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Employment or labour law is a set of regulations and legal aspects that govern the relationship between employers and employees. It outlines the expectations employers can have of their workforce, their obligations in providing certain entitlements, defining the official rights of employees within the workplace. This legal framework is particularly vital for UK employers as it integrates legal structures into key organizational processes, influencing how common practices are conducted.
In this eBook we delve into the essential aspects of employment characteristics, contracts, termination procedures, notice periods, working time, vacation entitlement and beyond.
Employment relationship in the UK may be concluded for:
In the United Kingdom, a fixed-term contract means that an employee is taken on for a set length of time, rather than permanently. This type of agreement clearly states when the job will begin and when it will end. Once the end date arrives, the employment comes to an end automatically, unless there is an arrangement to extend or renew the contract. Employers often use fixed-term contracts for roles linked to short-term projects or when extra help is needed for a limited period.
Important points to know about fixed-term work in the UK:
Contract length: The duration of a fixed-term contract can differ greatly, based on what the employer requires and the type of job involved. Some contracts might last only a few weeks, while others could go on for several years.
Renewal: A fixed-term contract may be extended or renewed if both the employer and employee agree. However, there are limits to how often this can happen, and continually renewing a fixed-term contract without a proper reason could lead to legal issues.
Rights and benefits: Employees working under a fixed-term contract in the UK usually enjoy most of the same rights as those on permanent contracts. These include entitlement to at least the National Minimum Wage, paid annual leave, and protection against unfair treatment. However, some benefits, such as pension schemes or sick leave, might be different depending on what is agreed in the contract and the employer’s own rules.
Termination: A fixed-term contract will finish automatically on the date that was agreed at the beginning, unless one of the parties decides to end it sooner following the contract’s terms. An employer can also bring the contract to an end early because of reasons like redundancy or if the employee is not performing well, but in these situations, they must act fairly and follow the correct legal process.
Redundancy: Employees on fixed-term contracts are treated the same as those in permanent roles when it comes to redundancy. If a fixed-term worker has been continuously employed for two years or more, they are eligible to receive redundancy pay just like permanent staff.
Notice periods: If a fixed-term contract is ended before the agreed date, there is usually a set period of notice that must be given by either the employer or the employee. The exact length of this notice period is normally detailed in the contract itself, or it may be decided by relevant employment laws.
Before signing a fixed-term contract, it is important that both the employer and the employee clearly understand what the agreement involves. This includes knowing why the contract is being offered for a set period, being aware of the rights and benefits available, and understanding how the contract can be extended or ended. If anything is unclear or a disagreement arises, it is wise to get professional legal advice.
Permanent employment (or indefinite employment) is the most common type of employment arrangement in the UK.
Key facts about permanent employment in the UK:
Indefinite duration: Permanent employment means that the working arrangement between the employer and employee does not have a pre-set end date. This is different from fixed-term contracts, as permanent roles continue unless either side decides to end the relationship.
Rights and benefits: People working in permanent jobs in the UK have many rights and perks according to employment laws. These include the following:
Pension and additional benefits: Those in permanent positions can often join a workplace pension scheme set up by their employer, which helps them save for retirement. On top of this, employers might offer other benefits like private health insurance, life cover, or financial bonuses, but these depend on the company’s own policies.
Notice periods: When it comes to permanent jobs, both the employer and the employee are usually required to give a period of notice if they want to end the job. This notice period is normally set out in the employment contract, but if it is not, there are legal rules that decide the minimum notice that must be given.
Career growth: Having a permanent job usually means you can build your career and move up within the company. Employees are often given chances to learn new skills, join training sessions, apply for higher positions, and use various tools that help them improve and advance in their profession.
Job security: People in permanent roles usually have more security in their jobs than those on short-term contracts. Although employers can let them go for genuine reasons, such as poor behaviour or company downsizing, permanent staff are protected by law from unfair dismissal. If their job ends due to redundancy, they might also qualify for a redundancy payment.
