EOR Service in United Kingdom

For foreign employers looking to hire in the UK, Employer of Record Solutions are a one-stop solution for all their cross-border hiring needs. EORs help businesses hire talent from countries where the business has no registered entity.  By offering the necessary resources to tackle compliance, enabling  payroll, and offering compliant benefits. Gloroots’ UK EOR can help you expedite your hiring process. Regardless of your expansion goals, company size, or desired pace of growth. 

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With a talent crunch forcing businesses to adopt cross-border hiring and tapping the gig economy, etc, employers are hiring from developing economies owing to lower hiring costs. However, this doesn’t mean employers can dismiss high-cost but mature labor markets like the UK. UK houses leading universities in the tech and business space, which produce graduates with high technical and business acumen. 

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Despite its lucrative talent pool, employing talent from the UK is a daunting task for foreign employers. UK’s labor laws differ greatly from employer-friendly nations such as the USA. For example, the UK has a statutory minimum of 5.6 weeks (28 days) of paid annual leave for full-time workers, regardless of their length of service. In the USA, there is no federal law mandating paid annual leave. Moreover, Collective Bargaining and Union Rights have to be constantly monitored and terms and conditions of employment have to be amended accordingly. Employers from countries where unionization rates are generally lower may find it difficult to navigate these laws.
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Here’s where a UK EOR can help. Partnering with an employer of record yields several hiring benefits, such as compliance with local employment laws, availing local insurance, and access to local expertise. EORs also help you save overhead costs around creating employment contracts and entity set-up and bank accounts creation in the UK - all of  which are needed to hire permanent employees in the country compliantly. 

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EORs typically offer two pricing models: fixed and variable. EORs that use the fixed pricing model provide a transparent pricing structure where fees range between $200 and $1000 per employee per month. The final cost of availing Gloroots’ EOR solution for the UK depends on the complexity of the employment laws in the employee's jurisdiction. 

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Please note that the benefits of using an EOR can outweigh the costs, especially for small businesses that may not have the resources to navigate complex legal and administrative requirements independently. 

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Our pricing  is inclusive of legal compliance services and administrative tasks for employing staff in the UK. Our SaaS-based EOR solution ensures your employee receives full HR support and localized benefits. We also provide a dashboard that tracks your UK workforce's expenses in real time. 

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Key Metrics For Foreign Employers

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The UK is ranked tenth globally for ease of doing business. According to Yahoo! Finance, London is the home to at least 80 unicorns or tech companies with a value of one billion dollars or more. London also ranked high in terms of access to early-stage investment.

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In addition, the UK provides international firms access to a vast pool of young, brilliant workers who migrate there from all over the world to complete their degrees at one of the nation's many prestigious colleges and then enter the workforce.

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Source: The Global Talent Competitiveness Index 2022

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Growing a team means hiring the right employees at the right time and for the appropriate positions. Employers in the UK must have a local legal organization and use local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in Belgium makes compliance with employment laws demanding.

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With Gloroots’s global Employer of Record (EoR) service, you can let Gloroots do the heavy lifting of payroll, tax, benefits, and compliance and concentrate on what matters to you most: your employees and company growth.

UK treats contractors, sole proprietors, self-employed individuals and full-time workers differently and there are significant risks associated with misclassification.

Employment laws in the UK are informed by several Acts.

Employment Rights Act 1996: Covers dismissal, unfair dismissal, paternity leave, maternity leave and redundancy.

National Minimum Wage Act 1998: Informs minimum wages.

Employment Relations Act 1999: Covers rights at work for trade union recognition, derecognition, and industrial actions.

The Maternity and Parental Leave etc. Regulations 1999: Covers the rights of employees to time off work during and after pregnancy.

Part-Time Workers (Prevention of Less Favorable Treatment) Regulations 2000: Covers the rights and compliance for part-time workers

The Equality Act 2010: An act that prevents discrimination in the workplace and the recruitment process. 

Agency Workers Regulations 2010: Statutory legislation that prevents discrimination against people who work for employment agencies. Treat them equally in pay and working time when compared to full-time counterparts who do the same work.

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Employment Contract

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Employers are required to provide new employees with a written statement that outlines essential employment terms, including compensation, working hours, annual leave, sick pay, severance pay, and notice period. While this is a legal requirement, it is common for employees and employers to negotiate a more detailed employment contract. These contracts can be either for an indefinite period or a fixed-term, providing flexibility for both parties involved.

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This might sound overwhelming, but it doesn't have to be. Gloroots eliminate these barriers for you. With Gloroots' Employer of Record offering, hiring and managing employees globally is a piece of cake.

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Get an overview of what you need to know when hiring in the U K. Contact us.

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Working Hour 

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The typical workweek comprises 40 hours and must not exceed an average of 48 hours over a period of 17 weeks. However, employers have the option to request workers to voluntarily opt out of the 48-hour limit.

