UK employee benefits to offer your remote workers

For US companies, hiring remote workers in the UK can be an attractive idea, given the shared language and overlapping culture.

But here’s a heads-up: you’ll have to familiarize yourself with a different set of employment benefits if you want to hire workers there.

Companies in the UK must offer an elaborate set of employee benefits to remain compliant with UK labor laws, and foreign employers of remote UK workers will have to offer the mandatory subsection of those benefits as well. 

Businesses should also consider offering a more competitive benefits package that goes beyond the basic requirements. This will give them an edge in attracting top talent.

In this article, we will examine a variety of statutory, standard, and premium UK employment benefits. We’ll also show you how you can offer some of these work benefits without having to establish a legal entity in the country.

Who is entitled to benefits in the UK?

Employees and workers (two distinct terms in the UK) are entitled to statutory benefits. 

Employees meet the traditional definition of full-time workers and sign employment contracts with their employers. 

Workers operate in a gray area between contractors and employees. Some companies that have attempted to classify workers as contractors have run into trouble under UK laws.

For more information on employees and workers, view Remote’s introduction to UK labor laws. In addition, Remote’s guide on hiring remote workers in the UK covers a variety of topics on UK employment, payroll, benefits, and labor laws.

Remote helps businesses avoid classification troubles with an employer of record (EOR) solution that guarantees full compliance with all UK labor laws. More on that later.

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What are the statutory UK employee benefits? 

Employees in the UK are the beneficiaries of an impressive array of statutory benefits. Here’s a comprehensive list of UK work benefits:

Minimum wage and overtime pay

In terms of minimum wage laws, the UK uses two different but related concepts: National Minimum Wage (NMW) and National Living Wage (NLW).

The NMW is a tiered system that applies to people who are finished school and entering the workforce. As of April 2023, this minimum wage ranges from £5.28 hourly for those under 18 to £10.18 for employees ages 21 to 22.

The NLW, which is currently set at £10.42 hourly, kicks in when the employee turns 23. These figures are adjusted each April.

Note that the UK government does not mandate overtime pay for workers. Companies often choose to include overtime pay in employment contracts if the job regularly requires overtime work.

Paid time off

The UK has a generous paid time off (PTO) policy known as “statutory annual leave entitlement.”

Workers in the UK are entitled to a minimum of 20 paid days off plus eight paid public holidays for a total of 28 days, or 5.6 weeks, of vacation time. Northern Ireland has two extra public holidays for a total of 10 paid holidays.

Employers are required to pay employees for holiday leave but are not required to pay overtime for employees who choose to work on holidays. To attract top talent, many employers choose to offer more than the minimum 28 days.

Employees in the UK may only roll over a maximum of eight PTO days per year in most circumstances. Employees forced to take another kind of leave (such as long-term sick leave) may roll over up to 20 days.

Employers are required to pay out unused PTO if an employee leaves during the middle of the year, up to the amount the employee has accrued during the current year.

International businesses with UK workers can offer unlimited PTO, but they must ensure their employees take enough time off. Employers who do not track PTO for workers in their home country must track PTO for workers in the UK to remain compliant with UK law.

Statutory sick pay

UK employees may miss up to one week of work without needing to provide a doctor’s note, also called a “fit note.” After one week, however, the sick employee must provide the employer with a document from a doctor verifying the illness.

Statutory sick pay, also known as long-term sick pay, provides workers with £109.40 per week (as of April 2023) and is paid by the employer. If the employee remains ill, the employer must pay statutory sick pay for a duration of up to 28 weeks. Employment contracts can extend this time period but cannot shorten it.

Although a worker on long-term sick leave cannot be forced to work, workers continue to accrue PTO during their absence as if they were at work. If an employee chooses to quit after several weeks of sick leave, the employer must pay out unused PTO accrued up to the day of departure, not up to the day the illness began.

United Kingdom —

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How to pay remote workers in the UK

Paying remote workers in the UK is functionally straightforward, but the process does involve a few legal hurdles. To ensure your employees, workers, and contractors receive their pay without interruption, start here.

