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United Kingdom

Employer of Record UK

Global Expansion's Employer of Record services provide the ability to quickly grow, manage, and pay international teams, without the need for a local entity. Our award-winning tech platform plus integrated support services make hiring, managing and paying your global workforce a breeze.

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Hiring in the UK

For companies that want to hire employees and run payroll in the United Kingdom without first establishing a business entity or subsidiary, Global Expansion provides Employer of Record services (EOR UK).

Our EOR services streamline and simplify the global hiring process. We handle the core global HR tasks - compliance, contracts, payroll, global benefits, and more - so that you forgo hours of ongoing admin, human error, and risky compliance.

In the United Kingdom, companies would historically establish a subsidiary or branch office to legally hire in that country. With Global Expansion, this step is no longer necessary. We have subsidiaries all over the world and therefore can legally hire on your behalf. The employees are ours only on paper and report directly to managers within your company.

Need assistance hiring in the UK? Contact us about our International EOR Service

Labor Laws in the United Kingdom

The employment laws in the UK are less stringent than those in other European countries. For example, the UK’s minimum wage law is more lax, and only a limited number of collective bargaining agreements are in place.

However, there are still some important protections enforced by labor laws in UK for employees that you should be aware of. UK Employees have the right to:

  • be paid for their work on bank holidays
  • be paid for overtime work (time and a half)
  • take paid time off if they are sick or need to care for an ill family member

Employment Contracts

There are five (5) types of employment contracts in the UK:

  1. Full-time and part-time contracts

    Under such a contract, the employer must give employees the following:

    • The mandatory minimum level of paid holidays in the UK
    • A payslip showing all deductions, such as National Insurance Contributions (NICs)
    • The mandatory minimum length of rest breaks
    • Statutory Sick Pay (SSP)
    • Maternity, paternity, and adoption pay and leave

    The employer should provide a safe and secure working environment and ensure employees work no more than the legal maximum

  2. Fixed-term contract

    This type of contract indicates a specific timeline or task. The employer must treat fixed-term and full-time employees equally.

    Workers qualified under a fixed-term contract include:

    • A seasonal or casual employee employed for up to six (6) months during a peak period
    • A specialist employee for a project
    • An employee covering another worker on maternity leave
  3. Agency staff

    The employer hires a temporary staff member through an agency. Under this contract, the employer should pay the agency and the employee’s NICs and SSP.

    Agency employees are eligible for the same terms and conditions as permanent employees after 12 weeks of continuous employment in the same role.

  4. Freelancers, consultants, and contractors

    The employer hires a freelancer, consultant, or contractor to fulfill certain tasks or projects. These self-employed workers pay their taxes and NICs and look after their health and safety. They are not qualified for the same rights as employed workers, such as minimum wage.

  5. Zero-hours contracts

    Zero-hours contracts are for “piece work” or “on-call” work. Under employment laws in the UK, zero-hours workers are eligible for mandatory annual leave and the national minimum wage. Zero-hours workers can get other jobs while being employed by other companies.

Employee Probation Period

The Employment Right Act (ERA) does not regulate the probation period in the UK as such. However, it provides for a "qualifying period of employment" which is comparable to the probationary period insofar as employees are excluded from the protection against unfair dismissal during that period. The maximum probationary (trial) period is 24 months.

Annual Leave in the United Kingdom

All full-time employees in the UK are legally entitled to 28 days of paid vacation per year (known as statutory leave entitlement or annual leave).

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Holidays in the UK

Here is the full list of public holidays in the United Kingdom:

New Year’s Day 1st January
Good Friday 2nd April
Easter Monday 5th April
Early May Bank Holiday 8th May
Spring Bank Holiday 25th May
Summer Bank Holiday 31st August
Christmas Day 25th December
Boxing Day 28th December


The exact dates may vary from year to year. If a bank holiday is on a weekend, a ‘substitute’ weekday becomes a bank holiday, normally the following Monday.

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Maternity Leave in the United Kingdom

Female employees are entitled to 52 weeks of maternity leave. 

A minimum of 2 weeks must be taken after the baby is born (4 weeks for factory workers.) The leave is divided into:

  • Ordinary Maternity Leave: first 26 weeks
  • Additional Maternity Leave: last 26 weeks

Maternity Pay in the UK is mandatory for up to 39 weeks.

