UK employers run PAYE payroll, pay 15% employer National Insurance above £5,000 a year, auto-enrol eligible staff into a pension and pay at least the National Living Wage of £12.71 an hour. The Employment Rights Act 2025 is being phased in: day-one family leave and SSP changes started in April 2026, a longer tribunal time limit and harassment duty in October 2026, and a 6-month unfair dismissal qualifying period from 1 January 2027. Foreign hires usually need a Skilled Worker visa sponsored by a licensed employer.
Pay, payroll taxes and pensions
From April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over. Employers pay 15% secondary Class 1 National Insurance above £5,000 a year, and employees pay 8% and 2% above their thresholds. Income tax is withheld under PAYE; Scotland sets its own income tax bands, from a 19% starter rate to a 48% top rate, so payroll must code Scottish taxpayers correctly.
Employers must auto-enrol staff aged 22 to State Pension age earning at least £10,000 and contribute at least 3% of qualifying earnings. Larger employers with a pay bill over £3 million also pay the 0.5% Apprenticeship Levy.12345
Leave and sickness
Workers are entitled to 5.6 weeks' paid holiday, capped at 28 days, which may include bank holidays. Statutory Sick Pay is £123.25 a week or 80% of earnings if lower, and since 6 April 2026 it is payable from the first day of sickness with no lower earnings limit. Employers cannot recover it.678
Dismissal and the Employment Rights Act 2025
Employees in Great Britain currently need 2 years' service for unfair dismissal; for dismissals from 1 January 2027 the period falls to 6 months, with the compensatory award cap removed. Employment law in Northern Ireland is devolved, the usual qualifying period there is 1 year, and the GB reforms should not be assumed to apply.
Other phased measures include the 6-month tribunal time limit from 1 October 2026, a duty to take all reasonable steps to prevent sexual harassment from 30 October 2026, fire-and-rehire protections from January 2027, and guaranteed hours for zero-hours workers in 2027 after consultation. The government states that future dates may change.981011
Hiring foreign staff
Every employer must check right to work before employment starts, and faces civil penalties for illegal working. Most non-UK hires need a Skilled Worker visa: a sponsor licence, an eligible occupation, and generally a salary of at least £41,700 and the occupation's going rate. Sponsors also pay the Immigration Skills Charge, £1,320 for the first year for medium and large sponsors.121314
| Item | Figure | Notes |
|---|---|---|
| National Living Wage (21+) | £12.71 per hour | From April 2026 |
| Employer National Insurance | 15% above £5,000 a year | Employment Allowance £10,500 |
| Statutory Sick Pay | £123.25 a week or 80% of earnings | No waiting days from 6 April 2026 |
| Annual leave | 5.6 weeks (max 28 days) | May include bank holidays |
| Pension auto-enrolment | Employer at least 3% | Staff aged 22 to State Pension age earning £10,000+ |
| Unfair dismissal qualifying period (GB) | 2 years; 6 months from 1 January 2027 | Northern Ireland usually 1 year |
| Skilled Worker general salary | £41,700 and going rate | Other options in the Immigration Rules may differ |
How it works, step by step
- Register as an employer for PAYE before the first payday2HM Revenue & Customs
- Carry out right to work checks before employment starts14Home Office
- Apply for a sponsor licence and assign certificates of sponsorship for foreign hires1213Home Office (UK Visas and Immigration)
- Set up a qualifying workplace pension and auto-enrol eligible staff5The Pensions Regulator
No timings or fees are shown unless an official source states them.
Documents usually needed
- Written employment contract and statement of particulars
- Right to work check records
- Sponsor licence and certificates of sponsorship for visa holders
- PAYE registration and payroll records
- Workplace pension scheme documents and enrolment notices
Common mistakes
- Assuming GB employment reforms apply unchanged in Northern Ireland.
- Relying on the 2-year unfair dismissal period for hires whose dismissal could fall after 1 January 2027.
- Running payroll without identifying Scottish taxpayers, who pay different income tax rates.
- Hiring a foreign national before the sponsor licence and visa are in place.
- Not budgeting for the Immigration Skills Charge on top of visa fees.
When the business crosses borders
- Seconded staff may stay in their home social security system if a certificate under a social security agreement applies; check the relevant agreement.
- Scottish income tax rates apply by residence of the employee, not location of the employer.
- Sponsor duties continue after the visa is issued, including record-keeping and reporting changes.
- Equity awards from a foreign parent usually need UK PAYE and National Insurance handling.
Questions businesses ask
When does the new unfair dismissal rule start?
For dismissals from 1 January 2027, most employees in Great Britain will be able to claim after 6 months instead of 2 years.911
Does a foreign company with no UK entity need to run UK payroll?
