PEO United Kingdom

World Bank Ease of Doing Business Ranking

• DB Rank – 8
• DB Score – 83.5

Rankings on Doing Business topics – United Kingdom

Topic Scores

Global PEO in United Kingdom

The United Kingdom stands as a prominent destination for professional employer organization (PEO) services, offering a dynamic and sophisticated business environment. With its rich history, global financial hub status, and diverse talent pool, the UK presents an attractive proposition for companies seeking to expand their operations. As a PEO country, the UK boasts a well-developed infrastructure, a stable legal framework, and a comprehensive social security system, all of which facilitate seamless employment and administrative processes. The UK’s PEO services enable businesses to navigate complex employment regulations, manage payroll and benefits, and efficiently handle HR tasks, allowing them to focus on their core competencies while confidently expanding their footprint within this influential market.

What Is a PEO?

A PEO, or Professional Employer Organization, is a company that provides a range of HR and payroll services to small and medium-sized businesses. These services can include employee benefits, payroll, compliance with labor laws, and recruiting and training.

PEOs work by entering into a co-employment agreement with the businesses they serve. In this arrangement, the PEO becomes the employer of record for the business’s employees, taking on responsibilities such as payroll, tax withholding, and employee benefits. The business, however, retains control over its day-to-day operations and the supervision of its employees.

PEOs can help businesses streamline their HR and payroll processes, reduce costs, and free up time and resources to focus on their core business activities. They can also provide access to a range of benefits and resources that small businesses may not be able to afford or manage on their own.

PEOs are also understood as employer of record / EOR at times.

United Kingdom – Country Overview

The United Kingdom consists of Scotland, England, Wales, and Northern Ireland, with the larger entity known as Great Britain and Northern Ireland. It is the fifth-largest economy in the world and the second-largest in Europe in terms of GDP. The UK ranks high in the World Bank’s Ease of Doing Business Rankings.

Capital City

London

Currency

Pound Sterling (£)

Principal Language

English

Government

Constitutional Monarchy

Employment Contracts in the United Kingdom

Under the Employment Rights Act 1996, employers must provide employees with a written employment contract in the United Kingdom. Employers and employees can agree to the terms of an employment contract, but British law imposes several obligations, and rights that may overrule the agreement terms.

Some of the details typically mentioned in the written employment contract in the United Kingdom include:

• Probationary period
• Other benefits such as lunch and childcare vouchers
• Mandatory training, regardless of whether the employer pays for it
• and more

The different types of employment relationships are:

• Permanent Employment: A permanent employee works at least 35 hours per week full-time. Employees on a fixed-term contract are not considered permanent. 
• Fixed-Term Contracts: Fixed-term contracts intend to make employment under specific contracts temporary rather than permanent.
• Temporary Employment: Temporary employment agencies can help employers in the UK find temporary workers.

Probationary Period

In the United Kingdom, a probationary period is typically 30 days for job tenures of 6 months or more.

Working Hours in the United Kingdom

According to labor law, the standard workweek is 48 hours, averaging over 17 weeks. The UK maintained its opt-out on working time, but employees can opt back in. In the UK, employees can work 8 hours per night shift and are entitled to free health and safety checks.

Employee Leave in the United Kingdom

Employees are entitled to the following leaves:

• Annual leave in the United Kingdom: Per the Working Time Regulations, full-time employees receive 5.6 weeks (28 days) of annual paid vacation, including public holidays.
• Paternity leave in the United Kingdom: Eligible employees can take two consecutive weeks’ paid paternity leave within eight weeks of a child’s birth or adoption.
• Maternity leave in the United Kingdom: In the United Kingdom, statutory maternity leave is 52 weeks long and includes:

• Ordinary maternity leave: first 26 weeks
• Additional maternity leave: remaining 26 weeks.
• 39 weeks of this is payable: the first six weeks at 90% of average pay and the remaining 33 weeks at statutory. The amount changes each tax year.
• Sick leave in the United Kingdom: Employees in the United Kingdom have the right to work off due to illness, including non-working days such as weekends and bank holidays. There is no legal limit to the number of sick days an employee can take in the UK. Employees receive up to 28 weeks of statutory sick pay on the provision of a fit note (sickness certificate).

Public Holidays

There are eight statutory national holidays in the United Kingdom; however, they differ per jurisdiction. For example, England and Wales have eight listed public holidays, Scotland has 9, and Northern Ireland has 10.

Following are national holidays in the United Kingdom that are not legally required to be observed by employers:

Other Paid Leave

• Employees are entitled to a minimum of 5 and a half weeks of paid vacation leave.
• Statutory Sick Pay (SSP) entitles employees to £99.35 per week. The amount of days for sick leave is technically unlimited, although a doctor’s note is needed for illnesses lasting up to 7 days or longer.
• Women are entitled to up to 52 weeks for maternity leave with 39 weeks of the leave being paid.
• Men are entitled to up to two weeks of paternity leave.

Taxation

Tax and employer contributions

The United Kingdom income tax rates for employers is slightly confusing as the tax is based on the remaining income after the Personal Allowance has been deducted. It also varies by actual country, for example, the basic rate for Scotland is 20% from £2,163 to £13,188 whereas the basic rate in England, Northern Ireland, and Wales is 20% for up to £37,700.

However, the United Kingdom’s corporate tax rate is still set at 19% as of 2019 and employer contributions must be made to the National Insurance (NI) at 13.8% on employee earnings of £732 and above each month.