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Labour law in the United Kingdom is a dynamic framework that governs the rights, responsibilities and protections of both employers and employees. At its core, UK labour law sets out the possibilities for employment relationships, including fixed-term contracts for temporary or project-based work and indefinite (permanent) employment arrangements. These legal structures ensure that employees, regardless of contract type, are entitled to fundamental rights such as the National Minimum Wage, statutory holiday entitlement and protection from discrimination. Employers must also comply with minimum standards for employment contracts, including clear terms on pay, working hours and notice periods, which together create a robust foundation for fair and transparent workplace practices.
This eBook explores the key aspects of UK labour law, offering insights for both employers and employees navigating the modern world of work.
Employment relationship in the UK may be concluded for:
Fixed term employment
Indefinite period of time
In the UK, fixed-term employment refers to a type of employment contract where the employee is hired for a specific period of time, as opposed to an indefinite period. These contracts specify a start date and an end date, after which the employment automatically terminates unless renewed or extended. Fixed-term contracts are commonly used for temporary or project-based work where the employer has a specific need for a certain duration.
Key facts about fixed term employment in the UK:
Contract length: The length of a fixed-term contract can vary widely depending on the needs of the employer and the nature of the work. Contracts can range from a few weeks to several years.
Renewal: Fixed-term contracts can sometimes be renewed or extended by mutual agreement between the employer and the employee. However, there may be limitations on the number of times a contract can be renewed, and there may be legal implications if a fixed-term employee is continuously renewed without a valid reason.
Rights and benefits: Fixed-term employees are entitled to many of the same rights and benefits as permanent employees, including the right to receive the National Minimum Wage, holiday pay, and protection from discrimination. However, there may be differences in benefits such as pension contributions or sick pay, depending on the terms of the contract and the employer’s policies.
Termination: Employment on a fixed-term contract automatically ends on the agreed end date, unless terminated earlier by either party in accordance with the terms of the contract. Employers may also terminate a fixed-term contract early for reasons such as redundancy or poor performance, but they must follow fair and lawful procedures.
Redundancy: Fixed-term employees have the same rights as permanent employees in the event of redundancy, including the right to receive redundancy pay if they have been continuously employed for two or more years.
Notice periods: Fixed-term contracts may include provisions for notice periods that apply if either party wishes to terminate the contract early. The length of the notice period is typically specified in the contract or determined by law.
It’s essential for both employers and employees to understand the terms of a fixed-term contract before entering into it, including the reasons for its use, the rights and benefits it provides and the procedures for renewal or termination. If there are any uncertainties or disputes, it’s advisable to seek legal advice.
Permanent employment, also known as indefinite employment, is the most common type of employment arrangement in the UK.
Key facts about permanent employment in the UK:
Indefinite duration: Permanent employment is characterised by an open-ended employment relationship between the employer and the employee. Unlike fixed-term contracts, there is no specified end date for permanent employment.
Rights and benefits: Permanent employees are entitled to a wide range of rights and benefits under UK employment law, including:
Pension and other benefits: Permanent employees may be eligible to participate in workplace pension schemes offered by their employer, which can provide valuable retirement benefits. They may also be entitled to other benefits such as health insurance, life insurance, and bonuses, depending on the employer’s policies.
Notice periods: Permanent employment typically involves a notice period that must be given by either the employer or the employee if they wish to terminate the employment relationship. The length of the notice period is usually specified in the employment contract or determined by law.
Career development: Permanent employment often provides opportunities for career development and progression within the organization. Employees may have access to training and development programs, promotion opportunities, and other resources to support their professional growth.
Job security: Permanent employees typically enjoy greater job security compared to those on fixed-term contracts. While they can still be dismissed for valid reasons, such as misconduct or redundancy, they have legal protections against unfair dismissal and may be entitled to redundancy pay if they are made redundant.
Overall, permanent employment offers stability, rights, and benefits that provide a strong foundation for employees’ long-term financial security and career advancement.