Maternity leave

Maternity leave in the UK is split into two parts: ordinary maternity leave and additional maternity leave. Ordinary maternity leave lasts for the first 26 weeks, while additional maternity leave adds another 26 possible weeks, for a total of 52 weeks of leave. Expecting mothers may begin to take their leave 11 weeks prior to the due date. Mothers are required by UK law to take at least two weeks of leave after the birth of the child.

Employers are required to pay 90% of the mother’s average wages for the first six weeks of maternity leave. For the next 33 weeks, employers must pay the lesser of 90% of average earnings or £172.48 per week. Employers do not have to pay for the final 13 weeks of maternity leave, but mothers are still entitled to that leave if they do not need to return to work.

A mother wishing to change the return-to-work date must provide at least eight weeks’ notice to the employer.

Mothers do not need to work for any minimum period of time to be eligible to take the full amount of maternity leave allowed by law.

Paternity leave

Paternity leave in the UK is much shorter than maternity leave at just two weeks. Paternity leave may not begin before the birth of the child, but employees may use paternity leave any time during the child’s first year of birth, provided the leave is taken consecutively.

Partners of pregnant employees are eligible for paternity leave regardless of gender. To qualify for paternity leave, the employee must be one or more of:

• The father of the child

• The legal partner of the person giving birth

• The person adopting the child

• The child’s intended parent, if planning to care for the child after surrogacy

While mothers taking maternity leave are not required to work for a minimum length of time before becoming eligible, paternity leave requirements enforce a minimum of at least 26 consecutive weeks of employment before eligibility begins.

Shared parental leave

Shared parental leave does not stack on top of maternity and paternity leave, but many families choose to share leave after the birth of a child. Shared parental leave can extend up to 50 weeks with up to 37 weeks paid. Parents do not have to take shared parental leave at the same time or even consecutively, but they must use the time within the first year after the birth.

Adoption pay and leave

Statutory adoption leave mirrors maternity leave. Employees adopting a child or having one through a surrogate arrangement may be eligible for a total leave of 52 weeks. The first half of that period is called “ordinary” adoption leave, and the second half is called “additional” adoption leave.

Statutory adoption pay equals 90% of the person’s gross average weekly earnings for the first six weeks and a fixed sum or 90% (whichever is lower) for the next 33 weeks.

Statutory parental bereavement pay and leave

The parental bereavement benefit may be extended to employees if they or their partner had a child under 18 who has died or had a stillbirth after 24 weeks of pregnancy. Employees can choose between one and two weeks of leave, taken separately or as one block of time.

Statutory redundancy pay

Employees with at least two years of service who are made redundant (by, for instance, being laid off as part of downsizing) are usually entitled to redundancy pay based on their age, weekly pay, and length of service. 

These employees receive half a week’s pay for each full year they were under 22 years old; one week’s pay for each full year they were 22 or older but under 41; and one-and-a-half week’s pay for each full year they were 41 or older — with length of service calculations limited to 20 years.

Pension plans, or pension schemes

Employers of UK workers are required by law to contribute a minimum of 3% of every worker’s salary toward a pension plan. Employees must contribute a minimum of 5% of their salary toward the plan. Employment contracts can increase these contributions but not decrease them.

Plans vary, but most fall into two categories: defined contribution schemes and defined benefit schemes. In defined contribution schemes, the amount of future payments increases based on how much the employee puts in. These operate similarly to 401(k) plans in the US. 

In defined benefit schemes, employees still contribute a set amount, but the amount paid does not depend on the amount contributed. Instead, the payments upon retirement are based on other factors, like how long the employee worked for the company and their highest level of seniority achieved.

In most cases, employers automatically enroll employees in pension contributions, provided the employees are between the ages of 22 and 66 and earn at least £10,000 per year. Employers can postpone pension enrollment for up to three months, but to do so, they must notify the worker of the postponement in writing and have a legally valid reason to postpone.

Standard UK employee benefits 

In addition to the statutory work benefits in the UK outlined above, UK employees can generally expect a set of standard benefits as part of their work arrangement. These include the following:

Flexible working hours

Options generally include flexitime (where employees have set core hours but can vary their start and finish times), staggered hours (having different start, finish, and break times), or remote work, which allows employees to work from home or other locations. 

