have?

Trade unions play a significant role in employee relations in the United Kingdom, in both the public and the private sector. They negotiate terms and conditions with employers on behalf of employees, seek recognition from employers to represent employees, provide legal and sometimes financial assistance and services to their members, and campaign for social and political change.

A trade union may be voluntarily recognised by an employer. There is no single way in which this has to happen; it is a matter of whether the employer agrees to such recognition and what it and the trade union agree the trade union is recognised to bargain over.

If a trade union has been refused recognition voluntarily and the workforce has 21 or more employees, the trade union can apply for statutory recognition from the Central Arbitration Committee, an independent statutory body. There is a complicated statutory process for making a request for recognition.

A trade union that is recognised by an employer acquires further rights, including the ability to negotiate collective bargaining arrangements on behalf of a group of workers and for its workplace representatives to be eligible for time off to carry out trade union duties. Trade union representatives may negotiate with employers on behalf of their members on pay and other conditions (eg, working hours and holidays), be informed of and consulted with about redundancies, and accompany members to disciplinary and grievance meetings.

Trade unions also have the ability to call for industrial action (including organising strike action). They are subject to a complicated process for balloting their members and over the subject of the collective dispute if they wish to avoid being legally liable to the employer and third parties affected by the action. Most commonly, a trade union organising a strike induces workers to break their contracts of employment, which the trade union can be sued for unless it has complied with these legal duties.

2.4 How are data protection rules applied in the workforce and how does this affect employees' privacy rights?

There are no employment-specific privacy laws in the United Kingdom; rather, the United Kingdom's data protection regime (principally embodied in the EU General Data Protection Regulation and the Data Protection Act 2018) applies to any data processing which takes place within the employment context in the same way as it does to other commercial data processing activities.

Accordingly, employers, as data controllers, will need to comply with the data protection principles when handling employees' personal data and, among other things, ensure that they:

  • have a legal basis for their data processing activities;
  • store employee records in a secure manner;
  • keep employee records up to date and for no longer than necessary, and have clear guidelines regarding applicable retention periods; and
  • inform employees about what personal data they collect, why they collect it, who it is collected from and who it is shared with.

When conducting employee monitoring within the workplace, employers must have regard to this statutory framework, as well as the guidance and codes of practice issued by the information commissioner and the implied term of trust and confidence. Accordingly, it is important for an employer to consider whether to undertake a data privacy impact assessment before conducting any employee monitoring activities and to publicise any systematic monitoring it does conduct.

2.5 Are contingent worker arrangements specifically regulated?

There is no concept of a ‘contingent worker' under UK law. However, various types of atypical working arrangements may be implemented, including the use of`;

  • fixed-term employees (ie, employees engaged for a defined period);
  • agency workers (ie, individuals who are employed by an agency and assigned to end-user clients for specific engagements); and
  • zero-hour contract workers (ie, workers who are engaged on an ad hoc basis with no guarantee of work).

Atypical workers such as these will still benefit from the applicable statutory and contractual protections outlined in question 1 if they meet the relevant employment status test.

These atypical working arrangements are also specifically regulated, to differing extents, including as follows:

  • Fixed-term employees are protected against less favourable treatment compared to permanent employees and the non-renewal of a fixed term contract constitutes dismissal for the purposes of a claim for unfair dismissal.
  • Agency workers have various ‘day 1' and ‘week 12' rights, such as the right to the same basic pay and working conditions as permanent employees after the twelfth week of their engagement.
  • Zero-hour contracts have been the subject of much parliamentary scrutiny and additional protections are due to come into force over the next couple of years, including the right to request a predictable and stable contract after 26 weeks' service.

