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Employment laws in the UK every business should know

Employment law exists to protect employees’ health, safety and rights – and it can also safeguard your business. Having rights and responsibilities clearly set out removes ambiguity as staff and employers know where they stand. As well as defining employees’ legal rights, employment law also sets boundaries, which can prevent or help to resolve disputes.

According to the impartial employment advice organisation Acas, every business has a responsibility to ensure it follows relevant rules and regulations. If you’re an employer that means you must understand and follow the rights and responsibilities of employees at work. Acas has a helpful rights and responsibilities online helpline that employers can use.

Why employment legislation matters

Failure by employers to uphold employment legislation can have severe consequences, both for businesses and staff. These can range from damaged staff morale and relationships with their employers, to significant reputational damage, lost sales and costly legal action. Legal issues and staff disputes can take up much time, lead to eye-watering fines and even imprisonment in worst-case transgressions.

Small businesses cannot reasonably be expected to know the finest details of every aspect of employment law. UK employment law changes regularly and even UK employment law specialists must strive to keep their knowledge current.

For this reason, it’s best to find a solicitor who can give employment law advice relevant to your business, rather than using a general high street solicitor. However, to mitigate risk to your business, it pays to know some employment law basics even if you intend to hire a lawyer.

The basics of employment legislation

You must register as an employer with HMRC when you start employing staff. This should be before your business’s first payday and it takes up to five days to get your employer PAYE reference number. You can’t register more than two months before your business starts paying staff. has a helpful step-by-step guide to getting your business ready to employ staff.

You must give people a written statement of employment if you’re employing them for more than one month. You must do this within two months of their start date. Visit to find out more about employment contracts, but take care when seeking to change employment terms in existing contracts, as this might only be possible with the employee’s agreement.

You must also provide a secure, safe and healthy working environment, one that grants sufficient privacy. Employees have a right to adequate toilet and washing facilities, as well as safe, accessible drinking water. You’re not legally obliged to allow smoking breaks unless agreed as part of an employment contract.

You must not treat a part-time or fixed-term worker less favourably than a full-time or permanent employee. Employees have many legal rights when it comes to disciplinary action, being dismissed or made redundant. They must not be subject to illegal discrimination in the workplace. Employees can raise a grievance, whether informally or formally. And, crucially, you must take out employers’ liability insurance.

The Health and Safety Executive has a range of useful information on your health and safety responsibilities as an employer.

Working hours and holiday entitlement

Your employees don’t have to work more than an average of 48 hours a week over a 17-week period, unless they opt out of the Working Time Regulations. They will need to confirm they are opting out in writing. It is perfectly legal to ask employees to opt out, but you can’t sack someone or treat them unfairly for not opting out.

Employees have a legal right to at least one full day off in every seven, as well as a daily rest period of 20 minutes if their working day is more than six hours. There is no legal obligation to pay for that rest period. Employees are entitled to a daily rest period of 11 consecutive hours in every 24. There are separate rules for workers aged below 18 and employing children.

Full-time employees are entitled to at least 28 days paid annual leave a year, though this can include bank holidays. Part-timers have a pro-rata entitlement to the same and there’s a handy holiday entitlement calculator for working out holiday entitlement for part-time workers. Bank holidays or public holidays do not have to be given as paid leave and some employers include bank holidays within their employees’ statutory annual leave entitlement.

The government has for more information about working hours and holiday entitlement.

Employment law and the minimum wage

There are two main legal requirements when it comes to paying staff a wage: the National Minimum Wage and the National Living Wage.

The minimum wage hourly rate employees receive is determined by their age and whether they’re an apprentice. To get the National Minimum Wage someone must at least be of school-leaving age. The National Minimum Wage for those aged 21-24 is £7.70; it’s £6.15 for 18-to-20-year-olds and £4.35 for under-18s.

The National Minimum Wage rate is £3.90 for apprentices who must either be aged below 19 or be in the first year of their apprenticeship. Apprentices must be paid the appropriate higher rate if they’re older than 19, or they’ve completed the first year of their apprenticeship.

To get the National Living Wage of £8.21 per hour an employee must be aged 25 or older.

Employees can contact Acas if they believe they’re not being paid the correct minimum wage rate. The government has previously publicly named and shamed businesses that have failed to pay the required minimum wage rates. HMRC can issue a penalty for not paying the correct rate of pay, and take employers to court for not paying the National Minimum Wage or National Living Wage. There is a £20,000 maximum fine for non-payment per employee.

