EMPLOYMENT CONTRACT

• The employment contract must be signed before the employment relationship begins.
• A non-compete clause is only possible if the employee receives compensation for the duration of the clause in the amount of at least 50% of the last annual salary.

Fixed term employment contract

General

• Employment contracts may in general only be limited in time if:
  • the company wants to check the professional qualification of the employee;
  • the position is a substitution;
  • the demand for labor is subject to seasonal fluctuations;
  • this is a project-related, fixed-term employment contract;
  • the employee is working for the company for the first time;
  • to accommodate a contingent workforce due to exponential growth.

Duration

• No limitations are imposed on Fixed Term employment contract and time frame is to be agreed between the service provider and the client.

Probationary period

• The probationary period can be agreed only in the first contract.
• The probationary period has a maximum duration of 6 months.
• During the probationary period, both the employee and the employer may terminate the employment contract at any time with 1 weeks’ notice.

Termination

• A fixed-term employment contract ends automatically at the end of the agreed term without notice.
• A fixed-term employment contract may not be terminated with due notice unless such termination is exceptionally provided for in an individual contract or by an applicable collective bargaining  agreement.

Permanent employment contract

Probationary period

• The probationary period has a maximum duration of 6 months.
• During the probationary period, both the employee and the employer may terminate the employment contract at any time with two weeks’ notice.

Termination

• The employee is subject to a statutory notice period of 1 week from the last pay period or to the end of the month.
• The notice periods according to UK Employment law depends on length of employment and are highlighted below:

– 1Month- 2 years:	1 Week
– 2 years- 12 years	1 Week’s notice for each completed year.
– 12 years +	Maximum of 12 week’s notice

Collective agreements

• A collective agreement in employment contract is a written agreement on the terms and conditions of employment between employer and employee organisations within a specific sector and in addition to applicable laws and regulations.
• The collective agreement applies only if the employee is a member of a trade union that has concluded the collective agreement and the employer is also affiliated.

WAGE AND SALARY

Minimum wage

• An employee must always receive at least minimum National Minimum Wage- Current NMW is at 10.44 p/hr.
• The statutory minimum wage is indexed every Tax year, commencing from 6^th of April but may be indexed in interim budgets by the Chancellor of Exchequer.

Wage deductions

• The employer may withhold or Deduct from wages only if the employee has given consent in writing.
• After deduction or offsetting, the Gross wage may not be less than the statutory minimum wage.
• Exceptions to this rule are:
  • already received advances;
  • Contributions by voluntary members of the statutory health insurance scheme;
  • Asset-based payments made to building societies or other credit institutions;
  • Non-cash compensation;
  • Employee discounts;
  • Repayments of principal or interest on employer loans;
  • Rent for an enterprise or company apartment;
  • premiums for a direct insurance, a pension fund or a pension fund financed by the employee through deferred compensation;
  • wage and salary sacrifices;
  • Fines, garnishment fees, telephone charges and union dues.

Tax rate

• In UK, there are different tax categories for income tax, and within each tax category a progressive tax rate applies.
• The UK tax classes are as follows:
  • Personal Allowance of up to £12,570 – Tax rate 0%
  • Basic Rate – tax rate of 20% between earnings of £12,571 to £50,270
  • Higher Rate- Tax rate of 40% between earnings of £50,271 to £150,000
  • Additional Rate- Tax rate of 45% for earnings over £150,000

National Insurance Rate

There are two classes of National Insurance which deals with on payroll employees. These are as below;

             -Class 1 Primary – Employees earnings more than £242 a week and under state pension age.

                                 -Class 1 Secondary– Employers pay these directly on their employee’s expenses or benefits. Benefits are paid under Class 1B and Expenses / Wages / Salaries are paid under Class 1A.

Class 1 Primary table is as below                                      Class 1 Secondary table is as below

Category A – £533 to £1048 PCM – 0%                            Category A- £0 to £758 PCM – 0%

Category A- £1048 TO £4,189 PCM – 8%                         Category A- £758.01 + 13.8%

Category A- £4189+ – 2%

National Insurances are also subject to change in accordance to budgets proposed by Chancellor of Exchequer.

Pensions- Automatic Enrolments

Automatic Enrolments were introduced in 2012 as workplace pensions- Employer must enrol all workers on to workplace pensions without needing to ask to be part of it.

Qualifying criteria;

                   -Work in the UK

                   -Atleast 22 year of age but under State Pension age

                   -Earn more than £10,000 a year for current fiscal tax year of 2024-2025

Contribution Levels

                   -Employees contribute 5% & Employers contribute 3% of their Gross Earnings if Earnings are over £6,240 per year.

Bonuses/ Commissions or any ad-hoc remuneration

• A bonus/Commission/ Benefit-in-Kind are all considered as part of the wage and taxed in accordance to the tax/NI and Pension rates listed above. Any non-monetary gifts will be valued at market value and added in to the gross wage in accordance with p11d on-payroll rules.

