UK HR Laws

April 9th 2024

Together with its rich pool of talent and thriving economy (the sixth largest economy in the world!), the UK remains an attractive hub for countless businesses and organizations. But running a business in the UK isn’t exactly simple. If you’re considering establishing or expanding your business here, it’s essential to navigate the intricate employment landscape – and that includes HR laws.

Understanding the rules that govern Human Resources in the UK is crucial for managing employees. From bringing in new team members to ending employment, and everything in between, these laws serve as the guiding framework for important HR processes.

In this article, we will explore the key aspects of UK employment laws, providing clear insights into the rights and responsibilities of both employers and employees. Whether you are a seasoned HR professional or a business owner, staying well-versed in these regulations is not just a legal requirement but a strategic move to foster a harmonious and legally sound work environment. 

This Article Covers:

Employee Classifications in the UK
Labour Laws Affecting HR Processes in the UK

Employee Classifications in the UK

Before we head into the UK’s HR laws, let’s first talk about employee classification. Every employer and HR personnel needs to understand the different types of employee classification. This isn’t only to ensure compliance with UK regulations but also to establish clear expectations regarding rights and responsibilities in the workplace.

Employee classification basically refers to the categorization of workers based on their employment status and the nature of their work. In the United Kingdom, there are three main classifications, each with its own implications for both employers and employees: Employee, Contractor, and Worker.

What is an Employee in the UK?

In the United Kingdom, individuals holding an employment contract are officially recognized as employees. Being an employee comes with more rights compared to workers or independent contractors.

Employees are entitled to the National Minimum Wage, statutory holidays, and a maximum 48-hour workweek. On top of these, employees also enjoy additional rights and benefits, including:

  • Statutory sick leave
  • Statutory sick pay
  • Statutory maternity/paternity/adoption/shared parental pay and leave
  • Statutory redundancy pay (dependent on length of service)
  • Time off in emergencies
  • Protection against unfair dismissal
  • Minimum notice periods before employment termination (dependent on length of service)
  • The right to request flexible work conditions

What is a Contractor in the UK?

In the UK, an independent contractor, often known as a freelancer or self-employed individual, operates their own work independently without supervision. Contractors are not entitled to benefits and assume full responsibility for managing their business.

What is a Worker in the UK?

A “worker” falls between the category of an independent contractor and an employee. While the terminology might seem interchangeable, especially in legal documents, it holds its own significance. A person is typically considered a worker if:

  • They have a formal and actual employer (not self-employed), and their work is not considered a customer or client relationship.
  • They work on a casual or irregular basis, remain on the payroll, and have taxes and National Insurance deducted from their paychecks.
  • Their tasks are directed by a manager at the company, and subcontracting is not allowed.
  • They work based on the employer’s needs, with no obligation for the employer to provide work, and the freedom for the worker to decline tasks.

Much like employees, workers enjoy certain benefits and protections, such as the National Minimum Wage and the statutory minimum paid holiday leave. However, they don’t have the same level of entitlements as employees. Notably, workers lack protection against unfair dismissal, a minimum notice period for termination, statutory redundancy pay, time off for emergencies, and the right to request flexible working conditions.

What are the Penalties of Employee Misclassification?

Misclassification can be really expensive. If the HMRC (Her Majesty’s Revenue and Customs) finds out you’ve misclassified someone as a contractor instead of an employee you could be asked to pay for missed time off, National Insurance dues, payroll taxes, and more.

Just to give you an idea of how costly it can be, Uber got fined almost 1 billion GBP in 2021 by the UK Supreme Court for misclassifying its workers as independent contractors.

To avoid this costly legal mistake, it’s best to understand the main employee classifications that exist in the UK, and what implications each classification holds for both employers and employees.

Labour Laws Affecting HR Processes in the UK

Several labour laws affect the employment process in the UK, from hiring, and onboarding, even to termination. In this section, we’ll be taking a closer look at these laws and their implications at each stage of the employment lifecycle.

What are the Hiring Laws in the UK?

When hiring employees in the UK, it is crucial to comply with various hiring laws, which include conducting right-to-work checks, considering disability accommodations, health checks, and child employment regulations.

