The United Kingdom, boasting one of the world's most developed economies, offers a dynamic landscape for hiring and business growth. With a GDP of 3.2 trillion U.S. dollars, it ranks as the fifth largest economy globally and the second largest in Europe. Despite being a net importer of goods, the UK maintains robust trade relations, particularly with the European Union and the United States. However, amidst economic shifts, navigating the UK's hiring landscape requires strategic insights and market understanding.

What you need to know before hiring employees in UK

Job market in UK

• The UK job market shows significant regional disparities. For instance, the South East enjoys the highest employment rate at 78.3%, while Wales trails with the lowest at 69.1%. These differences highlight the need for targeted recruitment strategies and localized workforce development initiatives.
• London has demonstrated robust employment growth, with a 1.2 percentage point increase over the past year. This resilience makes London a vibrant hub for new ventures and expanding businesses looking for a dynamic workforce.
• Areas like the East Midlands and Wales face higher unemployment rates, signaling potential for strategic investments in job creation and skills training to stimulate economic recovery and growth.
• Steady increases in payroll numbers, particularly in Northern Ireland, suggest a cautious yet positive trajectory in employment, reinforcing the region's appeal for business expansion and investment.
• By 2025, the UK workforce is expected to expand by 0.4 million, marking continued economic strengthening. This anticipated growth provides a promising landscape for businesses to innovate and scale operations, leveraging a growing pool of talent.

UK  Hiring Trends

• The UK's economy is showing signs of recovery, with GDP expected to grow steadily. This is supported by a private-sector-led recovery, indicating robust opportunities in various industries that are likely to expand their workforce.
• With the inflation rate forecasted to stabilize at 2% by 2029, businesses can anticipate a more predictable cost environment. This financial stability is conducive to strategic planning and investment, encouraging firms to hire confidently.
• The decreasing unemployment rate is a positive sign of economic health. This trend suggests a tightening labor market, where high-quality talent may become scarcer, prompting competitive hiring strategies.
• As part of the world’s largest economies, the UK offers a resilient market for business operations. The ongoing growth in GDP positions the UK as a dynamic environment for workforce expansion, particularly in sectors driven by private sector initiatives.
• Current government policies supporting private sector employment are shaping hiring trends. Observing these trends can help businesses align their hiring strategies with sectors that are experiencing growth due to these policies.

How to hire employees from UK 

1. Set up an entity in the country

In the UK, entities have several options when establishing a legal presence. Companies can register as a Private Limited Company (Ltd), which is the most common and offers liability protection to its shareholders. Another option is setting up a Public Limited Company (PLC), which allows for the sale of shares to the public. Registration involves Companies House and adhering to the UK corporate governance and compliance standards. Entities must also register for tax purposes with HM Revenue and Customs (HMRC) and comply with specific accounting practices as dictated by UK law.

2. Hire independent contractors

Hiring independent contractors in the UK requires drawing up contracts that define the scope of work, duration, and payment terms clearly to avoid any ambiguity regarding employment status. The UK enforces strict guidelines to distinguish between employees and contractors, especially concerning tax implications and employment rights. Misclassification can lead to legal challenges and financial penalties. Businesses use this flexible workforce model to manage projects efficiently and respond to market demands promptly, but they must manage these relationships carefully to ensure compliance with UK employment law.

3. Partner with an EOR in the country

Partnering with an Employer of Record (EOR) in the UK allows companies to bypass the complexities of setting up their own legal entity while ensuring full compliance with local employment laws, taxation, and payroll regulations. An EOR acts as the legal employer, handling HR tasks, tax withholdings, and employment benefits, thus minimizing the legal risks for the parent company. This partnership is particularly advantageous for companies looking to test the UK market without the immediate commitment of establishing a permanent presence, ensuring flexibility and reducing initial setup costs.

Employment Laws You Must Know Before Hiring in UK 

Compliance risk while hiring in UK  

When hiring in the UK, compliance risks include misclassification of employees as independent contractors, failure to adhere to stringent employment laws, and incorrect tax submissions. It is crucial to draft precise employment contracts and comply with UK employment regulations to prevent penalties, legal challenges, and potential harm to your business reputation. Ensuring accuracy in these areas not only safeguards against legal liabilities but also supports a trustworthy and ethical business environment.