3 Employment benefits

3.1 Is there a national minimum wage that must be adhered to?

Yes. Most workers aged 16 or over are entitled to receive the national minimum wage. Workers aged 25 and over are entitled to the national living wage. The exact rate depends on the worker's age and the rates change every April. The rates applicable from 1 April 2019 are as follows:

  • Workers aged 16 and 17 – £4.35 per hour;
  • workers aged 18 to 20 – £6.15 per hour;
  • workers aged 21 to 24 – £7.70 per hour; and
  • workers aged 25 and over – £8.21 per hour.

Many employers pay more than the national minimum wage and national living wage.

3.2 Is there an entitlement to payment for overtime?

There is no statutory right to payment for overtime in the United Kingdom. Employers must ensure that all overtime rates are set out in the employment contract. Employers often pay an enhanced rate for overtime, although they are not obliged to do so.

3.3 Is there an entitlement to annual leave? If so, what is the minimum that employees are entitled to receive?

Yes. Most workers have a right to a minimum of 5.6 weeks' holiday (28 days for a full-time worker) and must be paid their normal remuneration during that time. Any additional contractual holiday will be set out in the terms and conditions of the employment contract.

3.4 Is there a requirement to provide sick leave? If so, what is the minimum that employees are entitled to receive?

Yes. Employees are entitled to statutory sick pay after four days' consecutive leave, up to a maximum of 28 weeks. Statutory sick pay is paid by the employer. The statutory amount changes annually in April. The current rate (from April 2019) is £94.25 per week. Many employers offer enhanced sick pay.

3.5 Is there a statutory retirement age? If so, what is it?

No, the United Kingdom does not have a statutory retirement age; this was abolished in 2006.

4 Discrimination and harassment

4.1 What actions are classified as unlawfully discriminatory?

In the United Kingdom, discrimination can occur at any stage of the employment cycle, including before employment begins at the recruitment stage. Discrimination may impact on:

  • the terms and conditions of employment;
  • the application of policies and procedures;
  • day-to-day management decisions;
  • the termination of employment; and
  • standards of behaviour in the workplace.

Discrimination can take several different forms. It may be direct – treating someone less favourably than others because of a protected characteristic (see below); or indirect – putting rules or arrangements in place which apply to everyone, but which put people with a certain characteristic at a particular disadvantage. It might be lawful to have those rules or arrangements in place, as long as they can be justified by the employer. This means that the employer must show that it is pursuing a legitimate aim proportionately.

Other forms of discrimination include harassment (unwanted behaviour linked to a protected characteristic that violates the employee's dignity or creates an offensive environment for him or her) and victimisation (treating someone unfairly because he or she has complained about discrimination or harassment). There are also additional forms of discrimination specific to disability. ‘Disability' is defined as a "physical or mental impairment which has a long term adverse effect on an individual's ability to carry out normal day to day activities". This confers wide-ranging protection incorporating many health conditions, including neuro-diverse conditions such as autism and dyslexia.

4.2 Are there specified groups or classifications entitled to protection?

In the United Kingdom, employees and workers are protected against discrimination because of specific protected characteristics – namely sex, race, disability, age, religion and belief, pregnancy and maternity, marriage and civil partnership, gender reassignment and sexual orientation. Additional provisions set out the right to equal pay when comparing men and women. Part-time and fixed-term contract employees are also protected from being treated less favourably because of the part-time or fixed-term nature of their contracts.

4.3 What protections are employed against discrimination in the workforce?

As noted above, employees and workers are protected against four main forms of discrimination in the workplace.

There are two additional forms of protection for disabled employees:

  • They should not be treated unfavourably for a reason arising from their disability; and
  • Reasonable adjustments need to be made for them.

Both of these forms of protection are significant. Whether someone has been treated unfavourably arising from a disability is a low threshold and the employer must justify its treatment of the employee by showing the treatment is proportionate and in pursuit of a legitimate aim. Some examples of reasonable adjustments include adjusting selection criteria, reallocating duties, altering hours or place of work and acquiring or modifying equipment.