In the UK, an employment contract must meet certain basic requirements to be considered valid. The employer needs to make a definite job offer, and the employee must accept it clearly. Both sides must agree to the terms, and this agreement forms a legal bond between them.
By law, employers have to give new staff a written summary of the main details about their job within two months of starting work. This document should explain important points such as the job role, pay, working hours, holiday entitlement, and other key conditions.
On top of the main employment details, employers are legally required to pay staff at least the National Minimum Wage or the National Living Wage, depending on the worker’s age and circumstances. It is also important for employers to follow working time laws, which set limits on the number of hours an employee can work each week, and require minimum rest breaks and paid holiday each year.
In addition, employees have several legal rights that must be included in their employment contract. These cover things like protection against unfair dismissal, the right to statutory sick pay, and leave for maternity or paternity, among others. Making sure these basic standards are met helps both employers and employees know that their contract is fair and follows the law. For a contract to be valid, the employer must clearly offer the job and the employee must accept it. There must be an exchange, usually meaning the employee agrees to work in return for pay and benefits. Both sides should understand that the contract is legally binding, and all terms should be explained clearly so everyone knows their rights and responsibilities.
It is common for UK employment contracts to include a probation period, giving both the employer and the employee time to decide if the job and working relationship are suitable. This initial phase is designed for each side to judge how well the employee fits the role and meets expectations. The length of probation can differ depending on company policies and the nature of the job, but it usually lasts from one month up to six months.
Throughout this probation period, either party has the option to end the contract by giving a shorter notice period than what would be expected after probation is complete. This arrangement helps if the job turns out not to be suitable, offering flexibility to both the employee and the employer.
The length of a probation period can also depend on the type of job. For example:
Junior or entry-level roles: For positions at the beginning of a career, employers often choose a probation period of just one to three months. These jobs are typically less complicated, so it normally takes less time to decide if the employee is the right fit.
Senior or specialised positions: For jobs that carry greater responsibility or need expert knowledge, companies often set probation periods that last between three and six months. This gives the employer more time to properly assess whether the employee is meeting the demands and expectations of the role.
Contract or temporary roles: For positions that are contract-based or temporary, the probation period is often shorter compared to permanent jobs, since the length of employment has already been set in advance.
Both the employer and the employee should have a clear understanding of what is expected during the probation period. This includes knowing what targets or standards must be achieved. It is also important that any notice required to end employment during probation is explained in the contract or company rules, so everyone knows what to expect.
There are several ways to end an employment relationship in the UK, and each method comes with its own rules and legal points to consider. The most common ways include giving notice, agreeing to end the contract together, dismissal for a specific reason, redundancy, incapacity, or when a contract comes to its natural end. In every case, it is very important for both the employer and the employee to know their legal rights and responsibilities, and to follow the right steps as set out by law and contract.
Ending a job by giving notice means that either the employer or the employee lets the other side know in advance, as required by the contract or the law. Employees can leave by handing in their notice, and employers can let someone go by giving the right amount of notice too. Sometimes, instead of working the notice period, an employer might pay the employee for that time (called payment in lieu of notice) if the contract allows, or if both sides agree.
If both the employer and the employee agree to end the contract, this is called termination by agreement. Usually, a settlement agreement is used, which lists out the conditions, such as the last day of work, any payments, and if there are any rules about keeping things private. The length of notice in these cases is decided together, but if they cannot agree, the normal legal notice periods must be followed.
Sometimes, an employer might need to end employment for a serious reason, like gross misconduct or if the employee is not performing well. In these cases, the employer might not have to give as much notice, or any at all, but they must always follow a fair process. This means investigating properly and giving the employee a chance to explain. If the problem is poor performance, the employer should show that they have tried to help the employee improve first.
Redundancy happens when a job is no longer needed, often because of changes in the company. The employer must follow certain consultation rules, look for other jobs that the employee could do, and give proper notice and redundancy pay. The amount of pay depends on how long the person has worked, their age, and their weekly wage.