  • Right-to-Work Checks: Before employing anyone, employers are required to check their right to work in the UK as outlined in the Employment Background Check Act which was passed in 2008. Background checks can be done online using the applicant’s share code or by verifying their original documents. Identity service providers with Identity Document Validation Technology (IDVT) can also be used for this purpose. British and Irish citizens need to have their original documents checked as they do not have share codes.
  • Equality and Non-Discrimination: Job specifications must not exclude disabled people from applying for a position. While some roles may have essential requirements that cannot be adjusted, it is illegal to reject a disabled candidate because of their disability as per the Equality Act 2010. Aside from disability, other protected characteristics under the Equality Act 2020 include gender, race, religion, sexual orientation, age, and pregnancy/maternity status. None of these characteristics should affect the hiring process.
  • Health Checks: Health checks can be requested only if they are legally required or necessary for a specific job, such as eye tests for commercial vehicle drivers. Employers should include information about these checks in the offer letter, obtain written consent, and ensure compliance with anti-discrimination laws.
  • Data Protection: As per the Data Protection Act 2018, employers must adhere to data protection rules when handling information about job applicants. This includes safeguarding sensitive personal data and ensuring compliance with privacy regulations.
  • Child Employment: When employing children under the compulsory school leaving age, a work permit from the local authority may be required. Child employment is subject to strict conditions, and it is illegal to employ children under 13 unless it is part of a paid performance, sport, or modelling, with the appropriate child performance license.
  • Documentation for EU Citizens: EU citizens and their families now need to apply for settled status to apply for work in the UK. Existing employees from the EU, EEA, or Switzerland who came to the UK before July 1, 2021, do not require checks.

Non-compliance with hiring laws can lead to significant fines. Employers can be fined up to £20,000 if they cannot provide evidence of checking an employee’s right to work. Violating the Data Protection Act of 2018, on the other hand, can carry a maximum fine of £17.5 million or 4% of annual global turnover – whichever is greater.

What are the Minimum Wage Laws in the UK?

The National Minimum Wage Act 1998 establishes the legal framework for the National Minimum Wage, officially known as the National Living Wage, in the United Kingdom. The minimum wage varies based on the employee’s age and is updated annually every April.

From April 1, 2024, the rates will be as follows:

National Living Wage for over 21 £11.44 per hour
National Minimum Wage for 18 to 20-year-olds £8.60 per hour
National Minimum Wage for under 18 £6.40 per hour
Apprentice Rate £6.40 per hour

The apprentice rate applies to individuals aged under 19 or those over 19 in the first year of their apprenticeship. It’s important to note that the minimum wage is consistent across all regions of the UK.

Not everyone is entitled to the National Minimum Wage though, some exemptions include:

  • Self-employed workers
  • Company directors
  • Volunteers
  • Members of the armed forces
  • People living and working in a religious community

Employers who fail to pay the minimum wage can face fines from the HMRC, the UK tax authority. If employees believe they are entitled to the minimum wage and are not receiving it, they can file a complaint through the HMRC website.

In cases of non-compliance, the government can fine companies, as evidenced by over 200 firms being fined nearly £7 million and instructed to reimburse 63,000 workers for breaches extending over a decade. Notable companies involved in such breaches include WH Smith, Marks & Spencer, Argos, and Lloyds Pharmacy.

What are the Working Hour Laws in the UK?

In the United Kingdom, the Working Time Regulations 1998 govern the maximum weekly working hours, rest periods, and other aspects of working time. The key points related to working hours are as follows:

  • Maximum Weekly Working Hours: According to the Working Time Directive, also known as the Working Time Regulations, employees cannot work more than 48 hours per week on average, typically averaged over 17 weeks. However, employees have the option to voluntarily opt out of the 48-hour week. Individuals under the age of 18 are subject to specific regulations. They cannot work more than 8 hours a day or 40 hours a week.
  • Rest Breaks and Weekly Rest Period: Adult workers are entitled to a rest break if their daily working time exceeds six hours. They are also entitled to an uninterrupted rest period of at least 24 hours in each seven-day period. Young workers have specific provisions, including a rest break of at least 30 minutes if their daily working time exceeds four and a half hours.
  • Record Keeping: Employers do not need to keep records of all daily working hours but must maintain records to prove compliance with the 48-hour weekly maximum, limits for night working, and health assessments for night workers. These records should be kept for two years.

What are the Trade Union Laws in the UK?

