Employment trends and job market analysis for the United Kingdom
According to The Global City, the United Kingdom is a ‘global centre of academic excellence.’ 58.5% of the UK’s workforce are educated to at least a degree level making it one of the most skilled workforces in the world.
The UK workforce has seen a notable shift towards remote and hybrid work arrangements due to the impact of the COVID-19 pandemic. To effectively navigate this trend, consider establishing comprehensive remote work policies and ensuring open communication channels for remote teams.
Employee wellbeing has taken centre-stage in the UK, with companies placing a strong emphasis on mental health support and wellness initiatives. This trend underscores the importance of cultivating a work environment that prioritises employee mental and physical health. As you integrate into the UK market, align your wellbeing programs with local preferences and regulations.
Digital transformation has become a defining aspect of the UK business landscape, requiring a workforce skilled in digital technologies. Consider recruiting professionals with expertise in areas such as data analytics and cybersecurity. Embracing a digitally-focused approach will enable your business to thrive amidst ongoing technological advancements.
Diversity and inclusion efforts are gaining momentum in the UK, reflecting the country's multicultural makeup. As you expand, make diversity a priority in your hiring practices and foster an inclusive company culture. By valuing and celebrating differences, you can create a workplace that resonates with the diverse UK workforce.
Certain sectors in the UK face skill shortages, prompting businesses to offer attractive packages and development opportunities to secure top talent. Be prepared to adapt your recruitment and retention strategies to address these shortages and maintain a competitive edge.
The gig economy continues to evolve in the UK, offering both opportunities and challenges. As you expand, consider how freelancers and contract workers can contribute to your business objectives. While leveraging specialised skills, ensure compliance with relevant employment laws and provide fair treatment to all workers.
Environmental sustainability is a growing concern for employees and customers alike. To align with this trend, incorporate eco-friendly practices into your operations and company culture. Demonstrating a commitment to sustainability can positively impact your brand image and resonate with environmentally-conscious UK consumers.
Investing in upskilling and reskilling programs is essential to help your employees stay relevant in a dynamic job market. Providing training opportunities that align with both their career goals and your company's growth trajectory can foster a culture of continuous learning.
By recognising and adapting to these employment trends, you can effectively navigate the UK business landscape, attract top talent, and create a workplace that aligns with the evolving needs and expectations of the local workforce.
Pound Sterling (GBP)
20% for most goods and services
Labour laws to be aware of when contracting employees in the UK
Hiring employees in the UK requires compliance with various labor laws and regulations to ensure fair treatment of workers and a productive work environment. Here are some key labor laws to be aware of:
Every employee must have a written employment contract that outlines terms and conditions of employment, including job role, pay, working hours, holiday entitlement, and notice period.
National minimum wage (NMW) and national living wage (NLW)
The UK has a minimum wage law that sets out the minimum hourly rates for different age groups. The NLW applies to workers aged 23 and over, while the NMW applies to workers aged 16 to 22.
Working time regulations
These regulations stipulate maximum working hours, rest breaks, and minimum rest periods.
Full-time workers are entitled to a certain amount of paid leave per year, including public holidays. Part-time workers' entitlement is calculated on a pro-rata basis. You'll find more information on holiday entitlement further on in this guide.
Statutory sick pay (SSP)
Employees who are too sick to work are entitled to SSP, which is a set amount paid by the employer for up to 28 weeks. Eligibility criteria apply - we talk about this in more detail further on in the guide.
Parental leave and pay
The UK offers maternity leave, paternity leave, shared parental leave, and adoption leave, along with related statutory pay schemes. Find out more about parental leave later on in the guide.
The Equality Act 2010 prohibits discrimination on grounds of age, gender, race, disability, religion, sexual orientation, and more. Employers must ensure equal treatment and provide reasonable accommodations when needed.
Termination and notice periods
There are statutory notice periods that need to be adhered to when terminating an employment contract. These vary depending on the length of service of the employee. We cover employment termination later on in the guide.
Health and safety
Employers have a legal duty to provide a safe working environment and to assess and manage risks to employees' health and safety.
Trade unions and collective bargaining
Employees have the right to join trade unions, and employers must recognise and consult with employee representatives in certain circumstances.
It's important to note that labor laws can change, and it's recommended to consult with legal experts or relevant government resources to ensure that you have the most up-to-date information when hiring employees in the UK.