Life assurance

The UK’s life assurance or “death-in-service” benefit is a policy that many employers provide as part of their benefits package. It’s a type of insurance that pays out a tax-free lump sum to the employee’s chosen beneficiary or beneficiaries (often a spouse, partner, or children) if the employee dies while employed with the company. 

The payout is usually a multiple of the employee’s annual salary — typically between two and four times the amount.

Health insurance

The National Health Service (NHS) in the UK provides a wide range of free healthcare services for residents. This includes general practitioner (GP) appointments, hospital treatments, emergency care, maternity services, and certain types of long-term condition management. 

However, NHS services are overextended, which leads to extensive wait times, among other problems. Therefore, increasingly more workers are adding private healthcare. 

Some UK companies attract top talent by offering premium private health insurance as part of the total compensation package. Private medical insurance may provide access to clinics with shorter wait times or cover more elective procedures. Employers often give employees a cash stipend to use to find their own private plans.

Additional insurance

Because the NHS and private health plans do not cover a few specific types of care, some employers offer additional insurance as part of employees’ compensation. These insurance offerings can include dental insurance, vision insurance, fertility support, specialized disability support, and others outside the coverage zone of standard health care.

Extended leave

Extended leave typically refers to long-term absences from work due to reasons like illness, caring responsibilities, or sabbaticals. 

Certain forms of extended leave, like long-term sick leave or maternity leave, are covered by statutory provisions, as described above.

However, other types, such as emergency family leave or sabbaticals (career breaks), aren’t legally mandated and are entirely at the discretion of the employer. 

Training and development opportunities

These benefits are helpful for an employee’s professional growth and skill enhancement. Many employers provide on-the-job training or resources for further education, including tuition reimbursement for courses, workshops, or conferences. 

Employee assistance programs

These programs are designed to help employees deal with personal problems that could adversely impact their work performance, health, and well-being. This can include counseling and support for issues like stress, mental health struggles, financial concerns, and family problems. 

Employee assistance programs are confidential. They’re meant to provide proactive support to help employees navigate challenging situations, which in turn contributes to a healthier and more productive workforce.

Premium UK employee benefits

UK companies may offer some or all of their employees a variety of premium benefits as well, such as the following:

Income protection insurance

This benefit, also known as permanent health insurance, is a policy that pays out if you’re unable to work due to injury or illness. It provides a tax-free monthly income and continues until you return to work or retire at the end of the policy term, or at the time of your death.

Income protection insurance isn’t widely offered, but some employers, especially larger corporations, may provide it as a premium benefit. It’s more common for individuals to take out income protection policies independently as part of their personal financial planning.

Company car or car allowance

These benefits are usually reserved for employees who travel extensively for their jobs. They can include a car provided by the company or a monthly stipend for car-related expenses.

Bonuses and stock options

These are additional financial incentives generally offered by some companies to higher-level employees and can include cash bonuses or shares in the company.

Private pension schemes

Some companies offer additional private pension schemes that allow employees to save more for retirement, often with more favorable conditions than those offered by the statutory pension plan benefits.

Gym membership or wellness program

Some employers offer benefits aimed at promoting health and wellness, such as subsidized gym memberships or company-sponsored wellness programs.

On-site childcare

Some companies, most commonly larger corporations, offer on-site childcare facilities as a benefit to their employees, making it easier for their workers to balance work and family commitments.

Offer your UK employees better benefits with Remote 

The long list of UK employee benefits can feel intimidating. If you’re considering hiring remote workers in the Isles, you may wonder if your HR department is equipped to handle this much detail.

The good news is that third-party companies such as Remote, an EOR with employment offices in over 170 countries, can take care of these details for you. 

Remote is the expert on all things related to global HR. We can help you provide your team in the UK with a superior benefits package to ensure your company can attract and retain top talent in your field. 

Contact us today at sales@remote.com to learn more about our UK EOR and contractor management solutions.

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