Monthly Minimum Wage
From April 6, 2025, the hourly wage for those aged 21 and above will be increased to £12.21 per hour, £10 per hour for those aged 18 – 20, and £7.55 per hour for those under 18 and apprentices.
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Overtime Pay and Maximum Working Hours
Overtime pay is not mandatory, but the average wage for an employee’s total working hours cannot be lower than the national minimum wage.
The standard working hours are 8 hours per day and 40 hours per week. The standard working week is from Monday to Friday.
Note: According to the law, if an employee is not paid by the hour, as long as the calculated wage is not lower than the hourly minimum wage, generally, companies do not pay overtime pay. Depending on the work situation, for some jobs that may require a lot of overtime, the law allows companies to add relevant exemption clauses in the contract, such as flexible hours, elasticity, or not paying overtime pay if overtime does not exceed 40 hours.
Personal Income Tax
The Allowance is slightly adjusted every year. Starting from April 6, 2025, the 2025/2026 standard should be used. The tax calculation standards in England and Scotland are different. The annual income tax rate standard in England is as follows:
Basic B tax rate: 20% Up to £37,700
Higher tax rate: 40% From £37,701 to £125,140
Additional tax rate: 45% Above £125,140
The deductible tax – free amount in England is £242 per week; £1,048 per month; £12,570 per year.
Note: The scope of personal income tax collection ranges from 0% to 45%. Personal income tax is calculated on a progressive basis. Personal tax rates are also affected by various factors such as family status and the number of children. It should also be noted that the tax rates and tax brackets in Scotland are slightly different. Employees living in Scotland will have different tax numbers to ensure that the tax authorities levy taxes correctly.
Statutory Holidays
Full – time employees are entitled to 28 days of paid time off (PTO) per year, including 8 public holidays.
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Statutory Public Holidays
The annual holidays are announced on the government’s official website. In 2025, they are as follows:
New Year’s Day
Good Friday (April 18)
Easter Monday (April 21)
Early May Bank Holiday (May 5)
Spring Bank Holiday (May 26)
Summer Bank Holiday (August 25)
Christmas Day (December 25)
Boxing Day (December 26)
Additional public holidays in different regions:
Scotland:
Scotland Day (January 2)
St Andrew’s Day (December 1)
Northern Ireland:
St Patrick’s Day (March 17)
The Twelfth (July 14)
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Other Leave
Maternity Leave
Eligible employees can take up to 52 weeks of maternity leave.
It includes 26 weeks of ordinary maternity leave and 26 weeks of additional maternity leave.
Statutory Maternity Pay (SMP) can be paid for up to 39 weeks, usually as follows:
The first 6 weeks: 90% of the average weekly pre – tax income
The next 33 weeks: £187.18 per week or 90% of the average weekly income (whichever is lower)
The last 13 weeks of maternity leave are unpaid.
From April 6, 2025, the maternity pay will be increased to a maximum of £187.18 per week.
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Paternity Leave
The paternity leave for UK employees is one to two weeks. The UK government stipulates that fathers can take two weeks of paternity leave after the birth of their child. The statutory paternity pay is £187.18 per week (which may be adjusted on April 6 each year) or 90% of the average weekly wage (whichever is lower).
Sick Leave
Employees are entitled to up to 28 weeks (5.6 weeks including statutory holidays) of paid sick leave.
According to the law, for sick leave of less than 7 days, employees can notify themselves without providing a doctor’s certificate. The company can require approval from the direct manager.
According to the law, for sick leave of more than 7 days, an effective certificate is required to apply.
Employees on long – term sick leave who meet the conditions are entitled to the government’s Statutory Sick Pay (SSP). From April 6, 2025, the statutory sick pay will be increased to a maximum of £118.75 per week (which may be adjusted on April 6 each year).
Employment Contract
UK law stipulates that employment contracts are relatively broad, not only referring to written employment contracts but also oral agreements (Employment Rights Act 1996).
Written contracts can be signed according to the type of position. That is, if the position is permanent, the contract has no fixed term but has a probationary period, and employees should follow the notice period when leaving. If the employee is a contract worker or paid by the hour, the contract term can be agreed upon, and the company can decide the term (either six months or one year). The probationary period will also be adjusted accordingly. The contract must be in English, signed by both parties in writing, and can be in electronic form. The contract should include the following content. It is recommended to consult a local UK lawyer specializing in this field:
- Name of the employer and the employee
- Job title or job description
- Type of position (permanent or fixed/contractor)
- Date of starting work
- Contract term, only applicable to fixed/contractor
- Salary amount and payment frequency, as well as annual bonuses
- Working hours and working days, and how they may change
- Number of annual leave days (whether including public holidays); sick leave regulations
- Work location, and whether the employee may need to be relocated
- Additional work locations (if applicable)
- Probationary period and its application, as well as the notice period for leaving and the company’s right to terminate the contract
- Any other benefits, such as pensions, insurance, or allowances (private medical insurance, life insurance, etc.)
- Mandatory training, and whether the employer will pay for the training
- Clarify whether there are Collective agreements, i.e., collective contracts/unions
- Confidentiality requirements, ownership of inventions, company intellectual property and data protection, basic disciplinary requirements, absence management, post – employment non – competition regulations (if required), etc.
Probationary Period
The probationary period is generally 90 days.
For employees on fixed – term contracts and fix contracts, the probationary period is generally 3 to 6 months, which can be determined according to the position level. The probationary period for senior employees can also be 6 months.
Employer Costs
- National Insurance (NI), 15% of the employee’s salary;
- Workplace Pension, 3% of the employer’s basic pension;
- Employers’ Liability (EL) insurance, work – related injury insurance;
- Apprenticeship Levy, 0.5% of the annual pay bill, only legally required for large companies and not applicable to all companies.
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Dismissal (Legal Requirements and Best Practices)
Notice Period
During the probationary period, it can be proposed at any time. After becoming a permanent employee, the notice period for leaving is generally fixed at 90 days (three months) in the contract, but the specific leaving time can be negotiated between the two parties and can be advanced without violating the law. In the case of layoffs, at least: 1 – 2 years of service, at least 1 week; 2 – 12 years of service, 1 week per year; over 12 years of service, 12 weeks.
Voluntary Resignation
No compensation is required, and employees need to resign according to the notice period.
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Dismissal during Probationary Period
Employers are allowed to terminate the employment relationship at any time during the probationary period.
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Negotiated Dismissal
Generally, for employees with more than 2 years of service, the calculation of redundancy compensation is based on a maximum of 20 years:
Under 22 years old: 0.5 weeks’ pay for each year of service
22 – 40 years old: 1 week’s pay for each year of service
Over 41 years old: 1.5 weeks’ pay for each year of service
The weekly wage is calculated based on the average wage of the 12 weeks before receiving the layoff notice. Before April 6, 2024, the maximum weekly wage for laid – off employees was £700, and the maximum compensation amount was £21,000. If all compensation (compensation, unused annual leave, unpaid wages, and company benefits such as bonuses) does not exceed £30,000, no personal income tax is required. Regarding negotiated dismissal, it is recommended to hire or consult a local UK lawyer to clarify and understand the relevant details before taking action.
Dismissal for Just Cause
It is relatively difficult to dismiss employees on permanent contracts who have been employed for more than 2 years. A reasonable reason needs to be provided. It is easier to dismiss hourly workers and contract workers.