Taxes and payroll in the UK
Employer contributions in the UK
The pension scheme is one of most commonly provided contribution to an employee’s salary in the United Kingdom.
Different employers have different pension schemes so the percentage of employer contributions can vary, but 3% is the minimum employers have to pay.
All employers must offer a workplace pension scheme by law. You, your employer and the government pay into your pension.
Employee taxes in the UK
The UK basic income tax rate is 20%.
The deductions include National Insurance, Income Tax and Pension.
Minimum wage in the United Kingdom
As of April 1st 2022, the UK has increased the national minimum wage by 6.9% from £8.91 to £9.50. The UK government have said that this is the biggest ever cash increase to the minimum wage.
• The rates change on April 1st every year
Employee benefits in the UK
UK employers are legally obligated to provide their employees with certain basic rights and support. However, they are encouraged to develop additional policies that go beyond these fundamental requirements.
Mandatory benefits in the UK:
Supplementary benefits in the UK:
Private medical insurance
Income protection (long-term disability)
Health cash plan
When thinking about which optional benefits to implement, consider them from the perspective of your staff. Thinking about what is most meaningful to their needs and how you can help them at every stage of growth helps you understand what they need from you.
This will not only result in more loyal and productive employees, but it will also help you retain them and positively impact your bottom line.
Types of leave available in the UK
All employees in the UK are entitled to a certain number of leave requirements including annual leave, sick leave, maternity, and paternity leave.
Most workers in the UK who work a 5-day week must receive at least 28 days paid annual leave a year. This is the equivalent of 5.6 weeks of holiday.
An employer can include bank holidays as part of statutory annual leave.
UK public holidays
New Year’s Day
Early May Bank Holiday
Employees in the UK can get £99.35 per week Statutory Sick Pay (SSP) if they are deemed too ill to work.
It's paid by the employer for up to 28 weeks.
If an employee in the UK has been ill for more than 7 days in a row, they must give their employer a 'fit note' (sometimes called a 'sick note')
If an employee is on sick leave, they can usually build up four weeks' statutory paid holiday time
When an employee takes time off to have a baby, they might be eligible for:
Statutory Maternity Leave (52 weeks)
Statutory Maternity Pay
Paid time off for antenatal care
Extra help from the government (Universal Credit, Child benefit, Child Tax Credit)
Employees rights are protected while on Statutory Maternity Leave, including their right to:
Build up (accrue) holiday
Return to work
If an employee takes time off because their partner is having a baby (including adoption or surrogacy), they might be eligible several rights such as:
1-2 weeks paid paternity leave
Shared parental leave and pay
Employees rights are protected while on paternity leave, including their right to:
Build up (accrue) holiday
Return to work
Employees in the UK can be given time off to accompany their partner (or the surrogate mother) to 2 antenatal appointments.
If an employee is adopting a child, they can get time off to attend 2 adoption appointments after they have been matched with a child.
What are employee rights in the United Kingdom?
In the UK, employees are granted a range of rights to ensure fair treatment, job security, and a positive work environment. These rights cover various aspects of employment and are designed to protect employees' interests, and include:
Unfair dismissal protection
Employees with at least two years of continuous service have protection against unfair dismissal. Employers must have a valid reason (e.g., conduct, capability, redundancy) and follow a fair procedure to dismiss an employee.
Constructive dismissal protection
Employees have the right to claim constructive dismissal if they can prove that their employer's behavior has breached the employment contract to a serious degree, forcing them to resign.
Employees who report wrongdoing, such as illegal activities or health and safety violations, are protected from retaliation or unfair treatment under whistleblowing laws.
Time off for dependent care
Employees have the right to take reasonable unpaid time off to deal with emergencies related to dependents (e.g., family members) and make necessary arrangements.
Maternity, paternity, and adoption rights
These include rights to maternity and paternity leave, shared parental leave, and adoption leave. Eligible employees are entitled to time off and statutory pay during these periods.
Employees have the right to take unpaid parental leave to care for their child's welfare, with limits on the amount of leave and notice requirements.
Time off for public duties
Employees have the right to take reasonable time off for certain public duties, such as serving as a magistrate or a member of a jury.
Rights for temporary and fixed-term workers
Employee rights vary for contract vs. permanent roles. Temporary and fixed-term workers have certain rights, including protection against less favorable treatment compared to permanent employees and access to information about permanent job vacancies.
Rights for disabled employees
Employers have a duty to make reasonable adjustments to accommodate disabled employees, ensuring they have equal access to job opportunities and facilities.