To ensure an employment contract is valid in the UK, several minimum standards must be met. Firstly, there must be a clear offer of employment from the employer, which is then formally accepted by the employee. This mutual agreement forms the foundation of the contractual relationship.
Employers are legally required to provide a written statement of employment particulars to employees within two months of their start date. This written statement must cover key terms and conditions, including:
Names of the employer and employee
Job title and description
Working hours and days of work
Start date of employment
Pay and pay frequency
Holiday entitlement
Notice periods for termination
Details of any collective agreements that affect the terms of employment
Information on pensions and pension schemes (if applicable)
Additionally, employers must ensure that employees are paid at least the National Minimum Wage or the National Living Wage, depending on their age and specific circumstances. Compliance with working time regulations is also essential; these regulations set out maximum weekly working hours, required rest breaks, and minimum annual leave entitlements.
Beyond these basics, employees are entitled to a range of statutory rights that must be respected and clearly outlined in the employment contract. These include protection from unfair dismissal, entitlement to statutory sick pay, and rights to maternity or paternity leave, amongst others. By meeting these minimum requirements, both employers and employees can be confident that their contract is legally robust and fair.
There should be a clear offer of employment from the employer and acceptance by the employee. The agreement must involve consideration, which typically means the employee provides their services in exchange for pay and benefits. Both parties must intend for the contract to have legal effect, and the terms need to be clear and specific so that rights and obligations are understood.
Many employment contracts in the UK include a probationary period, during which the employer and the employee can assess whether the role is a good fit. This period allows both parties to evaluate each other’s performance and suitability for the position. The duration of the probationary period can vary depending on the employer’s policies and the nature of the role, but it typically ranges from one to six months.
During the probationary period, either the employer or the employee can terminate the employment contract with a shorter notice period than would be required after the probationary period ends. This allows for a more flexible arrangement in case the employment relationship doesn’t work out as expected.
The duration of the probationary period may indeed vary depending on the type of job position. For example:
Junior or entry-level positions: Employers may opt for shorter probationary periods, such as one to three months, as these roles may have less complexity and require less time to assess suitability.
Senior or specialised positions: Employers may choose longer probationary periods, such as three to six months, for roles that involve greater responsibility or require specific skills or experience. This extended period allows for a more comprehensive evaluation of the employee’s performance.
Contract or temporary positions: Probationary periods for contract or temporary positions may be shorter than for permanent roles, as the duration of employment is already predetermined
It’s essential for both employers and employees to clearly understand the terms and expectations associated with the probationary period, including any performance criteria or objectives that need to be met. Additionally, any notice periods for termination during the probationary period should be clearly outlined in the employment contract or company policies
Employment relationships in the UK may be terminated in several ways, each with specific considerations and legal implications. Common methods include termination by notice, mutual consent, for cause, redundancy, incapacity, and by operation of law. In all cases, it is vital for both employers and employees to understand their rights and obligations, and to follow appropriate procedures.
Termination by notice occurs when either the employer or employee provides advance notice as required by the employment contract or statutory law. Employees may resign by giving the required notice, while employers may dismiss staff, also by providing the agreed or statutory notice period. In certain circumstances, a payment in lieu of notice (PILON) may be made, allowing for immediate contract termination if permitted by the contract or agreed by both parties.
Termination by mutual consent is usually formalised through a settlement agreement, which sets out the terms of the termination, including the end date, compensation, and any confidentiality clauses. The notice period in such cases is agreed between both parties; if agreement cannot be reached, statutory notice periods may apply.
Termination for cause, such as gross misconduct or poor performance, may allow an employer to dismiss an employee with reduced or no notice, provided fair procedures are followed, including proper investigation and allowing the employee an opportunity to respond. For poor performance, employers must show they have offered support and opportunities for improvement.
