UK compensation laws differ from those in the US, and it’s important to understand these differences to stay compliant while hiring abroad. From the National Minimum Wage (NMW) to the cap on the workweek, there are many components that factor into compliant compensation and benefits.
What UK Compensation Laws Exist?
One critical UK compensation law is the NMW. The minimum wage depends on your employee’s age, so you can utilize different calculators to ensure you pay every employee a fair and legal wage. The country also has a legally mandated 48-hour workweek. Employees can opt out of this mandate if they’d like to work more hours, but you need to know their preferences ahead of time when crafting daily schedules.
In the case of a termination, the UK doesn’t have statutory requirements for severance pay except for redundancies. Any employee who’s worked continuously for two years or more has the legal right to the statutory redundancy payment (SRP).
What Benefits Are Guaranteed in the UK?
UK compensation laws are structured to benefit employees. Therefore you need to stay aware of every benefit and entitlement. For example, employees who work more than six hours a day are automatically entitled to a 20-minute break away from work. You can often work out these bonus schemes in an employment contract, which should go to an employee within two months of their start date.
The employer’s portion of the National Insurance Contribution (NIC) provides the primary statutory benefit of UK health insurance. However, many companies choose to offer supplementary benefits such as medical, vision, dental, and life insurance that are not guaranteed in UK employment law.
UK Benefit Management
If you choose UK benefit outsourcing, you don’t need to worry about benefits management. But if you decide to handle the entire compensation and benefit process yourself, you need to know how to disperse benefits in the UK.
Before your employee starts, you are legally required to draft an employment contract. In that contract, you can specify when you will pay the employee, how they will get paid, what benefits they are entitled to, and how those will get dispersed.
What Restrictions Exist for Benefits and Compensation in the UK?
Any employment contract in the UK needs to include compensation in British pounds rather than US dollars. You need to ensure you pay your employees in the country’s currency instead of foreign money.
Employees’ benefits are not typically covered when they’re in the US. If your employees will travel between the UK and the United States, or to another country outside of Europe, you need to cover the employee under a travel insurance policy.
If you’re overwhelmed by UK compensation laws, consider UK benefit outsourcing. A global PEO such as Globalization Partners can take the stress out of determining the correct compensation and benefits by hiring employees on your behalf. Contact us today to learn more.