Key Aspects of UK  Labor Law:

Employment Contract: In the UK, employment contracts may be oral or written, but it is best practice to provide a written statement of particulars. This document includes essential details such as:

• Identification of the employer and employee
• Job title and description
• Start date and continuity of employment
• Details on remuneration, including pay intervals and rate
• Work location and hours
• Overview of holiday entitlements and sick pay
• Information on disciplinary and grievance procedures
• Notice period and probationary terms if applicable
• Information on training requirements

This statement must be provided to employees by the start of their employment to ensure transparency and clarity about the terms of employment.

Working Hours: In the UK, the typical workweek is 40 hours, though it can average up to 48 hours over a period of 17 weeks. Employers have the option to request that employees opt out of this 48-hour limit.

Overtime: In the UK, many white-collar employees agree to work beyond the standard 48-hour week without additional compensation. Overtime pay applies only if no waiver is signed, within industries under collective bargaining agreements, or if contracts specify overtime rates.

Minimum Wage: Starting from April 1st, 2024, the national minimum wage in the UK varies based on the employee's age:

• Workers aged 21 and older are entitled to at least 11.44 GBP per hour.
• Workers between the ages of 18 and 20 have a minimum wage of 8.60 GBP per hour.
• Those under 18 years old earn a minimum of 6.40 GBP per hour.
• Apprentices also receive a minimum wage of 6.40 GBP per hour.

Payroll laws in UK 

In the United Kingdom, employers usually process payroll on a monthly basis, with wages typically being disbursed between the 25th and 30th of each month.

Employment benefits in UK 

Annual Leave 

Full-time employees in the UK are entitled to 20 working days of paid annual leave each year, in addition to 8 public holidays. The annual leave period runs from January 1st to December 31st.

Public Holidays

In 2024, there are 14 public holidays observed across the United Kingdom

Sick Days

Employees are eligible for up to 28 weeks of paid sick leave, which is compensated at a minimum of 116.75 GBP per week through Statutory Sick Pay (SSP), not payable for the first three days of sickness. For sick leave exceeding seven days, a medical certificate from a doctor is required. Employees might also receive contractual sick pay if it is offered, which is higher than SSP. After SSP ends, employees on long-term illness may qualify for Disability Benefits.

Maternity Leave

Female employees in the UK are entitled to 52 weeks of maternity leave 26 weeks of ordinary leave followed by 26 weeks of additional leave. They are not required to take the full 52 weeks but must take at least two weeks post-childbirth. Maternity Pay covers up to 39 weeks, paying 90% of average weekly earnings for the first 6 weeks, and either 184.03 GBP or 90% of average weekly earnings (whichever is lower) for the next 33 weeks.

Paternity Leave

Employees are granted one to two weeks of paid paternity leave, available within the first 52 weeks following the child's birth. This leave is compensated at 184.03 GBP per week, or 90% of the employee's average weekly earnings, whichever is lower. Eligibility requires at least 26 weeks of continuous employment by the qualifying week.

Public Health Insurance 

In the UK, public health insurance is primarily provided through the National Health Service (NHS), which is funded by taxation. UK residents, including expats and those with settled status, can access NHS services free of charge. Nationals from outside the EU/EEA/Switzerland may also access certain services for free if they've settled in the UK. Those coming from countries without reciprocal agreements must pay a health surcharge or obtain private health insurance. While most NHS services are free, charges apply for dental treatment and prescription medications, with exemptions available for certain groups. Overall, the NHS ensures universal access to healthcare for UK residents.

Filing tax in UK 

Income Tax

UK income tax follows a progressive structure, taxing higher incomes at higher rates. This system aims to distribute the tax burden fairly across different income levels.For detailed information regarding the tax structure in the UK, including specific tax rates and income brackets, Our tax guides for a comprehensive overview..

Other Tax and Social Security Contributions

In addition to employer and employee payroll contributions, the UK implements income tax, which varies based on income brackets. The Basic Rate is 20%, Higher Rate is 40%, and Additional Rate is 45%. Social security also includes benefits such as Statutory Sick Pay, Maternity and Paternity Pay, and Employment and Support Allowance, supported by government funding and contributions from employers and employees.For detailed information regarding the tax structure in the UK, including Other Tax and Social Security Contributions, Our tax guides for a comprehensive overview.