Statutory Sick Pay

• A Worker may self-certify as ‘sick’ for first 7 days. Any sickness beyond initial 7 days period require Medical Note certified by a General Practitioner surgery.
• Maximum of 28 weeks are paid under statutory Sick pay rules. Contract will be considered as ‘frustrated’ for sickness beyond period of 28 weeks.

All sickness is paid at statutory rate of £99.35 per week. First 3 days of sickness period is known as ‘waiting days’ and no payment is made.

Annual Leave Entitlement

Holiday days

• All workers are legally entitled 5.6 weeks paid holiday a year including public holidays. This is known as statutory leave entitlement or annual leave.
• Additional leave can be considered as authorized unpaid absence.
• Holiday days are accrued annually for the period from 1 January to 31 December.
• Leave days not taken in the year in which they accrue cannot be carried over to the following year.
• Statutory leave may only be paid out at the end of the employment relationship when there is no longer any possibility of taking the remaining leave.
• There is no entitlement to expense allowance or the like during the leave.
• Holidays paid out are an average of Basic wage (not including any bonuses, overtime – unless overtime is guaranteed and forms contract, other ad-hoc expenses) over last 52 weeks of the employee’s earnings.

Public holidays

• UK has the following public holidays:
  • New Year’s Day
  • Good Friday
  • Easter Day
  • Early May Bank Holiday
  • Spring Bank Holiday
  • Summer Bank Holiday
  • Christmas Day
  • Boxing Day

Statutory Maternity Pay -SMP

• An employee can take up to 52 Weeks’ maternity leave. The first 26 weeks are under ‘Ordinary Maternity Leave’, the last 26 weeks are considered as an Additional Maternity Leave.
• An employee must meet following criteria to qualify for SMP leave;

                     -Be on payroll in the qualifying week- The 15^th week before the expected week of Childbirth

                     -Gives 4 weeks’ notice before commencement of SMP

                     -Provides MATB1 as a proof of Pregnancy

                     -Have been employed continuously for atleast 26 weeks up to any day in the qualifying week

                                        -Earn atleast £123 a week before Taxes in an 8-week ‘relevant period’.

• An employee will receive 90% of their average weekly earnings for first 6 weeks and remaining 33 weeks to be paid at SMP rate – current rate is £156.66 or 90% of the average earnings (whichever is lower).
• During maternity leave, the employee acquires the normal holiday entitlement but on SMP Rate.
• Any period beyond 33 weeks are paid by Department of Work and Pensions.

Statutory Paternity Pay- SPP

• Paternity pay allows the worker to take time off when the partner is having a baby, Adopting a child or having a baby through Surrogacy arrangement.

• An employee must meet following criteria to qualify for SPP leave;

                     -Must be the father, Husband, Child’s adopter or Intendent Parent.

                     -Be on payroll in the qualifying week- The 15^th week before the expected week of Childbirth

                     -Gives 4 weeks’ notice before commencement of SPP

-Provides MATB1 as a proof of Pregnancy, Surrogacy arrangement confirmation or adoption     letter within 28 days

                     -Have been employed continuously for atleast 26 weeks up to any day in the qualifying week

                                        -Earn atleast £123 a week before Taxes in an 8-week ‘relevant period’.

• An employee will receive 90% of their average weekly or to be paid at SPP rate – current rate is £184.03 or 90% of the average earnings (whichever is lower).
• SPP only applies to 2 week’s period only.

ALLOWANCES AND REIMBURSEMENTS

Worker might be able to claim tax relief if;

• Worker use their own money for things that they require for their job
• These are wholly, exclusively and necessary for your job performance

No tax relief if employer reimburses the expenses or provides an alternative.

• Working from Home- workers can claim tax relief for business phone calls, Gas, Electricity for your work area but can not claim a tax relief for things which have dual functions. For example, broadband being used for work and private use too.
• Uniforms, Work clothing and Tools- workers can claim tax relief for repairing, replacing and cleaning of tools and uniforms. You cannot claim initial cost of buying small tools or clothing for work for example PPE.
• Vehicles for work- workers can claim tax relief if you use cars, vans, motorcyles or bicycle for work. This does not include travelling to and from your work unless it is a temporary place of work.

If worker uses their own vehicle or vehicles for work, they may claim tax relief on approved mileage rates. This covers the cost of owning and running your vehicle. Worker cannot claim;

                                -Fuel

                                -Electricity

                                -Road Tax, Mots or Repairs

Approved mileage rates are;

Cars and Vans – first 10,000 Business Miles in the tax year @ 0.45p       Over 10,000 Business miles @ 0.25p

Motorcycles – first 10,000 Business Miles in the tax year @ 0.24p          Over 10,000 Business miles @ 0.24p

Bicylces – first 10,000 Business Miles in the tax year @ 0.20p   Over 10,000 Business miles @ 0.20p

No claims can be made if reimbursed by the employer.

