Employment laws in the United Kingdom: What employers must know in 2026

Employment law in the United Kingdom sets the minimum that an employer has to offer on pay, working hours, leave, and how a job ends. Most of it flows from the Employment Rights Act 1996 and the Working Time Regulations 1998. You can be more generous. However, you cannot do less.

Payoneer Workforce Management brings employment compliance support, payroll, and employee management into one place, so you spend less time on administration and more on the business. This guide covers the key employment laws in the UK every employer should know. 

Hiring in the UK? Book a demo to understand how we can help.

What are the key employment laws in the UK?

Five statutes carry most of the weight in the UK: the Employment Rights Act 1996, the Equality Act 2010, the Working Time Regulations 1998, the National Minimum Wage Act 1998, and the Employment Relations Act 1999. Together they cover dismissal, discrimination, hours, pay, and union rights.

• Employment Rights Act 1996: It governs unfair dismissal, redundancy rights, maternity and paternity leave, and the requirement to provide written employment particulars.
• Equality Act 2010: It prohibits discrimination based on protected characteristics such as age, disability, gender, and race, and requires employers to make reasonable adjustments where necessary.
• Working Time Regulations 1998: It limits the working week to 48 hours, requires rest breaks, and provides 5.6 weeks of paid annual leave.
• National Minimum Wage Act 1998: Sets statutory minimum pay rates, updated annually, including the National Living Wage for workers aged 21 and over.
• Employment Relations Act 1999: It covers trade union rights, union recognition, and the right to be accompanied at disciplinary hearings.

One more is now rewriting the others. The Employment Rights Act 2025 is phasing in the biggest changes in years, across unfair dismissal, sick pay, and family leave, through 2026 and 2027. 

What happens if you break UK employment law?

Most disputes land at an employment tribunal, which can order back pay, compensation, or reinstatement, and from 2026, a new Fair Work Agency enforces pay rules directly. The penalties are rarely small. Here is where they usually happen:

Mistake	What can it trigger	How an EOR helps
Paying below the minimum wage	Back pay, penalties, and Fair Work Agency action	Offers local insights into the current statutory rate
Underpaying or delaying SSP	Employee complaint and enforcement	Helps pay SSP correctly from day one
Unfair or wrongful dismissal	Tribunal award, back pay, or reinstatement	It helps run a fair, documented process

Your wider tax position depends on your activities in the UK, so take your own tax and legal advice. Hire in the UK with Payoneer Workforce Management. 

What types of employment contracts are used in the UK?

The contract you use fixes a worker’s employment status, and status decides what they are owed. The main forms are full-time, part-time, and fixed-term, alongside agency, zero-hour, and self-employed arrangements. 

Getting the category wrong can leave you owing rights you thought did not apply: 

Primary contract type	Key points
Full-time and part-time	Written contract, paid holiday, rest breaks, Statutory Sick Pay, maternity leave and pay, and a payslip showing deductions such as National Insurance
Fixed-term	Employed for an agreed period, with start and end mutually agreed, and treated on par with permanent staff

Additionally, employers may explore some other types of contracts.

Contract type	Key points
Agency staff	Engaged through an agency, which the employer pays, including the worker’s Statutory Sick Pay and National Insurance
Zero-hour (casual)	Called in on-call as needed, but still owed the minimum wage and statutory annual leave like regular workers
Freelancers, consultants, and contractors	Self-employed, handling their own tax and National Insurance, and generally outside worker rights such as the minimum wage

Misclassification is the most common mistake with self-employed workers. If you treat a contractor like an employee, they can be reclassified as one, and you may owe back pay and benefits.

A contractor management system helps keep the working relationship clear with a contractor. For contractors you would rather not engage directly, an Agent of Record can hold the relationship on your behalf. 

What must a UK employment contract include?

By law, you must give most workers a written statement of their main terms, most of it on or before their first day. A UK employment contract typically records:

• Details of both parties (employee and employer)
• Employer’s registered or residential address (for individuals)
• Type of employment contract (trial, fixed-term, or indefinite, where applicable)
• Date the contract was signed
• Working conditions and pay terms, including job type, work location, salary breakdown, working hours, and start date
• Leave entitlements, including annual leave and sick leave provisions
• Notice periods, termination conditions, and any applicable probation period

What is the minimum wage in the UK?

There is no single figure; it turns on age. From 1 April 2026, anyone aged 21 or over must be paid at least GBP 12.71 an hour, with lower rates below that and for apprentices. The rates climb every April, so last year’s number is already stale.