  • 90% of average weekly earnings (before tax) for the first 6 weeks
  • £172.48 (current since April 2016) or 90% of average weekly earnings (whichever is lower) for the next 33 weeks

Paternity Leave in the United Kingdom

Fathers can choose to take either 1 or 2 weeks. They get the same amount of leave even if the partner has multiple births (such as twins). Leave cannot start before birth. It must end within 56 days of the birth. The mandatory weekly rate of Paternity Pay is £172.48 a week, or 90% of average weekly earnings (whichever is lower).

Sick Leave in the United Kingdom

Employees in the UK are entitled to mandatory Sick Pay for up to 28 weeks, paid for by the employer. If employees are absent from work for more than seven days, they must provide a note from their doctor to document the Sick Pay obligation.

Sick Pay begins after the employee has been out of work for four or more days in a row and it is currently paid at the rate of £88.45 per week (since April 2016).

Working Hours in the United Kingdom

By law, there is a maximum of 48 working hours in UK per week which an employee can be expected to work, averaging over 17 weeks.

Overtime in the United Kingdom

By law, employees cannot be forced to work more than an average of 48 hours per week. They can agree to work longer - but this agreement must be in writing and signed by the employee. Employers do not have to pay workers for overtime. However, the average pay for the total hours worked must not fall below the National Minimum Wage.

Termination of Employment in the United Kingdom

Dismissal occurs when an employer terminates one's employment; employers are not always required to give employees notice.

If an employee is terminated, the employer must demonstrate that they have a valid reason to justify why they acted reasonably under the circumstances.

Employees must be given at least the notice stated in their contract or the mandatory minimum notice period, whichever is longer. There are some situations where employees can be dismissed immediately - for example, for violence.

Employees can be dismissed due to

  • Not being able to do their job properly
  • Illness
  • Redundancy
  • Summary dismissal
  • Gross Misconduct
  • A mandatory restriction
  • It is impossible for an employer to continue the employee’s employment contract
  • Any other substantial reason

Notice Period in the United Kingdom

There are two types of notice – mandatory notice, which is required by law, and the notice period stated in the employee’s contract of employment.

The length of service is used to calculate the mandatory notice period:

  • one week's notice for one month and less than two years of service
  • one week's notice for each year for between two and 12 years of service
  • 12 weeks’ notice for 12+ years of service

The length of notice in the employment contract is at the employer’s discretion, but this notice period is usually 1 month for employees and up to 3 months for senior employees.

Severance in the United Kingdom

  • Severance pay is given when an employee is terminated due to redundancy and the employee has worked for the employer continuously for at least two years prior to the redundancy, according to the following schedule:
    • half of one week’s pay for each year of service where the employee was below the age of 22
    • one week’s pay for each year of service where the employee was between 22 to 41 years of age
    • 1 1/2 week’s pay for each year of employment where the employee was 41 and over
  • If an employee is laid off on or after April 6, 2022, his or her weekly pay is capped at £571, with a maximum mandatory redundancy pay of £17,130.
  • If the individual was laid off before April 6, 2022, the amounts will be lower.
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United Kingdom Salary and Wages

United Kingdom Average Salary

The average salary in UK varies greatly depending on factors such as age, experience, location, and sector. The Office for National Statistics (ONS) publishes data on average UK salaries.

According to their data, the median salary for full-time workers in the UK was £30,353 in 2020. The average salary in 2021 was £38,131 for a full-time role and £13,549 for a part-time role.

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United Kingdom Salary Ranges Visualized

Lowest average wage
Median wage
Maximum average wage

United Kingdom Salary Comparison

The ONS also publishes average salaries by industry and occupation. For example, it says that the average salary in the retail sector was £15,898 in 2019, while the average salary for a postman or postwoman was £27,497.

13th Month Salary in United Kingdom

There is no mandatory requirement to pay the 13th or the 14th-month salary in the United Kingdom. However, employees are entitled to 5.6 weeks of holiday per year, and bonuses are generally distributed, in the form of performance-related pay. In 2017, the average bonus stood at £1,600 per person.

