Know UK employment regulations
Our step by step guide takes you through your responsibilities as a UK employer and points to more information on regulations.
1. Understand contract types and employment responsibilities
If you’re employing staff in the UK, you will have tax and employment responsibilities under UK law. These depend on the type of contracts you give your staff, and their employment status.
2. Check National Insurance contributions and wage regulations
The UK's National Insurance system funds certain benefits and the state pension.
As an employer you’ll have to pay Employers' National Insurance Contributions, calculated as a percentage of the salary paid to your employees. In addition, your employees will pay a percentage of their wages, if they’re earning over a certain amount per week.
National Minimum Wage
The UK operates a National Minimum Wage to encourage people to work and prevent businesses from using low wages to compete unfairly. Employers must pay the National Minimum Wage no matter how small a company is.
National Living Wage
There's also a non-compulsory National Living Wage, which is higher than National Minimum Wage.
3. Understand pension and leave payments
You should be aware of your pension responsibilities as a UK employer. You can read more about this on the UK Pensions Regulator website.
In addition, you’ll need to be able to fund sick leave, maternity leave and paternity leave. Find out more in these employer guides on GOV.UK:
4. Register as an employer and set up payroll and PAYE
PAYE (“pay as you earn”) is the UK's system to collect Income Tax and National Insurance from employment. As an employer, you normally have to include PAYE as part of your payroll. PAYE is operated by the UK's tax, payments and customs authority, HM Revenue and Customs (HMRC).
You will need to register as an employer with HMRC when you start employing staff or using subcontractors for construction work.
You must register even if you’re only employing yourself, for example as the only director of a limited company.
You must register before the first payday. You cannot register more than 2 months before you start paying people.
5. Make your workplace safe and accessible
As an employer, you'll have a responsibility under UK law to:
- prevent discrimination
- make your workplace accessible for employees with disabilities or health conditions
- keep employee information and data safe
- maintain fire safety
- follow UK health and safety regulations
- make checks when you recruit and employ someone
6. Get Employer's Liability insurance
You must get Employers’ Liability (EL) insurance as soon as you become an employer. Your policy must cover you for at least £5 million and come from an authorised insurer.
EL insurance will help you pay compensation if an employee is injured or becomes ill because of the work they do for you. You can be fined £2,500 every day you are not properly insured.
You may not need EL insurance if you only employ a family member or someone who is based abroad.
7. Consider specialist advice and support
You may want expert advice on employment law or human resources, to make sure you’re prepared to set up in the UK.