The United Kingdom (UK) is an island nation to the northwest of Europe made up of England, Scotland, Wales, and Northern Ireland. It has a workforce population of 30.4 million people (2024), and a GDP of 3.34 trillion USD (2023). The UK has the world’s sixth-largest national economy, driven predominantly by finance, construction, tourism, and its large service sector.

With a strong economy and robust UK labor laws, employing people in the UK can be highly beneficial for your company. There are many mandatory employee benefits that companies must offer when employing in the UK, plus a range of supplementary benefits such as medical insurance, additional pension plans, and extra paid time off that employers should consider.

In this help guide, we’ll provide you with a thorough overview of employee benefits in the UK, including information on social security contributions, annual paid leave, working hours, and maternity/paternity pay. We’ll also cover the supplementary benefits companies may wish to offer to attract potential employees, and how Remote People can help to hire qualified UK employees while adhering to UK labor law.

United Kingdom Employment Laws

Labor law in the UK is designed to provide guidance and protection to both employers and employees in the UK. It includes a vast range of legislation, including laws on employment contracts, holiday entitlement, working hours, severance policies, and disciplinary procedures.

Many bills related to UK employee benefits have been released over the years including the following:

Most recently The Employment Rights Bill was introduced to parliament on the 10th October 2024, a policy designed to help the UK introduce new legislation within 100 days while modernising legislation regarding employee benefits.

It’s important to consult legal experts for detailed compliance with UK labor law when employing within the UK to ensure full compliance.

Mandatory Employee Benefits in the UK

There are many mandatory employee benefits in the UK that companies must adhere to when hiring in this country. The sections below explain these benefits thoroughly:

Social Security Contributions

Social security contributions, otherwise known in the UK as National Insurance, allow UK employees to qualify for certain benefits and the UK state pension.

UK employees will be issued with a National Insurance number to ensure contributions and taxes are recorded correctly.

National insurance must be paid if you’re 16 or over and are either:

Criteria Description
Employee Earnings Must earn at least £242 per week from one job
Self-Employed Earnings Must make at least £12,570 of profit per year

Employees who earn between £123 – £142 a week from one job, or are self-employed with profits of at least £6,725 usually will not be required to pay national insurance, but may still qualify for employee benefits including the state pension.

Different classes of National Insurance apply depending on employment status. UK employees stop paying National Insurance contributions when they reach state pension age.

Annual Paid Leave

UK employees are legally entitled to statutory leave entitlement known as annual leave. This consists of at least 28 days (5.6 weeks) paid holiday for employees who work 5 days a week.

Part-time employees who work regular hours throughout the year are also entitled to at least 5.6 weeks paid holiday, but this will work out less than 28 days (e.g., for an employee that works 3 days a week they must receive at least 16.8 days’ annual leave per year).

If employees work irregular hours, they will accrue annual leave based on the amount of hours they work.

Employers can issue employees with additional leave above the legal minimum as a supplementary employee benefit.

UK employees are also entitled to:

  • Build annual leave during maternity, paternity, or adoption leave
  • Build annual leave while off sick
  • Request annual leave at the same time as sick leave 

Working Hours

Employees in the UK can work a maximum of 48 hours per week on average (normally averaged over 17 weeks). There are some exceptions to this rule if you work in a job:

  • That requires 24-hour staffing 
  • Such as the armed forces, emergency services, or police
  • In the security/surveillance industry
  • As a sea-farer,sea-fisherman or vessel worker on inland waterways
  • Where working time is not measured such as a manager with control over your hours/decisions

In the above cases, employees can opt out of the maximum 48-hour week. UK employees under the age of 18 cannot work over 8 hours per day or 40 hours per week.

National Minimum Wage

The UK abides by the National Minimum Wage and the National Living Wage, rates designed to protect employees from exploitation and ensure they receive a legally mandated level of pay. 