In addition, when a woman is on maternity leave, additional protections from redundancy mean that if a redundancy situation occurs and her position may potentially be redundant, she should be offered any suitable alternative vacancy ahead of others in the redundancy pool, even if she is not the best qualified for that role. This same protection applies to those on adoption leave and to men and women on shared parental leave.

4.4 How is a discrimination claim processed?

If an employee feels that he or she has been discriminated against, he or she must bring a claim for discrimination at the local employment tribunal (see question 6). A two-stage approach to the burden of proof applies in discrimination claims. The first question is whether the individual can show the employment tribunal facts from which the employment tribunal could infer, without any other explanation from the employer, that discrimination took place. If not, the claim fails. If so, the burden shifts to the employer to explain to the employment tribunal that it did not in fact discriminate.

4.5 What remedies are available?

Where an individual succeeds in a discrimination claim, the employment tribunal may:

  • give a declaration of the rights of the individual;
  • make a recommendation to the employer aimed at reducing the adverse effects of the discrimination on the individual; and/or
  • order compensation.

Compensation in discrimination claims is uncapped. It can cover a claimant's financial loss (eg, loss of salary), but usually also includes an amount to compensate for injury to feelings. The level of injury to feelings compensation falls into three bands:

  • a lower band of £900 to £8,800 (for less serious cases, such as an isolated or one-off occurrence);
  • a middle band of £8,800 to £26,300 (for more serious cases that do not merit an award in the upper band); and
  • an upper band of £26,300 to £44,000 (for the most severe cases, such as where there has been a lengthy campaign of discriminatory harassment on the ground of sex or race). In exceptional circumstances, awards can exceed £44,000.

Aggravated damages can also be awarded in discrimination claims. They can be awarded where the employer has acted in a "high-handed, malicious, insulting or oppressive manner". Punitive damages are permitted in discrimination claims, but are rarely awarded. The law on awarding aggravated and punitive damages differs in Scotland from that of England and Wales. Punitive damages are unlikely to be awarded in Scotland. In addition, while English tribunals can make a separate award of aggravated damages in respect of an act of discrimination, this rule does not apply in Scotland.

4.6 What protections and remedies are available against harassment, bullying and retaliation/victimisation?

Harassment and victimisation are considered forms of discrimination in the United Kingdom and are dealt with as set out in question 4.1.

There is no freestanding employment right to bring a claim of bullying in the workplace; if the bullying behaviour is linked to a protected characteristic, the claim will be brought as a harassment claim under discrimination legislation. Another option, although rarely pursued, is for the employee to bring a civil claim for harassment and seek to have the employer held vicariously liable for any such harassment that took place in the workplace.

Alternatively, an employee with two years' service could bring a constructive unfair dismissal claim. In order to win a constructive unfair dismissal claim, an employee must show that the employer has committed a serious breach of contract which has caused him or her to resign without undue delay. Bullying would be a breach of the mutual implied term of trust and confidence.

5 Dismissals and terminations

5.1 Must a valid reason be given to lawfully terminate an employment contract?

In order to lawfully terminate an employment contract, the employer must:

  • comply with the applicable provisions of the employment contract that relate to the termination of employment, including giving sufficient notice (see question 5.2). A failure to comply with these requirements will give rise to a claim for wrongful dismissal (which is a breach of contract claim). However, a valid reason is not required in order to avoid a claim for wrongful dismissal;
  • not unlawfully discriminate against the employee in relation to the dismissal – see questions 1.1 and 4.1 for further information about unlawful discrimination; and
  • have a fair reason and follow a fair process before dismissing any employee with two years' service in order to avoid a claim for unfair dismissal. There are five potentially fair reasons for dismissing an employee: conduct, capability, redundancy, statutory restriction or some other substantial reason. What constitutes a fair process will depend on the circumstances and the reason for the dismissal, but will usually involve one or more formal meetings with the employee. In addition, employees with two years' service have the right to request a written statement setting out the reasons for their dismissal.

Accordingly, terminating an employment contract without giving a valid reason will not be wrongful, but is likely to result in the dismissal being found to be unfair and potentially even discriminatory.

