Introduction To UK Employment Laws For U.S. Employers

This brief overview of employment laws in the United Kingdom summarizes the key issues to consider when engaging staff in the United Kingdom. The purpose of this guide is to introduce U.S. employers to key concepts of UK employment law, which may be unfamiliar to them. It is not intended to be comprehensive and employers must seek specific legal advice in relation to individual cases.

Basic Principles

The following general principles should be noted:

A number of UK employment laws are mandatory and apply to employees who work in the United Kingdom, regardless of the employee's nationality or the employer's place of registration. Generally, there is no distinction between executive and junior employees and UK employment laws apply to both. These mandatory laws provide minimum rights for employees that override any lesser contractual provisions that may be in place. There are three main categories of staff recognized under UK laws: (1) employees, (2) self-employed individuals (often referred to as contractors or consultants), and (3) "workers." A worker is a broadly defined statutory concept that includes those who contract to provide work or services personally even if not an employee. An individual's employment status determines which employment laws apply and what the employer's obligations are in relation to income tax and national insurance contributions (social security) on earnings. Treating an individual as self-employed when he or she is, in reality, an employee can have significant financial consequences for the employer. There is no concept of employment at will. All employees have some rights, even if it is just the right to paid vacation time or to receive notice of termination. Employment Contract

Employers must set out in writing the principal terms of employment, within two months of an employee starting work. This information is usually contained in a written contract of employment and will be important in determining an employee's rights. Therefore, employers should draft the document carefully.

The statement must include the following information:

the name of the employer and employee; the place of work; salary; hours of work; paid holiday and vacation entitlements; sick leave and pay entitlements; the length of notice required to terminate the employment; disciplinary and grievance procedures; provisions for a pension if available; and whether a collective agreement applies to the employment. Minimum Benefits and Rights

National Minimum Wage

Most workers who work in the United Kingdom are entitled...