Work can also end because of incapacity, which means the employee cannot do their job due to a long-term illness or injury and no reasonable changes can help them return. Employers must act fairly, looking at medical advice and considering how long the person has worked, and must give the right amount of notice as set out in the contract or the law.
Fixed-term contracts will end automatically when the agreed period finishes, unless both sides decide to extend or renew the contract. Normally, no extra notice is needed unless the contract says otherwise.
Usually, the notice period is written in the job contract. If it is not, there are minimum notice periods set by the Employment Rights Act 1996: one week’s notice if a person has worked between one month and two years, and then one extra week for every year of service after that, up to a maximum of 12 weeks. These rules also apply for redundancy and incapacity.
It is a good idea for both employees and employers to check their contracts and the law to make sure they are following the correct procedure. Getting legal advice can help avoid disagreements or legal problems.
Employers in United Kingdom are required to pay the following taxes and contributions on the gross salaries of their employees:
| Contribution | Employee | Employer |
| Personal income tax | 20%/40%/45% | 0% |
| Pension contribution | 5% | 3% |
| Social security contribution | 8% | 15% |
In the United Kingdom, a typical full-time working week is usually set at 40 hours. This usually means working about 8 hours each day from Monday to Friday, but the exact hours can change depending on the employer’s guidelines and the type of job you have.
It’s important to understand that not everyone follows the same schedule. Many workers have different working patterns due to things like the industry they are in, shift jobs, flexible hours, or other irregular work arrangements. Below are some examples of how working hours can change when people have non-standard schedules:
Shift work: In sectors like healthcare, manufacturing, transport, and hospitality, staff may be required to work shifts that do not follow standard daytime hours. These shifts can rotate and might include mornings, evenings, nights, weekends, or even longer stretches such as 12-hour shifts. Employers are responsible for following working time laws, which means they must provide suitable rest periods and organise shifts in a way that helps employees avoid becoming overly tired.
Flexible working options: Some staff can benefit from flexible work set-ups, which may let them change when they start or finish work or allow them to work from home. These arrangements help people to better balance their work with personal needs, like caring for children or relatives. Both the employer and the employee should make sure any agreed changes to working hours or location are clearly set out in writing.
Part-time work: Part-time staff generally have a working week that is shorter than that of full-time employees, usually less than 40 hours. This type of job is often chosen by people who want more flexibility, perhaps due to family responsibilities or other personal reasons. Those working part-time receive the same legal rights and protections as their full-time colleagues, but these are adjusted according to the number of hours they work. This includes salary, paid holidays, and access to statutory benefits.
Zero-hour contracts: A zero-hour contract is a type of work agreement where the employer does not guarantee any set number of working hours, and the worker is not required to accept every shift offered. This arrangement gives employees the freedom to choose when they want to work, but it also means their earnings and job stability are not always certain. Employers using zero-hour contracts must still follow rules about working hours, making sure staff get enough rest and do not work more than the legal limit.
Seasonal or temporary work: Jobs in areas like farming, tourism, or shops often involve work that is not regular all year round. Employees might have to work more hours during busy times, and their schedules can change depending on demand. It is important for employers to follow all legal requirements when organising working hours, making sure that staff are not overloaded and that they receive proper breaks.
In the UK, employees are allowed to work overtime, but there are strict rules to prevent them from working too many hours. The Working Time Regulations 1998 state that most workers should not do more than an average of 48 hours a week, including any overtime, unless they choose to sign a written agreement to work more. Employers are not allowed to pressure staff into opting out of this weekly limit.
Although the law does not say employers must pay extra for overtime, many companies offer higher pay, extra time off, or other rewards for extra hours worked. The way overtime is paid should be clearly written in the contract or explained in company rules.
Employers must make sure that working extra hours does not harm employees’ health or safety. They need to manage overtime so workers do not get too tired or stressed. Everyone who works more than six hours in a day, including overtime, must get a break of at least 20 minutes. If you are under 18, there are even stricter rules, and you cannot usually work at night or do a lot of overtime.