Band	Hourly rate
National Living Wage (21 and over)	GBP 12.71
18 to 20	GBP 10.85
16 to 17, and apprentices	GBP 8.00

Furthermore, there is no separate legal minimum for London. The higher “London Living Wage” is a voluntary rate from the Living Wage Foundation, and paying it is a choice. 

Want to see what a hire costs once wages and on-costs are added? Try our employee cost calculator.

What are the working hours rules in the UK?

The cap is 48 hours a week, averaged over 17 weeks, and staff can opt out of it in writing. There is no fixed daily limit for adults on day shifts. Night workers are the exception, held to an average of 8 hours.

Staff working for at least 3 hours at night regularly are termed night workers. The night period lies between 11 pm and 6 am.

The employer and the employee can, however, agree on different terms, but it should be in writing.

Flexible working

Employees in the United Kingdom have the legal right to adjust their work time as per their convenience. Since April 2024, this is a day-one right, so a new hire can ask from the start.

Employees can request that the employer change the number of working hours, start date, or finish date of the work, the days they wish to work, and the location. They may even request to work from home. Such requests must be made reasonably, and employers have to consider them fairly.

What benefits must UK employers provide?

Employers must provide five benefits, including Statutory Sick Pay, family leaves, 5.6 weeks of paid holiday, a workplace pension, and National Insurance. A compliance gap arises if you miss any one of the following: 

• Statutory sick pay: Employees in the United Kingdom receive Statutory Sick Pay amounting to GBP 123.25 per week, now payable from the first day of sickness. Employees have to provide notice and proof of illness when the employer asks for it.
• Maternity leave and pay: Employees are entitled to a Statutory Maternity Leave of 52 weeks, and must take at least 2 weeks off after the birth (4 weeks in a factory). Statutory Maternity Pay runs for 39 weeks: 90% of average weekly earnings for the first six weeks, then GBP 194.32 or 90% of earnings, whichever is lower, for the next 33 weeks.
• Paid holidays: Employees who work 5 days a week are legally entitled to 5.6 weeks’ paid holiday a year, known as statutory leave entitlement.
• Workplace pension: Employers must auto-enroll eligible staff into a pension, with a minimum 8% contribution on qualifying earnings, of which the employer pays at least 3%
• Public health insurance: The UK government provides mandatory public health insurance funded through National Insurance contributions made by the employer.
• Social Security: The UK government provides social security benefits, including the Pension, SSP, and SMP.

What are the rules on termination and redundancy in the UK?

You can let someone go, but only with a fair reason, a proper investigation, and a fair process. Notice runs on length of service, and redundancy pay is set by age and years worked. Cut the process short, and a tribunal can undo the dismissal outright.

For now, an employee needs 2 years’ service to bring an ordinary unfair-dismissal claim, though the Employment Rights Act 2025 is set to make that a day-one right in 2027.

Notice period in the United Kingdom

An employer may terminate an employee either during or after the probationary period. Employees should be given a notice period before the employment term ends. If terminated during probation:

Length of employment	Notice period
Less than 1 month	1 week
More than 1 month	2 weeks

If terminated after probation:

Length of employment	Minimum notice period
1 month to less than 2 years	At least 1 week
2 years to less than 12 years	1 week for each year of employment
12 years or more	12 weeks

Severance pay in the United Kingdom

Departing employees receive severance pay in the United Kingdom upon enforced termination. The rates are as follows:

• 0.5 week’s pay annually if the employee’s age is less than 22
• 1 week’s pay annually if the employee’s age is between 22 and 40
• 1.5 weeks’ pay if the employee is 41 or older

The United Kingdom government has standardized GBP 751 as the legal weekly cap, so the maximum statutory redundancy payout is GBP 22,530.

Example: statutory redundancy pay

Take an employee aged 45 with 8 years of service, earning GBP 600 a week. Here is how their statutory redundancy pay works out:

Step	Detail
Employee	Aged 45, 8 years of service, GBP 600 a week
Rate for the 41-plus band	1.5 weeks’ pay per year of service
Weeks owed	8 x 1.5 = 12 weeks
Weekly pay against the cap	GBP 600, below the GBP 751 cap, so used in full
Statutory redundancy pay	12 x GBP 600 = GBP 7,200

How do I manage employment laws in the UK when hiring employees?

Keeping contracts, pay, pensions, and dismissal in line with UK law takes real time, and the rules typically move every April. Payoneer Workforce Management can act as your Employer of Record in the United Kingdom, engaging employees on your behalf and handling the statutory details, so you can hire without opening a UK entity.

Starting at $249 per employee per month, with the final figure shaped by your headcount and contract mix, the platform offers support in more than 160 countries.

Would you like to get started with Payoneer Workforce Management and transform the way you manage your global workforce?

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