• Professional Fees and Subscriptions- workers can claim tax relief for professional membership fees and annual subscriptions to an approved professional body or learned societies. The claim is not possible if the employer has paid on worker’s behalf or have paid to a professional membership that are not approved by HMRC. Approved list can be found here.
• Travel and overnight expenses- workers can claim tax relief on the cost or money that the worker spends on costs or money that has been spent. No claim is available for travelling to and from work unless you are travelling to a temporary place of work.

Tax claim is possible for money spent on;

             -Public Transport Costs

             -Hotel Accommodation for overnight stays

             -Food and Drink

             -Congestion charges and tolls

             -Parking Fees

             -Business phone calls and printing costs.

• Buying other equipment- In most cases, tax relief is available on substantial equipment, for example a computer to do work. You can not claim allowances for Cars, Motorcycles, bicycles but can claim mileage and fuel costs.

Claim tax relief for expenses if:

   -Needed for job

   -Use the equipment for work and there is no significant private use.

If equipment has been partially reimbursed by the employer, the worker should reduce the claim to the reimbursement made.

Compliance Documents

• A check code must be provided or alternatively a separate request can be made direct from Home-Office.
• A proof of address is required dated within last 6 months
• A right to work within the UK and ID Documents are required
• A check code must be supplied by all non-UK nationals.

OTHER

Retirement pension

• Everyone who works as an employee in UK acquires entitlements to state pension.
• The amount of your future pension depends, among other things, on your income and the length of time you have worked in UK. Minimum earnings required to qualify for state pension is the lower earnings threshold of £11,908.00
• The pension starts between the ages of 66, depending on your date of birth. Earliest age is 55 in the UK where any payments or annuity in workplace pensions / private pensions can be accessed.

Data Protection Regulation and Privacy

The Data protection ACT 2018 Controls how personal information is used by organisations, businesses or the government.

Everyone responsible for using personal data has to follow strict rules called ‘data protection principles. They must make sure the information is:

-used fairly, lawfully and transparently

-used for specified, explicit purposes

-used in a way that is adequate, relevant and limited to only what is necessary

-accurate and, where necessary, kept up to date

-kept for no longer than is necessary

-handled in a way that ensures appropriate security, including protection against unlawful or unauthorised processing, access, loss, destruction or damage

There is stronger legal protection for more sensitive information, such as:

-race

-ethnic background

-political opinions

-religious beliefs

-trade union membership

-genetics

-biometrics (where used for identification)

-health

-sex life or orientation

There are separate safeguards for personal data relating to criminal convictions and offences.

Rights

Under the Data Protection Act 2018, the right to find out what information the government and other organisations store about an individual. These include the right to:

-be informed about how your data is being used

-access personal data

-have incorrect data updated

-have data erased

-stop or restrict the processing of your data

-data portability (allowing you to get and reuse your data for different services)

-object to how individual’s data is processed in certain circumstances

An individual also have rights when an organisation is using personal data for:

-automated decision-making processes (without human involvement)

-profiling, for example to predict individual’s behaviour or interests

WELCOME TO THE UK

What do I have to do when I come to UK to live here?

National Insurance -Department of Work & Pensions

• Register with DWP to obtain a National Insurance number.

Bank Account

• Open a Bank Account. Can be done online.

Driving licence

• You can drive in UK for up to 1 year with international licence or EU licence but the vehicle must be taxed and should carry a valid insurance and a MOT.

Health insurance

• Pay £624 for NHS surcharge per year to benefit from Social Insurance under NHS.

Children

• In UK, school attendance is compulsory for children from 6 to 16 years of age.
• If you have children and work in UK, you are in principle entitled to child benefit (depending on immigration status) until the child is 16 years old.  

Contacts

• Home office- https://www.gov.uk/government/organisations/home-office
• DWP- https://www.gov.uk/government/organisations/department-for-work-pensions
• HMRC- https://www.gov.uk/government/organisations/hm-revenue-customs
• ACAS- https://www.acas.org.uk/
• Driver’s agency- https://www.gov.uk/government/organisations/driver-and-vehicle-licensing-agency

FIGURES 2022

Statutory minimum wage

From 01-01-2022: €  9,82

From 01-07-2022: € 10,45

From 01-10-2022: € 12,00

DISCLAIMER

The information on this page is for general information only and is not all-inclusive. No rights may be derived from this information. Although EORServices.co.uk has taken great care in compiling and maintaining this fact sheet and has relied on sources believed to be reliable, EORServices cannot guarantee the accuracy, completeness or timeliness of the information provided. EORServices accepts no liability for the accuracy, completeness and timeliness of the information provided.