Planning to hire employees in the United Kingdom? Here’s a quick guide

The United Kingdom is a strong market for companies looking to expand because of its skilled talent pool, mature financial ecosystem, and easy access to global business hubs. 

But unlike other markets, UK law sets a firm baseline when it comes to engaging with new talent. Writing employment contracts, statutory sick pay, and workplace pension enrollment are a few things off the list that you have to get right from day one. 

All these requirements can create a learning curve for employers for the first time in the UK.

One way to simplify UK hiring is to work with an Employer of Record (EOR) like Payoneer Workforce Management, a partner that can employ workers on your behalf and help handle payroll and local compliance while you engage with local talent. 

In this article, let’s learn more about how to hire employees in the United Kingdom and how Payoneer Workforce Management helps with compliant engagement of talent.

How to hire in the United Kingdom 

To engage talent in the United Kingdom, you can choose from any of the three options available in the country. Those include:

1. Set up a legal entity 

• The company can either set up a separate legal entity or a subsidiary company in the UK. This subsidiary company can onboard employees in the country directly. 
• However, if you plan to set up a subsidiary, you will have to register with HMRC and Companies House. You may also have to apply for a sponsor license to onboard foreign workers. 
• The other alternative is setting up a UK branch office. This branch office is an extension of the foreign company and not a separate legal identity. Though the branch office can employ employees, all liabilities and obligations rest on the foreign company. 
• This hiring process in the United Kingdom gives the company direct control over the operations. However, it often ends up being a time-consuming process. 

2. Hiring contractors in the United Kingdom

• Another way to recruit employees in the United Kingdom is via international contractors. They are commonly known as freelancers or self-employed individuals. 
• These contractors provide services to the client under a service contract, mentioning the work, deadline, and remuneration. There is no employment contract. 
• Independent contractors don’t have the same rights and protections as employees. They are usually affordable than salaried employees. 
• However, contractor misclassification may lead to penalties and fines, which can impact business reputation. So, one must be aware of the challenges and consider getting support to engage independent contractors.

3. Use of an Employer of Record (EOR)

• If you are confused about how to hire in the United Kingdom, using an Employer of Record (EOR) service can be a streamlined option.
• The EOR will act as the legal employer of the local workers in the UK on behalf of your company. They will not only support compliance with UK employment laws but also help handle taxes, payroll, and other benefits. 
• In case of any changes in the regulations and laws in the UK, the EOR can help you navigate local laws.

For instance, Payoneer Workforce Management helps you to compliantly engage talent in the UK and run payroll in 70+ currencies, with support for localized benefits.

Where to find Employees in the United Kingdom

Since the UK has an extensive talent pool, employers must choose the right hiring approach to find the ideal candidate who matches their job requirements well. Some popular options to find employees are:

Popular job boards

• You can find prospective employees through various job boards in the United Kingdom. 
• Some popular job boards in the UK include:
  • Reed
  • CV Library
  • Indeed
  • Monster

Work with local recruitment agencies

• You can seek help from recruitment agencies to find the right candidates for job vacancies in your company. 
• These agencies provide a workforce for full-time, part-time, or even temporary work. 
• You can register with multiple agencies, as this increases your chance of finding the right candidates for the job profile. 

EOR support

• Companies looking to hire in the United Kingdom may seek services from EOR service providers like Payoneer Workforce Management, which can help engage local talent quickly.
• This is a good option when you are looking for a good balance between navigating compliance with support and ease of working. 
• The EOR becomes the legal employer in the UK that can onboard employees on your behalf. It helps you handle payroll and taxation, support legal compliance and adherence to regulations, and more. 

Onboarding employees in the United Kingdom

Onboarding employees in the United Kingdom requires strict adherence to tax, legal, and compliance procedures outlined by the government of the UK. 

Here are some important details regarding the onboarding process you should know about before you plan to hire in the United Kingdom:

• Conduct a background check: When you decide to hire employees in the United Kingdom, check if they have the legal right to work in the country before they start. Use an identity service provider offering Identity Document Validation Technology (IDVT). 

Employers should check all the original documents of the candidate. 