In certain jobs, agreements between employers and unions decide how overtime works, including pay and the maximum hours allowed. All employees should know what their rights are about overtime and talk to their boss or a relevant organisation if they have worries about long hours or payment.
To sum up, working overtime is permitted, but employers must follow all the laws, keep their workers safe, and stick to what is written in contracts. If workers have any problems, it is important for them to understand their rights and speak up about their concerns.
If you work in the UK, you are entitled to paid holiday every year. The minimum amount by law for someone working five days a week is 5.6 weeks, which means 28 days of paid leave each year. This usually includes bank holidays, unless your contract says something different.
If you work part-time, your paid holiday is worked out based on how many days or hours you work each week, so it is fair for everyone.
There is no general legal right to unpaid leave in the UK, unless it is mentioned in your contract or company rules. However, there are some special cases when you can take unpaid leave by law. For example, parents can take up to 18 weeks of unpaid leave for each child until they are 18 years old, but not more than 4 weeks in any year for each child. Employees also have the right to unpaid leave if they need to handle emergencies with dependants, such as illness or sudden childcare problems. Other reasons for unpaid leave include certain public duties, like serving on a jury or being a magistrate.
Employee benefits can be divided into monetary rewards and non-monetary perks that are offered by employers to their staff.
Monetary rewards are extra payments or bonuses given in addition to your normal wages or salary.
Some of the most widespread non-monetary perks in the United Kingdom include:
All other perks, such as subsidised meals, social events, childcare vouchers, and share schemes, can be broadly categorised as Additional Employee Perks.
In the United Kingdom, a fixed-term contract means a job with a definite beginning and end date. People working on these contracts have the same rights as those in permanent positions, including salary, paid holiday, and pension benefits. If someone is kept on fixed-term contracts continuously for four years, their job will usually be made permanent.
Part-time roles involve working fewer hours than a full-time employee, normally less than 35 hours each week. These staff members get rights and benefits that match the number of hours they work. Zero-hours contracts do not promise any set hours, so people only work when asked by the employer. Such workers are entitled to basic rights like minimum pay and paid annual leave, though their job stability is not guaranteed.
Casual or occasional work usually applies to short-term tasks or jobs that do not follow a regular schedule. Workers in these roles are given basic entitlements like minimum wage and paid holidays. Employers often recruit them directly for single or brief assignments.
Temporary agency jobs are where people are hired by an agency but work for another business. After working with the same company for 12 weeks, agency staff must get the same pay, holiday, and working conditions as permanent employees. The agency looks after pay, tax, and employment paperwork.
Employee posting , also called secondment, is when workers from abroad are sent to the UK by their employer for a set time. While in the UK, they must receive at least the minimum wage, paid holiday, and must follow rules about working hours. Employers have to inform authorities and stick to UK employment laws.
In addition, umbrella company employment is widely used by contractors. Under this system, people become employees of a third-party company, which takes care of their wages and tax responsibilities. This offers flexibility, but the rights and tax situations can be different for each person.
These are just some of the key pieces of legislation that govern various aspects of employment in the UK, including employment rights, working conditions, equal opportunities, health and safety, and dispute resolution. Depending on the specific circumstances, other legislation or regulations may also apply. It’s important for both employers and employees to be aware of their rights and obligations under relevant laws and to seek legal advice if needed.
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About Accace Adept UK
We are a joint venture between Accace and Adept Advisory, established to pursue a long-term strategy of providing innovative Business Process Outsourcing (BPO) and advisory services to clients in the United Kingdom and South Africa. We joined forces to augment each other’s valuable insight, knowhow and practices, whilst combining our experience in complementary fields of expertise.
About Accace Circle
Accace Adept operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 60 jurisdictions with more than 7,000 professionals, we support over 80,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 800,000 pay slips globally.
Accace UK Limited (trading as Accace Adept)
Berkeley Suite, 35 Berkeley Square, Mayfair London W1J 5BF, United Kingdom
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