5.2 Is a minimum notice period required?

Yes. The usual position is that a contractual written notice period is set out in the employment contract. However, if this is not the case, the law imposes a statutory obligation on the employer to give an employee a minimum period of notice. If an employee's contractual notice is longer than the statutory minimum, the contractual notice period will prevail.

Statutory minimum notice depends on the employee's length of service: if the employee has been employed for more than one month, but less than two years, he or she is entitled to at least one week's notice. After that, minimum statutory notice is one week per year of service up to a maximum of 12 weeks.

5.3 What rights do employees have when arguing unfair dismissal?

Although the specific process that must be followed to fairly dismiss an employee varies depending on the reason for the dismissal, employees are typically afforded the right to be accompanied to formal hearings by a colleague or trade union representative and the right to appeal any decision to dismiss them. These rights are enshrined in the Advisory, Conciliation and Arbitration Service Code of Practice, which applies to conduct and performance-related dismissals. If an employer fails to comply with the code, the employee's compensation on a finding of unfair dismissal could be uplifted by up to 25%.

5.4 What rights, if any, are there to statutory severance pay?

In addition to receiving notice or a payment in lieu of notice, employees who are made redundant are entitled to a statutory redundancy payment, provided that they have worked for their employer for at least two years. This is worked out according to a statutory formula which is subject to a cap and takes into account the employee's age, length of service and pay. The maximum statutory redundancy payment from 6 April 2019 until 5 April 2020 is £15,750. A number of employers offer enhanced redundancy payments. There are many variations, but one example would be by lifting the cap on weekly pay.

6 Employment tribunals

6.1 How are employment-related complaints dealt with?

Most legal disputes arising from employment are heard in employment tribunals. These include all claims arising from employment statutes, such as unfair dismissal, redundancy and discrimination. Breach of contract claim of up to £25,000 in value can also be brought in the employment tribunals. Breach of contract claims in excess of this amount must be brought in the civil courts.

Employment tribunals are less formal than civil courts. Parties can be represented by solicitors, barristers, trade union representatives or non-legally-qualified friends or family members, or can represent themselves. Tribunal panels are composed of three members: a legally qualified employment judge who runs the proceedings and two lay members – one who represents employer organisations and one who represents employee organisations. Some types of cases (eg, unfair dismissal) can be heard by an employment judge sitting alone, whereas discrimination claims will be heard by a panel.

At a full hearing, the party with the burden of proof will present its evidence first. This will usually be the claimant, unless it is an unfair dismissal claim. The panel will look at documentary evidence and hear witness evidence, including that of the claimant. At the end of the hearing, it will give its judgment orally or will reserve judgment and subsequently issue a written judgment. Any appeal from the employment tribunal will be to the Employment Appeal Tribunal and subsequently to the Court of Appeal and Supreme Court.

6.2 What are the procedures and timeframes for employment-related tribunals actions?

Most employment-related claims need to be presented to the employment tribunal within three months of the relevant date (eg, the date of dismissal). There may be a number of different deadlines where there has been a series of discriminatory incidents. The employment tribunal will extend the deadline for claims presented late only in very limited circumstances.

Before making a claim to the employment tribunal, a claimant must notify the Advisory, Conciliation and Arbitration Service (ACAS) that he or she intends to bring a claim. He or she will then be offered the chance to try to settle the dispute using ACAS early conciliation. Parties are not obliged to engage with early conciliation, but if they do the time limit for bringing an employment tribunal claim is extended by the period of early conciliation. Once the early conciliation period ends, ACAS will issue an early conciliation certificate. The certificate will give the claimant a unique reference number which must be included on the ET1 form (see below) should he or she go on to present a claim.

There are specialised employment tribunal forms. To start a claim, the claimant must complete and submit an ET1 form; if the employer wishes to submit a response to defend the claim, it will use an ET3 form. No fee is charged for issuing an employment tribunal claim.