Minimum Wage in the United Kingdom

The UK minimum wage is regulated by several laws, including the National Minimum Wage Act 1998 and the National Minimum Wage Regulations 1999. . The NMW and NLW are two of the most important, but there are also laws about the contracts for payment below the minimum wage.

The National Minimum Wage Act of 1998 states that workers must be at least school-leaving age (16) to get the National Minimum Wage. Workers are aged 23 or over are entitled to the National Living Wage. Workers under 18 must be paid a youth rate, which is lower than the adult rate. Employers must keep a record of their employees' ages and wages in writing.

If an employer pays less than what they agreed on with their employee, it is considered an unlawful deduction from wages under Section 32 of the UK Employment Rights Act 1996. This can result in prosecution and/or civil proceedings being brought against them by HM Revenue & Customs (HMRC).

The average UK minimum wage varies by age group, as listed below:

    • For over 23 years old = £9.50 ($10.65)
    • For 21-22 years old = £9.18 ($10.29)
    • For 18-20 years old = £6.83 ($7.66)
    • For 16-17 years old = £4.81 ($5.39)
    • Apprentices receive a national minimum wage (NMW) of £4.81 ($5.39)

Income Tax in the UK

The UK tax system is a progressive one, meaning that the higher your income, the more you are taxed. The UK has a personal allowance for income tax, which is calculated as the amount of money you earn before you start paying income tax. This amount changes every year and can be found on the HMRC website.

If an individual is a resident and domiciled in the United Kingdom, they will be taxed on their worldwide income and capital gains. However, if an individual is not a UK resident, they will usually be taxed on their UK-source income but will not generally be taxed on capital gains, other than UK residential property or carried interest—even if the asset is located in the United Kingdom.

An employee is prima facie taxed on all remuneration and benefits from employment received during a tax year. The UK tax year ends on 5 April. An employee is taxable not only on basic salary but also on most perquisites or benefits in kind, including company cars, meals, accommodation, tuition for dependent children, medical insurance premiums, and imputed interest.

Capital gains tax in the UK

The UK also levies a tax on capital gains, which are calculated at either 18% or 28% (depending on whether the asset was held for more than 12 months).

In addition, where the asset is used for business purposes in the United Kingdom through a UK branch or agency, any gains are also subject to UK CGT.

There are also special rules for income and capital gains tax where a person has become a non-UK resident but returns to the United Kingdom within, broadly, five years. If an individual is resident but not domiciled (and not deemed domiciled) in the United Kingdom, they can elect for the remittance basis of taxation, in which case their non-UK investment income and capital gains are only taxed if they are remitted to the United Kingdom.

The tax rate for the period 6th April 2022 to 5th April 2023 is as follows: -


Taxable Income

Tax Rate

Personal Allowance Up to £12,570 0%
Basic Rate £12,571 to £50,270 20%
Higher Rate £50,271 to £150,000 40%
Additional Rate Over £150,000 45%
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Social Security in the UK

  • Earnings-related social security contributions (national insurance contributions, NIC) are payable by employers, employees, and self-employed individuals.
  • An employee’s Class 1 National Insurance is made up of contributions:
    • deducted from their pay (employee’s National Insurance)
    • paid by their employer (employer’s National Insurance)
  • The amounts deducted and paid depend on:
    the employee’s National Insurance category letter
    • how much of the employee’s earnings falls within each band
    • Employers generally make contributions at the rate of 13.8% depending upon an employee’s category letter and income level
  • Employees generally make contributions at the rates of 2%, 8%, and 10%, depending upon the category letter and income level. 

Social Security Contributions






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Deductible Expenses in the UK

Personal Deductions

UK-resident taxpayers are normally entitled to an annual tax-free personal allowance. The amount is GBP12,570 for the 2022/2023 tax year. Although, People aged 65 or older during the tax year may be eligible for an increased personal allowance.

Married couples are eligible for the married couple's allowance if one or both of them were born before 6 April 1935. In some circumstances, married couples who pay tax at no more than the basic rate may also be able to transfer their unused personal allowances onto each other (married couple’s allowance).

