Leave Laws and Holidays in the United Kingdom: A Guide for US Companies

Looking to expand your US company to the United Kingdom? Read our guide to learn about leave laws and policies in the UK, in preparation for hiring there.

Caitlin MacDougall
Caitlin MacDougall
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The UK is a popular location for US companies to seek international talent. Obviously, one of the biggest draws is that there is no language barrier, with 58.1 million UK citizens whose primary language is English. Wholesale and retail workers currently comprise most of the UK's private sector. Administrative support comes in second, with professional and technical activities trailing closely behind.

A big difference between the employment landscape in the UK and in the US involves leave laws. Most employees in the UK are allowed more time off — for lunch, for teatime, and for vacations. They also tend to work fewer hours than workers in the US. In this article, we will go over some of those leave laws, as well as general employment law in the UK.

Photo of a train on the Glenfinnan Viaduct

Employment law in the UK ⚖️

Employment law in the UK is designed to protect workers in an employment relationship, but there's some contention about their efficacy. State pension age is rising in the UK and currently stands at 66 years old, but the UK government wants to increase the minimum age to 67 by 2028, which many argue will lower the life expectancy, especially in light of the pandemic.

Otherwise, there have been some favorable updates for UK workers in years past, including the Employment Rights Act of 1996, which updated employee termination rights and parental leave policies. The National Minimum Wage Act of 1998 established minimum wage; however the national living wage has increased while wages have lowered. Currently, the minimum wage in the UK stands at £9.50 an hour for workers who are 23 years and older.

Requirements for an employment contracts

While many employees in the UK never receive an employment contract, employees are legally entitled to ask for a written contract from their employers. The written contract should include terms such as the job's description, when the employee relationship started and for which employer, employee working hours, statutory paid holiday entitlement or annual leave entitlement, pension, salary or wages, notice periods and procedures for termination, as well as disciplinary and appeal terms.

Independent contractor classifications

There are many different worker classifications in the UK, and it's important to know the differences between them.  The United Kingdom has many laws in place to protect UK employees, and while independent contractors have fewer protections, they do have more flexibility regarding when and how they work. Independent contractors also have health and safety protections, and may be entitled to protections against discrimination, depending on where they work.

Here are a few specifications for determining whether a worker is an independent contractor, or self-employed.

If a worker is self-employed, they:

  • are the owner of their own business and are taking a financial risk for the success or failure of that business
  • set the parameters for when and how they work, and provide their own tools and equipment to complete a task
  • can outsource work for a task
  • set a fixed price for a task or project, irrespective of how long it takes to complete that project
  • are allowed to work for more than one employer

A worker who is exempt from PAYE, or Pay As You Earn, is considered self employed. An employer should  check to see if their employee is self-employed in tax law and employment law. If an employer misclassifies a worker as self-employed when they are an employee in the eyes of the law, the oversight can result in hefty penalties, back payments to the employee, and back taxes to the UK government.

Photo of holiday lights on Regent Street, London

Statutory annual leave 🏖

Paid annual leave in the UK, known as statutory annual leave, is for workers who work at least five days a week. This annual leave entitlement include 28 days’ paid leave per year, or 5.6 weeks, depending on employment contracts. Agency workers, workers with zero-hours contracts, or workers with irregular hours are entitled this pay. Zero-hours contracts, if you are not familiar, is a written agreement wherein the employer doesn't guarantee any number of hours per week. With a zero-hours contract, the worker is not obligated to work when the employer does offer hours of work. These workers are also entitled to annual leave and minimum wage.

One catch for any employees, no matter the contract, is that 28 days is the limit for statutory annual leave. If an employee works for six days a week, for instance, they are still only entitled to 28 days of holiday leave. Employees who work irregular hours, like shift workers, are entitled to paid leave for every hour they work.

Use it or lose it

The use-it-or-lose-it policy allows UK workers to carry over a maximum of five days of their vacation entitlement into the next year. Many employers may have a different policy and are not required to provide rollover annual leave to their employees. It's important to communicate what the rollover policy is when hiring employees.