Redundancy occurs when a role is no longer needed due to organisational changes. Employers must follow specific consultation procedures, consider suitable alternatives for affected employees, and provide statutory notice and redundancy pay based on the employee’s length of service, age, and weekly pay.
Employment may also be terminated due to incapacity if an employee cannot perform their duties because of long-term illness or injury and reasonable adjustments are not possible. Employers must act fairly, considering medical evidence and service length, and provide the appropriate notice as set out in the contract or by law.
Finally, fixed-term contracts automatically end when the term expires, unless renewed or extended, and generally do not require notice unless stated otherwise in the contract.
The notice period in each case is usually stated in the employment contract. If not, statutory minimums under the Employment Rights Act 1996 apply: one week’s notice if employed continuously for one month to two years, and one additional week for each year of continuous employment up to a maximum of 12 weeks for those with two or more years’ service. For redundancy and incapacity, statutory notice periods also apply.
Both employers and employees should review their contracts and relevant laws to ensure compliance and consider seeking legal advice to minimise disputes or legal challenges.
Employers in United Kingdom are required to pay the following taxes and contributions on the gross salaries of their employees:
| Contribution | Employee | Employer |
| Personal income tax | 20% 40% 45% | 0% |
| Pension contribution | 5% | 3% |
| Social security contribution | 8% | 15% |
In the UK, the standard working time is typically defined as 40 hours per week for full-time employees. This means that full-time employees are generally expected to work around 8 hours per day, Monday to Friday, although actual working hours may vary depending on the employer’s policies and the nature of the job.
However, it’s essential to note that many employees may work different schedules based on factors such as industry norms, shift work, flexible working arrangements, or irregular working hours. Here’s how working time can differ with irregular working schedules:
Shift work: In industries such as healthcare, manufacturing, transportation, and hospitality, employees may work shift patterns that involve working outside of regular daytime hours. Shift work often involves rotating shifts, including mornings, evenings, nights, weekends, or even 12-hour shifts. Employers must ensure compliance with working time regulations, including providing adequate rest breaks and managing shift patterns to prevent excessive fatigue.
Flexible working arrangements: Some employees may have flexible working arrangements that allow them to vary their start and finish times or work remotely from home. Flexible working arrangements can help employees achieve a better work-life balance and accommodate personal commitments, such as childcare or caregiving responsibilities. Employers and employees should agree on the terms of flexible working arrangements, including any changes to working hours or location, in writing.
Part-time work: Part-time employees work fewer hours than full-time employees, typically working less than 40 hours per week. Part-time work can be a preferred option for individuals who require flexibility due to personal commitments or other reasons. Part-time employees are entitled to the same employment rights and protections as full-time employees on a pro-rata basis, including pay, holiday entitlement, and statutory benefits.
Zero-hour contracts: Zero-hour contracts are employment contracts where the employer is not obliged to provide a minimum number of hours of work, and the employee is not obliged to accept any work offered. Employees on zero-hour contracts have flexibility in their working hours but may not have guaranteed income or job security. Employers must ensure compliance with working time regulations, including providing adequate rest breaks and not exceeding maximum working hours.
Seasonal or temporary work: Some industries, such as agriculture, tourism, and retail, may have seasonal or temporary work patterns that involve irregular hours or peak periods of activity. Employers should ensure that working time arrangements comply with relevant laws and regulations, including managing workload and providing appropriate rest periods.
Overtime is permitted in the UK, but it is regulated to protect employees from excessive working hours and to ensure fair treatment. The Working Time Regulations 1998 set out the main rules regarding working time and overtime. Most employees cannot work more than an average of 48 hours per week, including overtime, unless they voluntarily opt out by signing an agreement. However, employers cannot force staff to opt out of this limit.
While there is no legal requirement for employers to pay extra for overtime, many offer increased hourly rates, time off in lieu, or other benefits for additional hours worked. The specific terms for overtime pay should be clearly outlined in employment contracts or company policies.