Employees must be:

  • Of school leaving age to receive the National Minimum Wage
  • Aged 21 or over to receive the National Living Wage

The current hourly rates for the National Minimum Wage and the National Living Wage are as follows:

CategoryApril 2025 (Current Rate)April 2026 
Apprentice£7.55£8.00
Under 18£7.55£8.00
18–20£10.00£10.85
21+£12.21£12.71

Overtime Pay

In the UK, employers do not have to pay workers for overtime, providing that the average pay for the total hours worked doesn’t fall below the national minimum wage.

Employee contracts must detail any overtime pay rates and how these are determined. Employees cannot be made to work over an average of 48 hours per week, and employers can stop overtime if it’s not guaranteed by contract.

Employers may issue days off known as “time off in lieu” instead of paying for overtime. Terms will be agreed in employee contracts including when this time can be taken. 

Paid Public Holidays

Public holidays, also known as bank holidays, in the UK differ for England and Wales, Scotland, and Northern Ireland.

If bank holidays fall on a weekend, the following weekday often becomes a bank holiday known as a ‘substitute day’. Employers are not required to give employees paid leave on bank holidays.

England and Wales Bank Holidays

  • New Year’s Day (January 1)
  • Good Friday (April 18) (date varies)
  • Easter Monday (April 21) (date varies)
  • Early May Bank Holiday (May 5) (date varies)
  • Spring Bank Holiday (May 26) (date varies)
  • Summer Bank Holiday (August 25) (date varies)
  • Christmas Day (December 25)
  • Boxing Day (December 26)

Scotland Bank Holidays

  • New Year’s Day (January 1)
  • 2nd January (January 2)
  • Good Friday (April 18) (date varies)
  • Spring Bank Holiday (May 26) (date varies)
  • Summer Bank Holiday (August 4) (date varies)
  • St. Andrew’s Day (December 1)
  • Christmas Day (December 25)
  • Boxing Day (December 26)

Northern Ireland Bank Holidays

  • New Year’s Day (January 1)
  • St. Patrick’s Day (March 17)
  • Good Friday (April 18) (date varies)
  • Easter Monday (April 21) (date varies)
  • Early May Bank Holiday (May 5) (date varies)
  • Spring Bank Holiday (May 26) (date varies)
  • Battle of the Boyne (July 14)
  • Summer Bank Holiday (August 25) (date varies)
  • Christmas Day (December 25)
  • Boxing Day (December 26)

Paid Sick Leave

Employees in the UK are entitled to statutory sick pay if they are too sick to work. This consists of a minimum of £116.75 per week and is payable for up to 28 weeks.

Employees must provide proof of sickness if they are off ill for over 7 days, in the form of a ‘fit note’ signed by a healthcare professional. A fit note will explain if the employee is fit for work or not.

If an employee is off work sick for over 4 weeks, this may be referenced as ‘long-term sick’. These employees are still entitled to annual leave and consult with an employment tribunal if they are dismissed unfairly.

Maternity Leave

Employees can take up to 52 weeks maternity leave in the UK. This is separated by the following:

Leave TypeDuration
Ordinary Maternity LeaveFirst 26 weeks
Additional Maternity LeaveLast 26 weeks

Maternity leave can be taken a maximum of 11 weeks before the expected week of birth (unless the child is born prematurely), and employees must take a minimum of 2 weeks after the birth of the child (or 4 weeks if the employee is a factory worker.

All UK employees are entitled to Statutory Maternity Pay (SMP) which is paid for up to 39 weeks in the following way:

  • 90% of average weekly earnings before tax for the first 6 weeks
  • £184.03 or 90% of average weekly earnings (whichever is lower) for the remaining 33 weeks

Employees must:

  • Provide proof of pregnancy in the form of a doctor’s letter or maternity certificate
  • Be on company payroll in ‘qualifying week’ – the 15th week before the expected week of birth
  • Give at least 28 days’ notice of data they wish to start SMP
  • Have been continuously employed for at least 26 weeks
  • Earn a gross amount of at least £123 per week in a relevant 8-week period

Employers can offer additional amounts of maternity cover. These policies must be clearly detailed in employee contracts.

Paternity Leave

If a UK employee’s partner is having a baby, adopting a child, or having a baby via surrogacy, the partner may be entitled to Statutory Paternity Leave/Pay.