Bank holidays and statutory holiday entitlement in the UK

Bank holidays are public holidays in which banks are closed, but depending on which part of the UK territory you are in, you may not share the same bank holiday as another part of the UK. For instance, Easter is not a bank holiday in Scotland, but it is in England and Wales.

Employers are not required to provide holiday pay for bank holidays or public holidays, but they may include these holidays as part of the employee's statutory annual leave. Interestingly, the UK has the smallest number of public holidays in the world, next to Mexico.

Here are the official bank holidays in the UK.

England and Wales

  • New Year’s Day
  • Good Friday
  • Easter Monday
  • Early May bank holiday
  • Spring bank holiday
  • Summer bank holiday
  • Christmas Day
  • Boxing Day

Northern Ireland

  • New Year’s Day
  • St. Patrick's Day
  • Good Friday
  • Easter Monday
  • Early May bank holiday
  • Spring bank holiday
  • Battle of the Boyne / Orangeman's Day
  • Summer bank holiday
  • Christmas Day
  • Boxing Day

Scotland

  • New Year’s Day
  • 2nd January
  • Good Friday
  • Early May bank holiday
  • Spring bank holiday
  • Summer bank holiday
  • St Andrew’s Day
  • Christmas Day
  • Boxing Day

Some of these holidays are obviously the same as those in the United States, but a few may sound new to you. Early May bank holiday, for instance, is a public holiday celebrated on the first Monday in May that commemorates International Workers’ Day, a day of protest in support of the right to an eight-hour workday. Most European countries call this day "May Day", which is akin to the US holiday Labor Day.

St. Andrew's Day in Scotland celebrates the patron saint of Scotland. The tradition goes back over a thousand years, but historians hypothesize that in the 9th century before King Angus battled England, he had a dream wherein St. Andrew appeared and promised him victory. The day of the battle, the symbol for St. Andrew, an X, appeared in the sky. This is also why the Scottish flag has an X on it!

Calculating holiday pay 🧮

To calculate an employee's leave, you can multiply the number of days the employee works a week by 5.6. If an employee works five days a week, they are entitled to 28 days of paid leave a year. And even if you're only working part time or making half a week's pay, you are still entitled to leave. If you're a part-time worker, let's say you work three days a week, you still multiply the number of days by 5.6, and you would accrue 16.8 days.

Photo of cottages in Luss

Other types of leave laws

Employees are entitled to statutory sick pay 🤒

UK employers must grant 28 weeks of paid sick leave to their employees, at £95.85 Statutory Sick Pay (SSP) per week. The employees who qualify for this type of paid leave must be classified as an employee, and the employee's average weekly earnings must meet or exceed £120. The employee must be sick for four consecutive days in a row before qualifying for sick leave, and these sick days include their scheduled days off or weekend days. Some employers may offer contractual sick pay, which is a kind of sick leave where the worker is paid at a higher rate than statutory sick pay. If the employer has this arrangement, they denote it in a written agreement.

In the case that an employee takes sick leave for more than seven consecutive days, they must acquire a sick note from a doctor to give to their employer. When an employee misses work because of illness, they will still accrue statutory vacation entitlement, and if they fall ill before or during a vacation, they can use their statutory paid holiday entitlement as statutory sick pay.

Employers are not allowed to pressure or force their employees to use their paid vacation time instead of their days of paid leave for an illness. An employee can carry their  unused holiday entitlement into the next year if they don't use it in the current year.

Accommodations for workers with disabilities 👩‍🦽

Accommodations for disabled employees is required by labor law. In addition to adapting the recruitment process to meet their needs, or adjusting or replacing equipment with more accessible equipment, employers must allow disabled people to make a gradual return to work if they become disabled at work. This could include adjusting working hours or letting the employee work part-time.