Since April 2015, an individual who is not liable for income tax in UK or not liable above the basic rate for a tax year may transfer up to GBP 1,260 (10% of their personal allowance) in 2022/23 to their spouse or civil partner. The recipient of the transfer must also be in a lower-income tax bracket.

Relief for alimony and maintenance payments may be available if an individual or his or her ex-spouse was born before 6 April 1935 and if certain other conditions are met.

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Standard Deductions

Employees can claim several standard deductions  on their taxes.

The first is travel and subsistence expenses incurred when working at a temporary workplace. This includes the cost of employee and family return trips home, subject to certain limitations with respect to the duration of the claim and family trips. For example, a non-UK domiciled individual who performs employment duties in the UK is eligible to claim home-leave expenses with respect to his or her family for qualifying journeys that are completed within five years of the date of his or her arrival in the UK.

Another common deduction for employees is qualifying relocation expenses up to GBP8,000. This includes moving costs such as removalist services, temporary accommodation costs, and shipping goods from one location to another. It does not include items like furniture or white goods (large household appliances).

Work-related training is another deduction an employee can take advantage of (for employees only), along with professional subscriptions and business mileage allowance for using an employee’s private car to travel in the performance of employment duties.

Business Deductions

In the UK, there are several categories of business expenses that you can deduct from your taxable income. These include:

  • Entertainment and gifts (except for certain inexpensive gifts bearing conspicuous advertising)
  • Depreciation, other than capital allowances
  • Nonbusiness expenses or the private-use proportion of expenses, including:
  • Costs of a capital nature
  • Profits or capital withdrawn from the business

Deductible Expenses




  • Travel and subsistence costs incurred when an employee works at a temporary workplace
  • The cost of employee and family return trips home
  • Qualifying relocation expenses of up to GBP8,000
  • Work-related training (for employees only)
  • Professional subscriptions
  • Business mileage allowance for using an employee’s private car to travel in the performance of employment duties
  • Overseas medical costs (for UK employees on foreign assignment)
  • Entertainment and gifts
  • Depreciation, other than capital allowances
  • Nonbusiness expenses or the private-use proportion of expenses
  • Costs of a capital nature
  • Profits or capital withdrawn from the business
  • Personal allowance of GBP 12,570
  • Married couples allowance
  • Relief for alimony and maintenance payments may be available if an individual or his or her ex-spouse was born before 6 April 1935 and if certain other conditions are met
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Immigration in the UK

Learn about immigration requirements in the United Kingdom, work visa requirements, work permits, and more.

UK visa requirements apply to all visitors to the country unless they are from a visa-exempt country or qualify for the Visa Waiver Program. There are a number of different types of visas that can be used by those wishing to enter under a UK work permit, including visitor visas, student visas, work visas, family visas and transit visas. You can read more about visa requirements UK below.

The visa policy UK states that The Golden Visa UK allows non-European Economic Area (EEA) nationals to live and work in the UK indefinitely. The scheme was introduced in 2008 and has since been revised a number of times. The latest version of the scheme was introduced in 2015.

At the time of writing, the Tier 1 Investor visa is unavailable. It was closed down as a consequence of the Russia-Ukraine conflict.

The scheme is open to certain categories of non-EEA nationals, including:

  • Tier 1 (Entrepreneur) visa holders
  • Tier 1 (Investor) visa holders
  • Tier 2 (General) visa holders
  • Tier 2 (Intra-company Transfer) visa holders

The type of UK Work visa you will need to apply for depends on the purpose of your visit.

Need assistance hiring in the UK? Contact us about our International EOR Service

Temporary work permits and process

The Temporary Work – Government Authorized Exchange visa has replaced the tier 5 visa You can apply for a Temporary Work – Government Authorized Exchange visa if you want to come to the UK for a short time for:

  • work experience
  • training
  • an Overseas Government Language Programme
  • research or a fellowship through an approved government authorized exchange scheme

You must also have a visa sponsor. The amount of time you can stay depends on the length of your visa and the start and end dates of your job. Depending on the scheme you apply for, you’ll get a visa for a maximum of 10 months, 12 months, or 24 months.

Residency visa / residence permit

EU Nationals

If you are from the EU, EEA, or Switzerland, you will not need a visa or work permit to work in the UK.