Employees on fixed-term contracts have the right to the same pay as permanent staff in comparable roles. Part-time workers have pro-rata pay and holiday rights. Employers must not take illegal deductions from an employee’s wages. Find out more via the government’s PAYE advice pages.

The government has a useful minimum wage guide to help businesses understand the requirements that need to be legally met.

Employment law and sick pay

Within their working year, employees have the right to be paid at least Statutory Sick Pay on the fourth consecutive day of their absence. They have no right to any pay for the first three days of their absence.

The current rate of Statutory Sick Pay is £94.25 per week for up to 28 weeks. Employers can pay their staff more than this through their own occupational sick pay schemes.

Maternity rights

You cannot sack a female employee or make her redundant because she is pregnant. Pregnant staff members must also be given time off for antenatal appointments.

A female employee is entitled to take 52 weeks’ Statutory Maternity Leave, consisting of Ordinary Maternity Leave which covers the first 26 weeks, and Additional Maternity Leave for the remaining 26 weeks.

To qualify for Statutory Maternity Pay, which is payable for up to 39 weeks, a female employee must have worked for you for 26 weeks by the end of the fifteenth week before the week her baby is due. She must also earn at least the lower earnings limit of £118 per week. Employees who don’t qualify for Statutory Maternity Pay might qualify for Maternity Allowance.

Under Statutory Maternity Pay rules, an employee is entitled to 90% of her average weekly earnings for the first six weeks, followed by the standard weekly rate of £146.68 or 90% of her average weekly earnings if this is lower than £146.68.

Employers can recover 92% of their Standard Maternity Pay payments from HMRC rising to 103% if their total annual National Insurance payments are below £45,000. Female employees cannot return to work within two weeks of giving birth, rising to four weeks if they work in a factory.

Employment law: paternity and adoption rights

Eligible employees can take one or two weeks’ paid Paternity Leave which equates to £146.68 or 90% of average weekly earnings, whichever is lower at or around the period in which the baby is due or born.

Fathers, partners and parents-to-be can take unpaid time off work to attend up to two antenatal appointments.

When adopting a child, one of the adoptive parents is entitled to six months’ paid and six months’ unpaid leave. If their partner works, he or she can take paternity leave. Statutory Adoption Pay and Leave rights are similar to an employee’s maternity rights.

Employment law: Shared Parental Leave and Pay

Shared Parental Leave and Pay rules were created to give parents greater flexibility during the 12 months following the birth or adoption of their child. A new mother can share up to 50 weeks’ leave with her partner, after taking off the first two weeks following her baby’s birth, rising to four weeks if she works in a factory.

For those who qualify, leave can be taken in up to three different blocks and parents can choose how much time off each will take. Shared Parental Leave can be used alongside or instead of traditional maternity, adoption and paternity leave.

Employment law: flexible working and reasonable adjustments

Employers must consider requests for flexible working conditions from eligible employees with at least 26 weeks’ service. You must make reasonable adjustments to your premises or processes if this enables suitably qualified people with disabilities or health conditions to work for you. This includes trainees, apprentices and contract workers.

Find out more about flexible working on the website.

Employment law: staff pensions

According to the Pensions Act 2008, every UK business is required to put eligible staff into a workplace pension scheme and contribute to the scheme as well. The move is designed to help workers save for retirement and is often referred to as ‘automatic enrolment’. As an employer you must contribute at least 3% of earnings and your employee must contribute at least 5%.

The Pensions Regulator has a detailed guide for people setting up a business and how to put automatic enrolment in place.

Union membership, whistle blowing and staff monitoring

Employees can belong to a trade union and they’re legally entitled to blow the whistle on your business to the relevant authorities if your actions are illegal or dangerous. This is known as whistleblowing and is protected by law. Whistleblowing allows staff to report criminal activities such as fraud, or activities that put the health and safety of people in danger.

As a business, you’ll need to have a whistleblowing policy and process in place. Find out more about whistleblowing on the government’s website.

As an employer, you also have the right to monitor staff activity at work. This can be extensive, including reading email, monitoring website visits and using CCTV. However, you’ll need to inform staff of any data you capture and ensure it falls under General Data Protection Regulation (GDPR) laws, including allowing employees to access the information and records you have on them.


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Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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