Other adjustments

If an employee has been sick for more than four weeks, the sick leave is considered long-term sick leave. In this case, the employee is still entitled to annual leave. If an employees has chronic periods of illness, the periods are considered linked. Each of these linked periods must be four or more days each and be eight weeks or less apart. If these linked periods of sickness last more than three years, the employee isn't entitled to statutory sick pay.

Employees are entitled to parental leave 🤱

While you wouldn't consider parental leave as falling under vacation leave entitlements, it's still worth noting, as employers are required to offer parental leave to employees, just as they are obligated to offer annual leave.

The UK government allows 52 weeks of maternity leave for mothers who are undergoing natural birth or adoption of a child. The statutory leave entitlement is broken up into two periods: ordinary maternity leave, which is the first 26 weeks, and then additional maternity leave, which is the last 26 weeks. The first 39 weeks of maternity leave must be paid leave, and the remaining thirteen weeks may be unpaid parental leave.

UK law requires that mothers take at least two weeks' leave after giving birth, adopting, or completing a surrogacy arrangement. If a mother works in a factory, she must take four weeks' leave. Workers are entitled to maternity leave if they give notice to their employer with proof of their pregnancy (e.g. a doctor's note), and if they have worked continuously at the same job with the same employer for at least 26 weeks. The 26 weeks must including the "qualifying week," or the 15th week before the mother's due date.

Paternity leave

To qualify for paternity leave, fathers must give a 28-week notice period to their employers, and, like the mother, they must have worked for the same employer at the same job for 26 weeks, including the "qualifying week."

Fathers are entitled to one or two weeks of paid paternity leave, but the leave must start after the child is born, and the days of leave must be consecutive. Additionally, a father cannot take paternity leave and pay if they have been given paid time off to attend adoption appointments.

Compassionate leave ❤️

Employees may take leave due to personal circumstances, such as to take care of a dependent or to tend to an emergency such as illness, injury, or assault. The policy for this type of leave depends on the employer. While employers may only provide unpaid leave for emergencies, some may allow paid compassionate leave.

Leave for public duties

An employer must allow their employees leave to perform public duties for a reasonable unpaid amount of time if they hold a public position. Such positions include serving as a magistrate, councilor, or a member of a governing body of an educational institution. Employment law also requires that employees are entitled to leave if they are a member of a statutory tribunal (e.g. an employment tribunal).

Photo of Broadway Tower and surrounding countryside

Compliance laws

The laws and regulations for annual vacation and paid leave can vary depending on where you decide to hire globally. There are labor laws, collective agreements, and worker classifications to consider. You may wonder how a business owner can keep track of it all, especially when there's still payroll management and tax compliance to consider.

Partnering with Pilot 🤝

Partnering with a company like Pilot, which specializes in HR, international compliance, and remote payroll, is a prudent way to cover all your bases and make sure nothing falls through the cracks. Our international and fully distributed team has expert knowledge on everything from classifying workers, vacation pay, acquiring work permits, payroll, and labor laws, to tax compliance. Small businesses and large corporations alike look to our professionals to help them navigate the complex aspects of hiring and maintaining workers.

Payroll with Pilot is easy and user-friendly. We never mark up exchange rates, and we don't require that contractors use a debit card or e-wallet. Instead, funds go straight to your independent contractors’ bank accounts. We support payments in over 240 countries around the world. It's easy to see why contractors love us as much as our clients.

Interested in learning more? Schedule a demo with us today.


⚖️ Legal Disclaimer: The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.


Cover photo of Union Jack flags on a street in London by Ian Taylor on Unsplash

Photo of train on Glenfinnan Viaduct by Jack Anstey on Unsplash

Photo of holiday lights on Regent Street, London, by Jamie Davies on Unsplash

Photo of cottages in Luss by Tarun Narang on Unsplash

Photo of Broadway Tower and surrounding countryside by Colin Watts on Unsplash

Caitlin MacDougall
Caitlin MacDougall
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