Business culture in UK 

Business culture in the UK is characterized by a blend of traditional values and modern professionalism, reflecting its status as a global economic powerhouse. Here are some key aspects:

• Business culture in the UK places a strong emphasis on professionalism and punctuality. Being on time for meetings and appointments is highly valued, as is maintaining a formal and respectful demeanor in professional interactions.
• Clear and direct communication is preferred in UK business culture. It's important to articulate thoughts and ideas concisely, avoiding ambiguity or excessive politeness. However, maintaining a polite and courteous tone is also important, even when disagreeing or providing feedback.
• While there is often a hierarchical structure within UK organizations, there is also a culture of accessibility and openness. Seniority is respected, but employees are encouraged to voice their opinions and contribute to discussions, regardless of rank.
• Building relationships and networking are crucial aspects of UK business culture. Attending industry events, conferences, and networking functions provides opportunities to connect with peers, potential clients, and business partners. Building a strong professional network is often key to success in the UK business world.
• Although dedication to work is important, there is also a recognition of the importance of maintaining a healthy work-life balance in UK business culture. Employers increasingly support initiatives such as flexible working hours and remote work to accommodate employees' personal lives and well-being.

Top sectors to hire from in UK

Services Sector

Explore abundant talent pools in finance, retail, and healthcare. Discover skilled professionals adept in customer service, administration, and digital marketing, driving business growth.

Manufacturing Industry

Tap into the UK's rich manufacturing heritage. Unearth opportunities in automotive innovation and advanced production. Source talent in engineering and production management to fuel your company's success.

Agriculture

Cultivate growth in agribusiness and food technology. Harness the potential of sustainable farming practices. Recruit agricultural technicians and agronomists to nurture your agricultural ventures.

Tourism and Hospitality

Embrace the allure of the UK's tourism industry. Harness skilled professionals in hospitality management and tourism marketing. Craft unforgettable experiences to captivate travelers worldwide.

Technology and Innovation

Pioneer the future with UK's tech ecosystem. Unlock innovation in IT, fintech, and biotech. Attract top talent in software development and cybersecurity to propel your startup forward.

Top cities to hire from UK 

London

As the UK's bustling capital, London offers a diverse talent pool across industries. With a vibrant business environment and access to top universities, it attracts professionals from around the globe.

Manchester

Known for its thriving tech scene and creative industries, Manchester is a hotspot for talent in digital marketing, software development, and media production. Its affordability and quality of life make it an attractive option for job seekers.

Birmingham

With a strong presence in finance, manufacturing, and healthcare, Birmingham offers a diverse range of skilled professionals. Its central location and excellent transport links make it a strategic choice for businesses looking to expand.

Edinburgh

Renowned for its rich cultural heritage and innovative startups, Edinburgh boasts a highly educated workforce. It's a hub for tech companies, fintech, and creative industries, drawing talent from across Scotland and beyond.

Hire in UK compliantly with Gloroots

Gloroots, as an Employer of Record (EOR) in UK , provides a streamlined solution for the unique challenges of hiring in the country. Our platform accelerates candidate onboarding, ensuring swift and compliant operational initiation. Tailored for companies of all sizes, it simplifies payroll management, benefits administration, and tax handling, removing the need to establish a local entity. This allows businesses to focus on efficiently building their remote team in UK . For more information on how Gloroots can assist with your Cypriot hiring needs, please contact us.

Frequently Asked Questions 

What are the legal requirements for hiring employees in the UK?

Employers in the UK must adhere to legal obligations such as providing a written employment contract, paying the National Minimum Wage or National Living Wage, and offering a workplace pension scheme. Additionally, employers need to verify an employee's right to work in the UK by checking relevant documents.

How can I attract top talent to my company in the UK?

 To attract top talent, it's essential to offer competitive salaries, opportunities for career development, and a positive work culture. Highlight your company's unique selling points, such as flexible working arrangements, employee benefits, and opportunities for professional growth, in your job postings and employer branding efforts.

What strategies can I use to streamline the hiring process in the UK?

Utilize technology such as applicant tracking systems (ATS) to automate and streamline the recruitment process. Create clear job descriptions, utilize targeted job boards and social media platforms for advertising vacancies, and implement efficient screening and interviewing techniques to identify the best candidates efficiently. Additionally, consider partnering with recruitment agencies or outsourcing certain aspects of the hiring process to save time and resources.