7 Trends and predictions

7.1 How would you describe the current employment landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The employment law landscape in the United Kingdom is ever-changing. Employment tribunal litigation continues unabated, although claims have not yet returned to the levels they were at in 2013, when fees for bringing a claim (which have since been abolished) were introduced.

Since the United Kingdom's adoption of the EU General Data Protection Regulation, there has been a marked increase in employees making data subject access requests, either because they want to understand what personal data is held on them or as part of a wider pre-litigation tactic.

In the past few years there have been a number of cases regarding whether individuals are employees, workers or self-employed contractors. The government made the issues of ‘employment status' and increasing security for atypical workers key focuses in 2018, which resulted in a number of recommendations. "The biggest package of workplace reforms for over 20 years" was set out in the Good Work Plan. However, many of the recommendations have little detail and will be the subject of further consultation.

There have also been significant cases regarding:

  • the rights of whistleblowers;
  • suspension and dismissal of employees; and
  • whether men who take shared parental leave should be paid the same as women who received enhanced company maternity pay in the past year.

There has also been a focus on appropriate behaviour in the workplace following the #MeToo movement. As well as an increase in internal grievances for employers, the government has commissioned a report on sexual harassment in the workplace and recommendations for change have been made.

The use of non-disclosure agreements in harassment and discrimination cases has also come under scrutiny.

* * * * * * * * *

Brexit has dominated the UK Parliament's agenda for some time. Employment changes are generally made in April and October each year and a number of new legislative developments are expected in the next 12 months, including the following:

  • April 2020:
    • extension of IR35 reforms to the private sector, to ensure that individuals who would be employees if they were employed directly pay broadly the same tax as if they were employed;
    • increase in the holiday reference period for workers with variable pay from 12 to 52 weeks; extension of the right to a written statement to all workers from day 1 and to contain extra details;
    • threshold for valid employee requests for information and consultation to be lowered from 10% to 2% of employees; and
    • abolition of the opt-out from equal pay protections of Agency Worker Regulations (Swedish derogation).
  • Future date to be confirmed (expected 2020):
    • parental bereavement leave and pay to be introduced, giving employed parents who have lost a child two weeks' statutory paid leave to allow them time away from the workplace to grieve.
  • Possible future developments subject to consultation:
    • introduction of ethnicity pay gap reporting;
    • extended redundancy protection for those on family leave;
    • codification of the employment status test and other reforms arising from the Good Work Plan; and
    • proposed employment tribunal reform.

8 Tips and traps

8.1 What are your top tips for navigating the employment regime and what potential sticking points would you highlight?

The employment regime in the United Kingdom is complex. Top tips include the following:

  • Be professional in interviews and do not make personal comments which could be construed as discriminatory.
  • Ensure that the employment contract reflects your agreement with the employee and update it on promotion.
  • Be respectful in your dealings with employees to prevent breaching the implied term of trust and confidence.
  • Have a clear equality and diversity policy setting out appropriate behaviours in the workplace and how employees can complain.
  • Ensure that all members of the workforce understand that jokes and banter could be taken as harassment.
  • Implement workplace policies in a proportionate way to prevent discrimination.
  • Make reasonable adjustments for disabled employees.
  • Do not retaliate against whistleblowers or those who have raised discrimination complaints.
  • Manage employees in their first 18 months of employment: if there are problems, sort them out before they gain unfair dismissal rights.
  • Allow employees to take their paid holiday.
  • Remember that women on maternity leave and those on certain other types of family leave have enhanced rights in a redundancy situation.
  • Work out which of the five fair reasons is applicable to any potential dismissal and follow an appropriate procedure.
  • Give employees notice when terminating employment.
  • Remember that anything written on email or social media is likely to be disclosable in employment tribunal proceedings or if an employee makes a data subject access request.
  • Make a short, clear, objective note of any important meetings; memory is not a good custodian of fact.

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.

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