Attracting talent when hiring in the UK
As competition increases and hybrid working becomes more available, an employer must consider how this new post-covid world can impact a potential employee’s decision to consider an office-based job.
According to travel figures compiled by Google’s Mobility report, going back into the office is less popular in the United Kingdom than anywhere else in Europe. A portion of bosses in the UK much prefer their employees to work within sight because in their perspective, their staff are much more productive that way. Some employers also believe that it is much harder to be collaborative and creative with their staff over a video call versus an in-person meeting.
However, many UK employees argue that they can get much more work done at home due to the lack of office-related distractions such as chatting with other colleagues and the high-volume level of general office noise.
Here are some of the ways businesses can find employees in the UK:
Implement policies that promote work-life-balance
In a recent survey by Glassdoor, workers who rated their employers as offering a robust work-life harmony were notably more inclined to highlight adaptable working hours and wellness in their feedback, whereas those with a lower work-life balance were more prone to discussing exhaustion and burnout.
By implementing these factors into your company culture, you're more likely to attract and retain a motivated workforce.
Upskilling and reskilling
Offering opportunities to upskill and reskill is a strategic approach that can significantly benefit companies in attracting top talent. In today's fast-paced and ever-evolving job market, skilled professionals seek continuous growth and development.
By providing employees with chances to enhance their skills and acquire new ones, companies demonstrate a commitment to investing in their workforce's professional growth and future. This fosters a sense of loyalty and engagement among existing employees while also appealing to potential candidates who value personal and career development.
Furthermore, a company known for its focus on upskilling and reskilling is perceived as a forward-thinking and innovative organisation, which can attract ambitious individuals eager to stay relevant and competitive in their fields.
Career growth opportunities
Job seekers who are high performers and talented are always keen on learning new things, so they're always interested in joining organisations where there are opportunities for career growth.
Whether these opportunities take the form of mentorships or professional development plans, business should focus on providing candidates with clear information about potential career pathways within the company.
Hiring best practices in the UK
Understand UK employment laws
Familiarise yourself with UK labor laws and regulations to ensure compliance. Seek legal advice if needed to understand your obligations as an employer.
Create clear job descriptions
Develop detailed and accurate job descriptions that outline roles, responsibilities, required skills, qualifications, and expectations for the positions you're hiring for.
Post on job boards, use global employment outsourcing, and join professional networks to reach potential candidates. Tailor your job postings to the local market and culture. This can also help you to attract passive candidates who may not be actively looking for a new role, but are open to the possibility should the right job come along.
Conduct thorough interviews
Conduct interviews to assess candidates' skills, experience, and cultural fit. Consider including both virtual and in-person interviews to evaluate candidates more comprehensively. It's also important to carry out reference checks to get a feel for the candidate's work history.
Consider cultural fit
Ensure that candidates align with your company's values and culture. Consider how they will contribute to your team dynamics.
Offer competitive compensation
Research industry standards and salary expectations in the UK to offer competitive compensation packages. Consider factors such as location, role, and experience.
Draft clear employment contracts
Create well-drafted employment contracts that outline terms of employment, including compensation, benefits, working hours, and any other relevant details.
Comply with visa requirements
If hiring non-UK nationals, make sure to understand and comply with the UK's immigration and visa requirements. Sponsorship may be necessary in some cases.
Plan for onboarding
Develop an effective onboarding process that helps new employees integrate into your company culture and understand their roles and responsibilities.
What should the onboarding process look like in the UK?
When expanding your business to the UK and onboarding new employees, it's crucial to establish a thoughtful and comprehensive process that sets the tone for a positive work experience. The onboarding process should blend logistical orientation with cultural integration, ensuring that new hires are equipped to contribute effectively and feel a sense of belonging from day one.
Begin by creating a warm welcome for new employees. Arrange a personalised orientation session where you introduce them to the company's history, values, and mission. Highlight your UK-specific achievements and goals to demonstrate your commitment to the local market.
Provide clear guidance on practical matters. Explain company policies, benefits, and expectations for performance and conduct. Offer written materials that detail important information, including employment contracts, code of conduct, and details about compensation, working hours, and leave policies. Ensure they are familiar with health and safety procedures and understand their rights as employees in the UK.
Introduce new hires to their teams and key colleagues. Foster connections through informal meet-and-greet sessions, team lunches, or virtual coffee breaks. Encourage open communication and provide mentorship to help new employees integrate smoothly into the company culture. Address any questions they may have, helping them feel valued and understood.