• Send an offer of employment: When someone accepts a job offer, issue a formal offer letter. There should also be a written contract, where the employer should make clear which parts of the contract are legally binding. There should be an employee handbook and an offer letter from the employer mentioning duties, salary, working hours, leaves, benefits, probation period, and other important details. 

• Enroll your employee in payroll: Submit the complete employee details to HM Revenue and Customs (HMRC) to set up the new employee in the payroll software before paying the employee using a Full Payment Submission (FPS).
  
• Collect tax documents: Ask the new employee for the P45 provided by their previous employer. In case they do not have one, use the HMRC starter checklist to determine the right tax code. 

• Set up the work account and configure devices: Now, set up official accounts for your employee. After the workspace is set up for the new employee, it is time for an introduction with the existing team and colleagues. This helps in better networking and communication.  

• Explaining duties and roles: In the onboarding process, the employee gets to know about the company’s mission, vision, and goals. The employees understand their duties to get an idea of what the company wants from them. 

• Schedule an orientation: Training is an indispensable part of employee onboarding. Employees understand and learn to use various resources and tools for better performance. 

Key employment laws and requirements in the United Kingdom

Employment regulations in the United Kingdom are guided by various employment laws. These laws mandate strict rights for workers, including minimum wage, paid holidays, written contracts, unfair dismissal, and protection against discrimination. 

Here are some other important things you must keep in mind when engaging employees in the United Kingdom:

Employment contract

In the United Kingdom, the employment contract should be in written format. The contract must mention the employment conditions, rights, duties, and responsibilities of the employee. 

It typically contains the following details:

• Employer’s name
• Employee’s name
• Job description and start date
• Payment amount and terms
• Hours and days of work
• Leaves
• Holiday entitlement
• Probation period
• Training
• Liability
• Benefits 

Employee benefits

Employees in the United Kingdom are entitled to various employee benefits. Some of them are as follows:

Working hours and overtime

Employees in the UK have a work week of 40 hours (Monday to Friday). They should not work more than 48 hours weekly on average. 

Employees are also entitled to one 20-minute break for shifts that are longer than 6 hours. They are also entitled to 11 hours rest between two working shifts and weekly rest periods. 

Tax obligations

When planning to hire in the United Kingdom, you need to know the tax system, which is as follows:

Termination and severance 

Termination can occur in several situations, including employee resignation, mutual agreement, termination during the probationary period, or dismissal by the employer for reasons such as misconduct, performance concerns, or unauthorized absence.

Notice periods depend on tenure. During probation, employees with less than one month of service receive one week’s notice, while those employed for more than one month receive two weeks. 

After probation, the notice period increases with length of service: at least one week for those employed between one month and two years, one week per year for those with two to twelve years, and twelve weeks for employees with twelve or more years of service.

Severance pay is as follows.

Explore Payoneer Workforce Management in the United Kingdom

If you are planning to onboard employees in the United Kingdom, the whole process can be streamlined with help from an EOR like Payoneer Workforce Management in the United Kingdom. You can start engaging employees in the UK without having a local infrastructure in the country. 

Offering EOR services in more than 160 countries across the globe, Payoneer Workforce Management supports 70 currencies. The EOR service provider helps you handle workforce management in the United Kingdom and supports compliance with legal matters, local regulations, and employment laws in the country. 

It also helps take care of payroll management, employee benefits, onboarding and termination procedures, taxation, and much more. 

Book a demo today to learn how Payoneer Workforce Management can help. 

FAQs

1) Is a written employment contract legally required in the UK?

While verbal contracts are valid, employers must provide written terms of employment (a written statement of employment particulars) to the employee before they start work. Employees in the country receive their key terms on the first day. Written contracts protect both the employer and the employee by clearly outlining duties, responsibilities, payments, and working conditions. 

 2) How long is the UK probationary period?

No legally mandated probationary period exists, but employers commonly set 3-6 months. During probation, notice periods are typically shorter, and dismissal is easier. 

3) How does UK pension enrollment work?

Employers should enroll eligible workers in a workplace pension scheme. Minimum contributions total 8% of qualifying earnings: employees contribute 5%, employers contribute 3%. Employees can opt out, but are re-enrolled every three years if they remain eligible.