Although the UK has left the EU, EU, EEA and Swiss citizens can travel to the UK for holidays or short trips without needing a visa.

Non-EEA nationals

In general, non-EEA nationals, and persons without settled status or a right of abode who wish to come to the UK for the purpose of employment must obtain the requisite entry clearance for that purpose before traveling to the UK.

The UK’s Points Based System (PBS) is a points-scoring system under which applicants are awarded points to reflect earnings, experience and the demand for skills in certain sectors.

The PBS consists of five tiers. Some of the main employment categories under the Points Based System (PBS) are as follows:

Tier 1

  • Tier 1 has several subcategories:
  • The Tier 1 (Exceptional Talent) category
    • It is intended for individuals who are internationally recognized in their field as a leading global talent.
    • The UK government has limited the number of applications that can be made, with 1,000 places released on both 6 April and 1 October each year.
    • Every initial application must be endorsed by a “designated competent body” before a visa application can be made.
  • The Tier 1 (Start-up) and Tier 1 (Innovator) categories
    • Applications under these categories require an endorsement by an approved body, which will assess whether an individual’s business idea is new and viable and has potential for growth.
    • The Tier 1 (Start-up) category is available for those looking to set up a business in the UK and permits a stay for up to two years without the option of extension.
    • The Tier 1 (Innovator) category is available for those wishing to set up and invest at least EUR 50,000 of funds into a business and initially permits a stay for three years with the option to extend for further three-year periods with the potential to apply for settlement after five years.
    • Business organizations with a history of supporting UK entrepreneurs may be eligible to apply to become endorsing bodies.

Tier 2

  • A Skilled Worker visa
  • A Skilled Worker visa has replaced the Tier 2 (General) work visa
  • To qualify for a Skilled Worker visa, you must:
    • work for a UK employer that’s been approved by the Home Office
    • have a ‘certificate of sponsorship’ from your employer with information about the role you’ve been offered in the UK
    • do a job that’s on the list of eligible occupations
    • be paid a minimum salary - how much depends on the type of work you do
    • Your visa can last for up to 5 years before you need to extend it.
    • You’ll need to apply to extend or update your visa when it expires or if you change jobs or employers.

Senior or Specialist Worker visa (Global Business Mobility)

  • A Senior or Specialist Worker visa has replaced the Intra-company Transfer visa, previously the Tier 2 (Intra-company Transfer) Long-term Staff visa.
  • To qualify for a Senior or Specialist Worker visa, you must:
    • be an existing employee of an organization that’s been approved by the Home Office as a sponsor
    • have a ‘certificate of sponsorship’ from your employer with information about the work you will do in the UK
    • do a job that’s on the list of eligible occupations
    • be paid at least £42,400 per year
  • You can stay in the UK with a Senior or Specialist Worker visa for whichever is shorter of:
    • the time is given on your certificate of sponsorship plus 14 days
    • 5 years

Visa requirements UK overview

Learn about the visa policy in the United Kingdom and all the ways to obtain a regular or a work visa for the United Kingdom.

Tier 1 (Exceptional Talent Visa)


Tier 1 (Startup Visa)


Skilled Workers Visa


Senior or Specialist Worker visa (Global Business Mobility)


Temporary Work – Government Authorized Exchange visa

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Value Added Tax (VAT) in the UK

The standard rate of UK VAT increased to 20% on January 4th, 2011 (from 17.5%). Some things are exempt from value-added tax, such as postage stamps, and financial and property transactions.





Standard Rate

Group 1083


Reduced Rate Group 1083 5%
Zero Rate Group 1083 0%

Value Added Tax


Standard Rate


Reduced Rate


Zero Rate

Withholding Tax in the UK


There typically is no withholding tax on dividends paid by UK companies under domestic law, although 20% withholding tax generally applies to distributions paid by a REIT from its tax exempt rental profits (subject to relief under a tax treaty)


There is no withholding tax requirement in the UK for certain interest payments, such as interest paid to UK residents from bank deposits, unit trusts, open-ended investment companies, or peer-to-peer lending.

A 20% withholding tax may apply to other sources of interest. Interest paid to a non-resident is subject to 20% withholding tax, unless the rate is reduced under a tax treaty, or the interest is exempt under the EU interest and royalties’ directive.