This consists of either £184.03 per week or 90% of average weekly earnings (whichever is lower. Tax and National Insurance will need to be deducted from this amount.

Either 1 or 2 weeks can be taken, either consecutively or separately. Leave cannot start before the birth of the child, and the start date must be either:

  • The date of birth
  • A set date after the birth
  • An agreed number of days after the birth

Employees can take unpaid leave for antenatal appointments if the employee is:

  • The baby’s father
  • The spouse or civil partner of the expectant mother
  • In a long-term relationship with the expectant mother
  • Is the intended parent in a surrogacy arrangement

Pensions

Pensions for UK employees are split into the following categories:

The Basic State Pension

To be eligible for the basic State pension, you must be:

  • A man born before 6th April 1951
  • A woman born before 6th April 1953

You must have been paying National Insurance for enough qualifying years. The full basic State Pension is £169.50 per week, which increases each year based on the highest of:

  • The average percentage growth in wages
  • The percentage growth in UK prices as measured by the Consumer Prices Index 

The New State Pension

To be eligible for the new State pension, you must be:

  • A man born before 6th April 1951
  • A woman born before 6th April 1953

10 qualifying years of National Insurance payments are required for the new State Pension. The full new State Pension is £221.20 per week, but this amount may depend on:

  • Your employment leading to you being contracted out prior to 2016
  •  The amount of National Insurance years you have
  • You paying into the Additional State Pension prior to 2016

Workplace Pensions

All UK employees are entitled to a workplace pension scheme.

Employers must automatically enroll employes into a pension scheme and make contributions if all of the following apply:

  • The employee is classed as a ‘worker’
  • The employee is aged between 22 and state pension age
  • The employee earns at least £10,000 per year
  • The employee usually works in the UK

A percentage of an employee’s pay is put into the pension scheme each payday. In most cases, employers will also add money to the pension scheme. Pensions are usually protected if:

  • An employer goes bust
  • If a pension provider goes bust
  • The pension scheme is a ‘trust-based scheme’

Severance Pay

Employees in the UK are entitled to severance pay, also known in the UK as statutory redundancy pay.

Employees are generally chosen for redundancy if employers need to reduce their workforce. This is often carried out via the following methods:

  • Last in, first out (employees that have been employed for the least amount of time are selected first)
  • Asking for volunteers
  • Disciplinary records
  • Staff appraisals/qualifications/experience

If an employee has been working for an employer for 2 years or more, they will be entitled to:

Age Group Severance Pay
Under 22 Half a week’s pay for each full year
22 or over but under 41 One week’s pay for each full year
41 or over One and a half week’s pay for each full year

Weekly Pay is averaged at the amount employees earned per week over the 12 weeks before the day the redundancy notice was served.

Length of service is capped at 20 years for UK employees issued with redundancy.

Employees are not entitled to statutory redundancy pay if:

  • An employer offers to keep an employee on
  • An employer offers suitable alternative work which is refused by an employee without good reason
  • An employee is:
    • A registered dock worker or share fisherman
    • A crown servant or member of the armed forces/police
    • An apprentice who does not become an employee at the end of training
    • A domestic servant who is a member of an employer’s immediate family

Supplementary Employee Benefits in the UK

Employers of UK employees may wish to offer supplementary employee benefits to attract new candidates for employment and improve employee retention rates. Examples of supplementary employee benefits include:

  • Private healthcare
  • Performance bonuses
  • Supplementary pension plans
  • Enhanced maternity/paternity leave
  • Extra allowances such as transportation, housing, and meals. 

Optimize Employee Benefits with Remote People

emote People provides comprehensive Employer of Record in the UK and can help companies hire UK employees with ease, ensuring employee benefits, taxes, payroll, and other tasks are adhered to.

As an experienced EOR provider, we understand the UK’s labor and tax regulations, minimizing errors and handling every stage of the legal and administrative process efficiently.

Our UK EOR services make it easier to hire employees in the United Kingdom, giving you a reliable way to expand without the complexity of setting up a local entity.

Remote People can also help you source qualified talent through our UK recruitment services. Our team understands the UK market and hiring landscape and can guide you toward the right candidates for your business.