This guide has not confirmed the rules for non-UK employers; check PAYE obligations before employing staff in the UK.
What does a sponsored worker cost the employer beyond salary?
At least the Immigration Skills Charge (£1,320 for the first year for medium and large sponsors) and the sponsor licence fee, plus normal payroll costs.13
What this guide does not yet confirm
These points need checking with a qualified local professional in the United Kingdom before you rely on them.
- Illegal working civil penalty amounts were not confirmed on an opened page.
- Sponsor licence fees and the Skilled Worker RQF skill level were not confirmed.
- Northern Ireland employment law changes and whether the 6-month qualifying period applies there were not confirmed.
- Statutory notice periods, redundancy pay and the written statement rules were not checked against opened pages.
- PAYE obligations of non-UK employers with no UK establishment were not researched.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
From April 2026 the National Living Wage for workers aged 21 and over is £12.71 an hour, with £10.85 for ages 18 to 20 and £8.00 for under-18s and apprentices. UK-wide. Rates for April 2025 to March 2026 were £12.21, £10.00 and £7.55.
Employers pay secondary Class 1 National Insurance at 15% on earnings above £5,000 a year (£96 a week) in 2026-27. Employees pay 8% between £12,570 and £50,270 a year and 2% above. Employment Allowance of £10,500 can reduce eligible employers' bills.
PAYE income tax for 2026-27 in England, Wales and Northern Ireland is 20% up to £37,700 of taxable pay, 40% to £125,140 and 45% above; Scotland sets its own bands from a 19% starter rate to a 48% top rate. Standard personal allowance £12,570. Scottish rates apply to Scottish taxpayers on non-savings, non-dividend income.
Employers with an annual pay bill over £3 million pay the Apprenticeship Levy at 0.5% of the pay bill, less a £15,000 allowance. Connected companies share one allowance.
Employers must automatically enrol staff aged 22 to State Pension age who earn at least £10,000 a year into a workplace pension and contribute at least 3% of qualifying earnings. Qualifying earnings are generally between £6,240 and £50,270 a year; contributions are paid to the scheme by the 22nd of the following month.
Eligibility criteria taken overview page.
Statutory Sick Pay is £123.25 a week or 80% of average weekly earnings, whichever is lower, and employers cannot recover it from HMRC. 2026-27 rate. The removal of the SSP lower earnings limit and waiting days from 6 April 2026 is recorded in gb-people-009.
Almost all workers are entitled to 5.6 weeks' paid holiday a year, capped at 28 days, and employers may count bank holidays within it. Great Britain guidance; pro rata for part-time workers.
The Employment Rights Act 2025 received Royal Assent in December 2025; day-one paternity leave and unpaid parental leave, SSP changes and a doubled maximum protective award for collective redundancy took effect on 6 April 2026, and the Fair Work Agency was established on 7 April 2026. Great Britain. Further measures are phased through 2027; all future dates are subject to parliamentary process.
Employees in England, Scotland and Wales usually need 2 years' service to claim unfair dismissal; for dismissals from 1 January 2027 this falls to 6 months for most employees. Northern Ireland, where employment law is devolved, usually requires 1 year; GOV.UK does not say whether the 2027 change applies there. Automatically unfair reasons need no qualifying period.
From 1 October 2026 the time limit for most employment tribunal claims rose from 3 to 6 months, and from 30 October 2026 employers are under a duty to take all reasonable steps to prevent sexual harassment, alongside trade union recognition and access reforms. Great Britain. For breach of contract claims in Scotland the longer limit starts on 9 November 2026.
Fire-and-rehire protections and uncapped unfair dismissal compensation are scheduled for January 2027, while guaranteed hours for zero-hours workers are listed for 2027 with timing to be updated after consultation. Great Britain. Dates subject to parliamentary process.
A Skilled Worker visa generally requires a salary of at least £41,700 a year and at least the going rate for the occupation code, and the employer usually needs a sponsor licence. Immigration Rules Appendix Skilled Worker, option A (SW 4.4). Other options in the Appendix may allow different thresholds. Going rates are based on a 37.5-hour week.
Sponsor licence requirement. The Appendix page does not state the date from which £41,700 applies; it was last updated 8 October 2026.
Sponsors pay an Immigration Skills Charge of £1,320 for the first 12 months of each sponsored worker (£480 for small or charitable sponsors), plus £660 (or £240) for each further 6 months. Skilled Worker and similar sponsored routes; some exemptions apply.
The page does not state the date from which these amounts apply.
Employers must check that a job applicant is allowed to work in the UK before employing them, and can face a civil penalty for employing an illegal worker without a correct check. UK-wide.
Penalty amounts were not confirmed on an opened page.
Questions on this topic
14 statements on employment, payroll and immigration in the United Kingdom
