Employees and Job Contracts in the UK

Information on job contracts and employee benefits in the UK, and how these affect both employers and employees. Also information on requirements for companies regarding UK immigration rules...

This page contains guidance on the following:

Employee Contracts

UK law grants employees a range of protections that create obligations and potential risks for employers. Although these are generally less stringent than in other European countries, you will nonetheless need to be aware of them.

The obligations an employer owes its UK employees include but are not limited to:

  • a general duty to provide a safe place of work, to take out employer’s liability insurance, consult with employees or their representatives over health and safety issues and provide staff with certain health and safety information
  • a requirement to provide a written statement of terms and conditions of employment to employees within two months of commencement of employment. (A contract of employment can satisfy this obligation)
  • an obligation not to discriminate against employees, including job applicants
  • an obligation to pay employees at least the national minimum wage, which is a fixed hourly rate and is increased annually
  • various benefits in connection with giving birth, adoption and other family situations. (These include maternity absence for up to 12 months, part of which is paid, and a right to time off to deal with domestic emergencies)
  • a maximum working week of 48 hours
  • a minimum amount of 5.6 weeks' paid holiday each year
  • a requirement to observe limitations on the freedom of an employer to process personal data obtained about its employees and job applicants, including transferring it to third parties
  • various rights for employees to protect them in the event of termination of employment
  • an obligation to make a pension arrangement available to its staff if it employs five or more people. At present, there is no obligation to contribute to this arrangement

Employee Benefits

The contract of employment will include terms relating to:

  • salary
  • potential bonuses
  • benefits provided by the employer to employees

Providing benefits (rather than paying a higher salary) can have tax advantages for both the employer and the employee. The employer is responsible for reporting any taxable benefits provided to an employee in an annual return (form P11D).

As previously mentioned, every employer of five or more people must offer a pension arrangement. However, the employer is not obliged to contribute to that arrangement. This will change from 2012 when UK employers must automatically enrol all workers into a pension scheme and ensure minimum contributions are paid equal to 8% of total earnings.


In 2008 the UK government introduced a new immigration system known as the ‘Points Based System’ (‘PBS’). New applications will be processed under the PBS and for workers already in the UK with work permits issued under the old regime, there are transitional arrangements in place for renewal of these. The PBS is a five-tier system that has replaced more than 80 existing immigration categories.

Illegal employment

Under UK immigration legislation, it is illegal to employ an individual who does not have the appropriate permission to work in the UK. If a company employs an individual illegally they may be liable to a civil penalty of up to £10,000 per illegal worker. A company can establish a statutory excuse if they undertake the appropriate documentary checks for each worker before they commence employment. For any worker with limited permission to work in the UK, these checks should be undertaken every 12 months. If however, a company knowingly employs an individual without the right to work in the UK, they will be subject to a criminal penalty of an unlimited fine and/or imprisonment (of the Authorising Officer in the company) of up to 2 years.

Information supplied by PriceWaterhouseCoopers PWC, 1 Embankment Place, London, WC2N 6RH Contact: Mike Curran | Tel: 0207 213 8190 | e-mail or Dipan Shah | Tel: 0207 804 0685 | e-mail