The continuing application of the directive following the UK’s departure from the EU on 31 January 2020 is dependent upon the outcome of ongoing negotiations, but interest payments made to qualifying EU companies that satisfy the conditions for application of the directive continue to be exempt throughout the transition period until 31st December 2020


Royalties paid to nonresidents generally are subject to a 20% withholding tax, unless the rate is reduced under a tax treaty or the royalties are exempt under the EU interest and royalties’ directive.

The continuing application of the directive following the UK’s departure from the EU on 31 January 2020 is dependent upon the outcome of ongoing negotiations, but royalties made to qualifying EU companies that satisfy the conditions for application of the directive continue to be exempt throughout the transition period until 31st December 2020


Type of Payment








Dividends 0% 0% 0% 0%
Interest  0% 0%/20% 0%/20% 0%/20%
Royalties  0% 0%/20% 20% 20%

Mandatory Benefits in the UK

It’s important to understand the legal requirements of hiring employees in the United Kingdom (whether it’s remote or in-office) so that your business remains compliant. As part of Global Expansion’s International PEO and Employer of Record (EOR) solution, we guarantee employees are registered with the appropriate government agency, and that they receive mandatory benefits such as minimum wage, workers’ compensation, and paid time off (PTO).

Additionally, all tax deductions associated with the employee are processed at the source, meaning our in-country entity will be responsible for paying all taxes to the authorities on behalf of the new hire.

  • These are mandatory benefits as postulated by law
  • These include a probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, severance pay and 13th month pay
  • Mandatory benefits also include social security benefits.
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Mandatory Benefits overview

Standard employee benefits in the UK include:

  • Paid time off

  • Overtime pay

  • Mandatory sick pay

  • Maternity and paternity leave

  • Shared parental leave

  • Pension plans

  • Private health insurance

Employers may offer employees additional insurance such as dental and vision insurance, fertility and specialized disability support, and other plans outside the scope of standard health care.

Payroll In the UK

Here’s what you need to know to run payroll in the United Kingdom.

UK payroll is usually run on a monthly basis, but weekly payroll can also be used. A part of payroll is collecting the UK’s payroll taxes from employees by way of their salaries.

The PAYE system is used to collect income tax and National Insurance from employees working in the UK. Deductions for these payments are made before employee wages or occupational pensions are paid.

Global Expansion’s UK EOR and UK PEO solution can help you run payroll in the United Kingdom with ease. In just a few clicks, your employees will be onboarded and enrolled into our payroll system. Additionally, we can invoice clients locally, meaning we can enroll any new hire quickly and efficiently, whether they're an expatriate or local nationals.

Payroll Accrual in the United Kingdom

Country Accruals Additional Information


Social security on above GBP702


Maternity leave



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Employers are required to contribute 13.8% of the employee’s salary above GBP702 per month to Employer’s National Insurance.

If you are employed and pregnant, you are entitled to 52 weeks (1 year) of maternity leave, no matter how long you've worked for your employer. This is made up of 26 weeks of ordinary maternity leave and 26 weeks of additional maternity leave.

Payroll Accruals Additional information

Annual Leave


Maternity Leave


Paternity Leave


Sick Leave




Social Security


Accrued Benefits in the United Kingdom

Christmas Bonus % 0%
Christmas Bonus Over Vacations % 0%
Severance per Year%

There is no right to severance, however, after two years of employment the calculations are made with the redundancy formulae.

Vacations %

All full-time employees in the UK are legally entitled to 28 days of paid vacation per year (7.67% of annual salary)

Of annual
Notice %

Employees are entitled to 1 week notice period for one year of service or more 

Christmas Bonus Over Notifications % 0%
Vacations Plus % 0%

Total percentage of Salary (yearly)

The total employment accruals as a percentage of salary per annum


Why use Global Expansion to hire in the United Kingdom

Establishing a branch office or subsidiary in the United Kingdom can be time-consuming, expensive, and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because the United Kingdom's labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by UK law to maintain its good standing as an equal-opportunity employer.

Global Expansion makes it easy for you to expand into the United Kingdom. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our United Kingdom Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets

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