Employers have a duty to safeguard employees’ health and safety, which includes managing overtime to prevent risks such as fatigue or stress. Rest breaks are mandatory: employees must receive at least a 20-minute break if their working day exceeds six hours, including during overtime. Young workers under 18 have stricter limitations on working hours and are generally not permitted to work night shifts or excessive overtime.
In some sectors, collective agreements between employers and trade unions may determine overtime arrangements, including pay rates and maximum working hours. Employees should know their rights regarding overtime and discuss any concerns about long hours or pay with their employer or relevant authorities.
Overall, while overtime is allowed, employers must follow all relevant regulations, health and safety requirements, and contractual agreements. Employees are encouraged to stay informed about their rights and to raise any issues if they arise.
Employees in the UK are entitled to paid annual leave. The statutory minimum for those working a five-day week is 5.6 weeks, which amounts to 28 days per year. This entitlement typically includes public or bank holidays, unless stated otherwise in the employment contract.
For part-time employees, annual leave is calculated on a pro-rata basis according to the number of days or hours worked each week.
Unpaid leave is not a general statutory entitlement in the UK; it is only available if specifically provided for in an employment contract or company policy. However, there are several statutory exceptions where employees have a legal right to take unpaid leave. These include parental leave, where eligible employees can take up to 18 weeks of unpaid leave per child until the child’s 18th birthday, with a maximum of 4 weeks per year for each child. Employees are also entitled to reasonable unpaid time off to deal with emergencies involving dependants, such as illness or unexpected childcare issues. Additionally, unpaid leave is permitted for certain public duties, like serving on a jury or acting as a magistrate.
Pension scheme (auto-enrolment mandatory)
Enhanced paid leave (maternity/paternity/adoption)
Private medical and dental insurance
Professional training and development support
Life assurance & income protection
Company car or travel allowances (including cycle-to-work schemes)
Employee assistance and mental health programmes
Employee discounts and cashback offers
Flexible and remote working options
Gym memberships and wellbeing subsidies
All other perks, such as subsidised meals, social events, childcare vouchers, and share schemes, can be broadly categorised as Additional Employee Perks.
In the UK, fixed-term employment refers to roles with a clear start and end date. Employees on fixed-term contracts are entitled to the same rights as permanent staff, including pay, holiday, and pension provisions. If they remain on successive fixed-term contracts for four years, their status is usually converted to permanent.
Part-time work involves employees regularly working fewer hours than full-time staff, generally under 35 hours a week, with rights proportionate to their hours. Zero-hour contracts offer no guaranteed hours, and individuals work only when needed. While they receive basic rights like the minimum wage and annual leave, job security is limited.
Casual and occasional work typically covers short-term or ad hoc roles without a regular work pattern. These workers are entitled to basic rights, such as the minimum wage and holiday pay. Employers generally hire them directly for brief assignments.
Temporary agency work involves workers being employed through an agency but carrying out duties for client companies. After 12 weeks in the same assignment, agency workers must receive equal treatment in pay, holiday, and working conditions as permanent employees. The agency is responsible for payroll, taxes, and employment terms.
Posting of employees, also known as secondment, relates to staff temporarily assigned to the UK by an overseas employer. These employees must receive the UK’s minimum employment standards, including the minimum wage, holiday entitlements, and regulated working hours. Employers are required to notify UK authorities and follow relevant employment regulations.
Additionally, umbrella company work is common in contracting. In this arrangement, workers are employed by an intermediary company, which manages their pay and tax. This structure offers flexibility but can lead to varied rights and tax implications.
Understanding and applying labour law in Slovakia is essential to maintaining a compliant and productive workplace. At Accace, we provide expert labour law consultancy and payroll services in the United Kingdom to help you manage employment relationships, contracts, internal policies, and day-to-day HR administration. With our support, you can confidently handle your employer obligations while staying aligned with local regulations.
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and approximately 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 60 jurisdictions with more than 7,000 professionals, we support over 80,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 800,000 pay slips globally.
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