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Overtime:

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In the UK, any work performed beyond the standard working hours per week is considered overtime and is subject to the terms outlined in the employment contract or collective agreements. In most cases, white-collar workers are requested to waive the 48-hour limit, allowing them to work additional hours without any restrictions or extra compensation. However, there are exceptions to this rule. Overtime payment may be required if the waiver is not signed, in industries governed by collective bargaining agreements, or if specific provisions for overtime pay are specified in the employment contract.

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Minimum Wage:

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As of April 1, 2023, the national minimum wage in the UK varies based on the age of the employee. The minimum wage rates are as follows:

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These rates ensure that employees receive fair and appropriate compensation based on their age and level of experience.

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Maternity Leave and Paternity Leave

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In the UK, female employees are entitled to a total of 52 weeks of statutory maternity leave. This consists of 26 weeks of ordinary leave and an additional 26 weeks of additional maternity leave.

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While it is not mandatory for the employee to take the full 52 weeks of leave, a minimum of two weeks after the birth of the child is required. Please note that this requirement may vary depending on the specific sector in which the employee works.

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During maternity leave, mothers are eligible for Statutory Maternity Pay (SMP). SMP provides compensation for up to 39 weeks, with the payment amount varying depending on the specific timeframe. For the first six weeks, the employee receives 90.00% of their average weekly earnings. For the remaining 33 weeks, the employee is entitled to either £156.66 or 90.00% of their average weekly earnings, whichever is lower.

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Annual leave

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Full-time employees in the UK are entitled to 20 working days of paid annual leave per year. Typically, this includes bank holidays. However, employers have the discretion to offer additional leave, often providing workers with 25 days in total. The specifics of the annual leave entitlement, including any additional days, should be clearly stated in the employment contract.

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In response to the impact of COVID-19, employees who were unable to utilize their entitled holiday leave are permitted to carry it over to the following two years. This flexibility allows for the accommodation of unforeseen circumstances related to the pandemic.

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Sick Leave

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Employees in the UK can receive up to 28 weeks of paid sick leave, known as Statutory Sick Pay (SSP). The minimum compensation for SSP is £109.40 per week. However, SSP is not payable for the first three days of any sickness absence. Many employers have their own sick pay schemes and may provide full salary during the initial three days.

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If an employee's sick leave extends beyond seven days, including weekends and bank holidays, they must provide a medical certificate from a professional doctor.

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In addition to SSP, employees may be entitled to contractual sick pay, which offers a higher rate of pay during sick leave, if their employer provides this benefit.

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For employees who are sick with COVID-19 or live with someone who has the virus, there may be eligibility for statutory sick pay.

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INCOME TAX 

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The majority of employees belong to category A in terms of income tax classification. 

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To know about further categories, please visit : National Insurance rates and categories: Contribution rates - GOV.UK (www.gov.uk)

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Other Taxes and Social Security contribution:

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Employer Payroll Contributions:

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Employee Payroll Contributions:

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Termination Process:

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The process of ending employment differs depending on the employment agreement and collective agreement in effect, and it is determined by the type of contract and the reason for termination. Whether a dismissal is considered fair or unfair depends on the justification and behavior associated with the termination.

It is important to note that pregnant employees or those on maternity leave are protected from termination.

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Notice Period

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In the UK, the duration of notice periods is determined by either the employment contract or the minimum requirements set by law, whichever is longer.

Regarding redundancy, the legally mandated notice period is a minimum of one week's notice for employees who have worked between one month and 2 years. For each additional year of service beyond 2 years, an employee is entitled to one week's notice, up to a maximum of 12 weeks' notice.

In instances of serious misconduct, it is possible for an employee to be dismissed without any notice.

Employers also have the option to provide payment in place of the notice period.

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Severance Pay

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Severance pay is obligatory solely in situations of redundancy. The precise sum of severance pay relies on the employee's age and their minimum two years of service:

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Note: The weekly pay used for calculation is capped at £571.

The maximum period of service considered for severance pay calculation is 20 years. 

Severance pay is not required for regular termination cases.

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Probation Periods

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The United Kingdom does not have specific legal regulations regarding probation periods. However, probationary periods usually range from three to six months.

The terms and conditions of the probationary period are typically specified in the employee's employment contract. 

Venturing into hiring in the UK introduces a complex web of compliance requirements. Employers must navigate through a maze of employment laws, payroll procedures, DE&I compliance, data protection rules, and other legal needs for a smooth and lawful onboarding process. Building the essential infrastructure and keeping up with evolving compliance rules adds complexity to the hiring process.

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But don't worry, Gloroots is here to simplify your journey. Our comprehensive solutions provide a straightforward platform to manage all aspects of hiring in the United Kingdom. With our experts, you can confidently handle cross-border employment and payroll compliance. We assist in crafting employment contracts, ensuring timely payments, and offering compliant benefits, so you can focus on choosing the right talent.

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Trust Gloroots to make your global hiring experience simple and efficient.