In the United Kingdom, trade union laws safeguard the rights of employees in their relationship with unions. Individuals have the freedom to choose whether to join a union, remain a member, or leave at their discretion. Importantly, employees can belong to any union of their choice, even if it differs from the one negotiating with the employer on pay and conditions. The law also permits membership in multiple unions concurrently.

Employers are prohibited from offering benefits to induce employees to leave a union or threatening unfair treatment based on union membership. Furthermore, it is unlawful for employers or employment agencies to refuse employment based on an individual’s union membership status. Dismissal or selection for redundancy due to union membership, non-membership, or participation in union activities is strictly prohibited.

What are the Leave Laws in the UK?

Leave laws in the UK cover various types of situations to support employees in balancing work and personal life. Understanding these leave laws ensures employees can manage various life events without compromising their employment rights.

  • Sick Leave: Employees can take time off when ill, with proof required only for periods exceeding seven days. Statutory Sick Pay (SSP) is available for up to 28 weeks, starting after four consecutive sick days, offering £109.40 per week. Employers may provide additional sick pay.
  • Paternity Leave: Entitles employees to one or two consecutive weeks of paid leave, beginning after childbirth or adoption. Statutory paternity leave pays £172.48 or 90% of the average weekly wage (whichever is lower).
  • Maternity Leave: Statutory maternity leave in the UK is 52 weeks, split into ordinary maternity leave and additional maternity leave. Employees can take up to 39 weeks of maternity pay, receiving 90% of their average weekly earnings for the first six weeks and £172.48 or 90% for the following 33 weeks.
  • Neonatal Care Leave: Allows parents with babies in neonatal care to take 12 weeks of paid leave in addition to statutory maternity or paternity leave.
  • Parental Leave: Employees are entitled to 18 weeks of unpaid leave for each child up to their 18th birthday, with a maximum of four weeks per year. Parental leave protects employment rights and requires more than a year’s service.
  • Shared Parental Leave: For couples both employed for at least 26 weeks, shared parental leave allows them to share up to 50 weeks of leave and 37 weeks’ pay during their child’s first year.
  • Bereavement Leave: Employees can take unpaid leave for emergencies involving dependents, covering partners, children, parents, or anyone living in the household. Paid leave is available for one or two weeks following the death of a child.
  • Work-Related Injury Leave: Statutory sick pay is offered for work-related injuries at £109.40 per week. Employers may have more generous sick pay schemes, and compensation for injuries is tax-free if certain conditions are met.

What are the Employment Contract Laws in the UK?

In the UK, employers are not legally obligated to provide employees with a written employment contract. However, under the Employment Rights Act 1996, individuals classified as workers or employees are entitled to receive a written statement of employment details within two months of starting their employment.

This written statement should encompass essential terms and conditions, including the following details:

  • Names of the employer and employee
  • Job title
  • Pay rates and intervals
  • Working hours (including if employees are required to work overtime)
  • Details about sick pay and paid leave.

The UK allows various types of employment contracts, giving employers the freedom to structure relationships based on factors like the nature of work, duration of employment, and mutual needs.

What are the Workplace Health and Safety Laws in the UK?

The Health and Safety at Work Act 1974 is a crucial legislation in the UK, applying to all businesses. It mandates employers to provide necessary information, training, and supervision to ensure the health and safety of employees.

Employers are obligated to provide safe systems of work, adequate training, and maintain safe equipment, among other responsibilities. They are also legally obligated to conduct risk assessments relevant to their workplace as part of managing staff health and safety. Employees, in turn, have responsibilities to care for their own safety, not interfere with safety equipment, and cooperate with their employers.

Any serious workplace accidents, occupational diseases, and specified dangerous occurrences should be reported within 10 days of the incident as per the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR). This reporting duty spans across all workplaces, from high-risk environments like construction sites to lower-risk settings such as offices.

What are the Termination Laws in the UK?

Termination of employment in the UK is not governed by at-will employment, meaning employers cannot dismiss employees without notice and a justifiable reason.

When an employer decides to terminate an employee, written notice is required, except in cases of gross misconduct, such as theft or violence, where immediate dismissal without notice is permissible. It’s crucial for employers to have a valid and justifiable reason for dismissal and to follow the company’s official termination procedures to comply with UK employment laws. 

Dismissed employees are generally not entitled to severance pay. However, employers can still include this benefit in their company policies to enhance their appeal to potential candidates, signalling additional support during periods of unemployment.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.