United Kingdom Payroll and Benefits Benchmark guide

The national hourly minimum wage is:

• Under 18: £4.35
• Age 18-20: £6.15
• Age 21-24: £7.70
• Age 25 and Over: £8.21

Employers must give a minimum of 28 days paid leave a year. The Public holidays can be incorporated as part of the 28-leave entitlement; however, it is common practice for employers to give above 28 days. 

Workers currently employed can receive £94.25 per week Statutory Sick Pay (SSP) for up to 28 weeks if they are too ill to work. For an employee to qualify they must be sick for four or more days in a row. Employees must receive the statutory minimum but may be entitled to more depending on the company’s sick pay scheme.

Employees must give their employer a doctor’s note if they have taken sick leave for more than 7 days in a row. This includes non-working days, such as weekends and bank holidays.

Statutory maternity leave is 52 weeks and is comprised of:

• Ordinary Maternity Leave - first 26 weeks
• Additional Maternity Leave - last 26 weeks

Mothers are required to take off at least 2 weeks’ leave after the baby is born (or 4 weeks for factory workers) out of the entitled 52 weeks.

Unless the child is born early, the earliest that leave can be taken is 11 weeks before the expected week of childbirth.

Statutory Maternity Pay (SMP) is paid by the employer for up to 39 weeks with the employee receiving:

• 90% of their average weekly earnings (before tax) for the first 6 weeks
• £148.68 or 90% of their average weekly earnings (whichever is lower) for the next 33 weeks

Employees can choose to take either 1 week or 2 consecutive weeks’ leave. The allotted time off is the same regardless of the number of children (for example twins). Leave can’t start before the birth.

The statutory weekly rate of Paternity Pay is £148.68, or 90% of the average weekly earnings (whichever is lower).

Any money paid is done so in the same way as wages are paid, for example monthly or weekly. Tax and National Insurance will be deducted.

Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) is given to eligible employees who are having a baby or adopting.

• Leave must be used in the first year the child is born
• Up to 50 weeks of leave is shareable with up to 37 weeks of pay between the couple.
• Leave can be taken in blocks, all at once, together as a couple, or separate

A normal working week is 48 hours.

Employers can ask for workers consent, in writing, to opt out of the 48 hours weekly limit.

For an employee to work overtime it must be stated and agreed upon in the employment contract. Employers do not have to pay any overtime unless it is outlined in the contract.

20% standard rate.

Mandatory contributions are as follows:

• Employee – 5%
• Employer – 3%

National insurance is deducted from employers and employees and the amount of paid contributions depends on the employee’s category letter.

There are multiple categories, but most employees fall under category A.   

As of April 2020, there are two NI thresholds - primary and secondary.

Employees earning below £719 a month are exempt from the Employee NI contribution.

Employers will pay NI from the secondary threshold of £719 a month; i.e. the first £719 a month of the salary remains exempt from the Employer NI contribution.

Employee National Insurance Rates

Apprenticeship Levy: This will affect employers in all sectors. The levy will only be paid on annual payslips in excess of £3 million. The levy will be charged at a rate of 0.5% of an employer’s payslips. Each employer will receive an allowance of £15,000 to offset against their levy payment. 

Salary should be paid monthly between the 25^th - 30^th of the month.

Dismissal can be deemed fair or unfair depending on reasoning and conduct.

Notice must be given based on what is stated in the employment contract or the statutory minimum, whichever is longer.

The statutory redundancy notice periods are:

• at least one week’s notice if employed between one month and 2 years
• one week’s notice for each year if employed between 2 and 12 years

Dismissal without notice can be utilized in cases of gross misconduct.

Employees on Fixed term contracts which are ended ahead of the expiry date need to be given the statutory notice period.

Employers can pay in Lieu of notice.

Severance is only required in cases of Redundancy. Payment is statutory if an employee has been under contract for at least 2 years:

• Half a week’s pay for each full year for employees under the age of 22
• One week’s pay for each full year for employees between the ages of 22 to 41 years of age
• One and half weeks’ pay for each full year for employees over the age of 41
• Length of service is capped at 20 years
• Weekly pay is capped at £525