Offer training and resources that align with the employees' roles and responsibilities. Provide access to online learning platforms or specialised training sessions that empower them to excel in their positions. Be sure to incorporate UK-specific training, such as cultural nuances and market insights, to enhance their understanding of the local business environment.
Incorporate cultural assimilation into the onboarding journey. Organise activities that introduce new hires to UK customs, traditions, and local etiquette. This could involve sharing insights on UK work culture, local holidays, and social norms. Encourage participation in company events and local community engagement to help them feel connected to both their colleagues and the broader community.
Regularly check in with new employees during their initial months. Schedule follow-up meetings to gauge their progress, address any concerns, and provide additional support. This demonstrates your commitment to their growth and well-being within the organisation.
By blending logistical information with cultural integration, your onboarding process in the UK can create a strong foundation for new employees to thrive. A well-rounded approach helps them not only understand their roles but also feel welcomed and valued as integral members of the company.
Termination of employment in the UK
In the UK, termination of employment is known as ‘dismissal’. An employer in the UK does not always have to give an employee notice. If an employee is dismissed, the employer must show that they have:
A valid reason that they can justify the dismissal
Acted reasonably in the circumstances
Furthermore, an employer must:
Be consistent i.e. not dismiss an employee for something they let other employees do
Have made a full investigation before dismissing the employee – for example if a complaint was made about the employee
Both fixed-time and part-time workers cannot be treated less favourably than full-time employees.
In the UK, an employee must be given a notice period before their employment ends. Here are the statutory redundancy notice periods for employees:
12 week’s notice if employed for 12 years or more
At least one week’s notice if employed between 1 month and 2 years
One week’s notice for each year if employed between 2 and 12 years
As well as the redundancy pay, an employer should either:
Pay an employee through their notice period
Pay the employee in lieu of notice depending on their circumstances
If an employee in the UK has worked at a company for 2 years or more, they should receive:
Half a week’s pay for each full year they were under 22
One week’s pay for each full year they were 22 or older, but under 41
One and a half’s week’s pay for each full year they were 41 or older
If an employee is eligible, they can receive statutory redundancy pay if they have been temporarily laid off. This can be for either:
More than 4 weeks in a row
More than 6 consecutive weeks in a 13 week period
An employee is not entitled to statutory redundancy pay if:
Their employer offers to keep them on
Their employer offers them a suitable alternative work that they refuse without good reason
In the UK, the most common length for a probation period is either 3 months or 6 months. These are the most common types:
3-month probation period: this is typically used for entry-level employees in roles where little or no previous experience is required
6-month probation: this is typically used for more senior positions where more significant experience is required.
Longer than 6 months: this is rare as probation periods do not usually last longer than 6 months. Having one this long can be considered unreasonable without justification.
If an employee fails to meet a companies’ standards or is guilty of misconduct/poor performance, there are a few options to consider before dismissal. One of which being an extension of the probation period with an outlined list of improvements for the employee to meet.
If they at the end still fail to meet these requirements, dismissal is an option.
What are my options for hiring in the UK?
For businesses that want to hire contractors and employees in the UK, Airswift provides a variety of employment solutions that make it easy for you to hire employees efficiently and within full compliance with the local laws.
Our expertise allows us to minimise risk while bearing the administrative responsibilities of hiring and onboarding high-quality candidates while you focus on growing your business.
Our contract hire services can help you fill temporary roles and provide your business with the agility to respond to shifts in needs and market demand.
For long-term hiring needs, Airswift’s professional search can help you discover talented UK candidates for permanent roles within your business.
Employer of Record
For businesses that want to conduct remote hiring without setting up a physical entity, an Employer of Record in the United Kingdom simplifies the process of hiring employees in the UK with minimal compromise on time and expense.
An experienced Employer of Record lets you bypass the complications of physical entity setup and focus on growing your business. Tasks an EOR can help you manage include overseeing locally compliant payroll and managing statutory benefits.
Although the information provided has been produced from sources believed to be reliable, Airswift makes no warranties, whether express or implied, regarding the accuracy, adequacy, completeness, legality, or reliability of any information herein. Accordingly, there shall be no liability attached to use of the information herein, howsoever arising. For the latest information and specific queries regarding particular cases, please contact our team.
Table of Contents
Find out more
Learn how Airswift can help you hire employees in the UK