The UK has a comprehensive social security system, funded from general taxation and from National Insurance Contributions. The social security system provides state benefits to cover maternity/paternity/adoption, childcare, disability and carer matters. It also administers retirement pensions. State benefits can be contractually supplemented by employers. The National Insurance Fund aims to provide subsistence level benefits to all those in need.
Employers are under an obligation to collect income tax at source from employment income, pensions and taxable state benefits under the Pay As You Earn (“PAYE“) system. Employed earners and their employers must also pay National Insurance Contributions (“NICs“). Various contributions are required to be made in respect of all UK employees. Class 1 contributions are payable in respect of earnings by both employer and employee.
Healthcare and Insurances
Employers carrying on business in Great Britain are required to have in place employer’s liability insurance against liability for bodily injury or disease sustained by employees and arising out of and in the course of their employment in Great Britain. Some employers may offer employees benefits such as life insurance, permanent health insurance, private medical insurance and company cars.
Holidays and Annual Leave
Employees and workers are entitled to 5.6 weeks’ paid annual leave (pro-rated for part-timers). This holiday entitlement can include public holidays, of which there are currently eight in England and Wales.
Statutory holiday entitlement under the Working Time Regulations cannot normally be carried over into the following year, nor can workers be paid in lieu of taking statutory holiday, except on termination of employment.
Maternity, Paternity and Adoption Leave
Pregnancy rights include health and safety protection and the right to reasonable paid time off for ante-natal care. Family rights to leave and pay have been subject to major reform in Great Britain with the introduction of shared parental leave and pay which applies to all qualifying working parents of children. Whilst the default 52 weeks’ maternity/adoption leave for employed mothers/adopters remains, those employees are entitled to give up their leave and pay and share it with the father/their partner (i.e. whoever shares the main caring responsibility for the child at the date of birth/adoption).
Employees with 26 weeks’ service also qualify for Statutory Maternity/Adoption Pay which is calculated as follows: (i) six weeks at 90% of salary; and (ii) 33 weeks currently at a flat rate of GBP 151.20, or 90% of salary if that is lower. Shared Parental Pay follows the same flat rate for up to 37 weeks.
Fathers/co-adopters continuously employed for 26 weeks are entitled to: two weeks’ Ordinary Paternity Leave; and two weeks’ Statutory Paternity Pay: currently at GBP 151.20, or 90% of salary if that is lower.
All employees continuously employed for 26 weeks have the right to request flexible working, i.e. to change the hours/times they work or their work location, irrespective of their caring responsibilities. Although compensation for non-compliance, or for a decision based on incorrect facts, is capped at eight weeks’ pay, victimisation, sex discrimination and unfair dismissal claims may also be brought following an employer’s refusal to grant the employee’s request.
Sickness and Disability Leave
Employers are required to pay Statutory Sick Pay (“SSP“) to employees who are off work due to illness, after the third day of absence (subject to certain qualifications). The current rate of SSP is GBP 95.85 per week from April 2020, for a maximum of 28 weeks. Employers often supplement SSP with contractual sick pay for a specified period.
The UK government introduced a number of temporary measures in response to the coronavirus pandemic. SSP is available from the first day of sickness absence to those advised to self-isolate for various reasons including because they are showing symptoms of COVID-19, or they are caring for others within the same household who have symptoms. The cost of providing SSP to any employee off work due to coronavirus is refunded by the government for up to 14 days for businesses with fewer than 250 employees.
Employers are required to pay SSP to employees who are off work due to injury, after the third day of absence (subject to certain qualifications). The current rate of SSP is GBP 95.85 per week from April 2020, for a maximum of 28 weeks. Employers often supplement SSP with contractual sick pay for a specified period.
Other Required or Typically Provided Leave(s)
Unpaid parental leave: eligible employees can take unpaid parental leave to look after their child’s welfare; up to 18 weeks’ leave for each child and adopted child, up to their 18th birthday. The limit on how much parental leave each parent can take in a year is 4 weeks for each child (unless the employer agrees otherwise).
Time off for dependants: all employees are entitled to reasonable unpaid time off work to deal with an emergency involving a dependant (e.g., if a dependant falls ill or is injured, if care arrangements break down, or to arrange or attend a dependant’s funeral).
Time off for public duties: all employees have to be allowed time off for jury duties/service. Employers do not have to pay employees for time spent on public duties or jury service, but some choose to do so.
Time off for losing a child or suffering stillbirth: a new law was introduced in April 2020 giving employed parents the right to 2 weeks’ leave if they lose a child under the age of 18 or suffer a stillbirth from 24 weeks of pregnancy. Parents are also able to claim Statutory Parental Bereavement Pay for this period, subject to meeting the eligibility criteria.
Pensions: Mandatory and Typically Provided
Employers have to ensure that workers in the UK, between the ages of 22 and state pension age, and earning a salary of at least GBP 10,000 per annum are automatically enrolled into a qualifying pension scheme to which the employer must contribute. There are minimum total contributions that have to be made. Currently for employers this is 3% of each employee’s qualifying earnings.
Other Required Or Typically Provided Benefits
Some employers choose to provide other benefits to employees such as season ticket loans to enable employees to buy an annual train ticket to commute to work or subsidised gym membership, but this is entirely at the employer’s discretion.