🇬🇧 Hiring in the United Kingdom

💡 Everything you need to know to hire and manage employees in the United Kingdom through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.

At a Glance

Onboarding a New Hire

Plan for 3-5 business days between submitting a new hire and their start date. Your new hire completes a right to work check before or on day one and provides their National Insurance number, while Toku sets up tax withholding and enrolls them in a workplace pension (auto-enrollment applies to all qualifying employees).

Submit the new hire through the Toku platform for the employment agreement, statutory registrations and payroll setup. See Onboard Contributors as a Client Admin in Toku for the steps. Toku will confirm the expected onboarding timing for your hire.

Employer Costs

On top of gross salary, employers in the UK pay:

As a rule of thumb, total cost of employment is roughly 115-118% of gross salary. There is no 13th month salary in the UK.

Employees pay their own share too: income tax of 20-45% depending on earnings (Scotland sets its own rates), National Insurance of 8% on earnings between GBP 12,571 and GBP 50,270 and 2% above that, and a 5% minimum pension contribution. These are withheld from gross salary through PAYE, not charged on top. Toku calculates and remits all of the above.

Compensation & Payroll

Toku runs one payroll per month in the United Kingdom, and employees receive an itemized payslip each cycle. From April 1, 2026 the National Living Wage (age 21 and over) is GBP 12.71 per hour, with GBP 10.85 for workers aged 18-20. Salaries are paid in GBP by bank transfer. There is no statutory overtime premium in the UK; any overtime pay is a matter of contract.

Employment Contracts & Probation

• Toku issues a compliant local employment agreement for every hire, including the written statement of employment particulars required on or before day one.
• Permanent (indefinite-term) contracts are standard. Fixed-term employees must not be treated less favorably than permanent staff, and successive fixed-term contracts convert to permanent after 4 years unless objectively justified.
• Probation is 6 months per Toku's employment agreement. There is no statutory probation period in UK law; note that from January 1, 2027 unfair dismissal protection will begin after 6 months of service (down from the current 2 years).

Working Hours

A typical contractual week is 37.5-40 hours. The legal maximum is 48 hours per week averaged over 17 weeks, and employees can voluntarily opt out of this cap in writing. Employees are entitled to 11 consecutive hours of daily rest, 24 hours of uninterrupted weekly rest, and a 20-minute break on working days over 6 hours. There is no statutory right to overtime pay, though total pay must never fall below the minimum wage per hour worked.

Leave Entitlements

Leave accrues from day one and is pro-rated for part-time workers. Statutory family leave payments are made through payroll but are largely recoverable from HMRC, so the net cost to you is limited.

Public Holidays (2026)

England and Wales observe 8 bank holidays in 2026; Scotland observes 9 (adding January 2 and St Andrew's Day, without Easter Monday) and Northern Ireland 10 (adding St Patrick's Day and the Battle of the Boyne). Whether bank holidays are paid days off on top of annual leave depends on the employment contract.

Benefits

In the UK, the NHS provides healthcare free at the point of use, the State Pension is funded through National Insurance, and every qualifying employee must be auto-enrolled in a workplace pension with minimum combined contributions of 8% of qualifying earnings (3% employer, 5% employee). Statutory sick pay and family leave payments run through payroll. These statutory costs are shown in Employer Costs above. On top of this, Toku provides private medical insurance with VitalityHealth, a Smart Pension workplace pension, employer-funded life insurance and critical illness cover, and Help@hand wellbeing services. Private medical insurance sits alongside NHS coverage rather than replacing it.

Benefits at a Glance

Private Medical Insurance: VitalityHealth

All eligible employees are auto-enrolled from their start date. Coverage includes: virtual GP fully covered; specialist consultations and diagnostics fully covered with GP referral; physiotherapy; mental health care (talking therapies, psychiatric stays up to 28 days/year); in-patient and day-patient treatment fully covered; full cancer care including chemo and radiotherapy; childbirth/adoption benefit of £100 per child; dental (routine £100/year, major treatments 80% up to £400/year, emergency dental up to £2,500/claim); optical up to £500/year; and worldwide travel cover with emergency medical up to £10 million.

Underwriting note: the plan uses moratorium underwriting. Pre-existing conditions (treated or consulted on before enrollment) aren't covered for the first 2 continuous years, and may become covered after a symptom- and treatment-free period. Employees switching from another insurer may apply for continued terms subject to approval.

Dependents can be added via the benefits app once the benefit appears in the employee's Toku account. Employees with 12+ months of continuous cover can convert to an individual plan within 30 days of leaving.

Pension: Smart Pension

Defined contribution scheme with 3% employer / 5% employee contributions, with the employee share taken via salary sacrifice (pre-tax); rates are adjustable by the employee. Employees aged 22+ (and under State Pension age) earning over £10,000/year (£833/month) are auto-enrolled and can opt out (with refund) within the opt-out window in their Smart Pension welcome email, typically one month. The employer 3% is billed to you.

Life Insurance & Critical Illness (Employer-Funded)

• Life insurance: 4× annual base salary, with cover from day one and auto-enrollment at hire; continues during temporary absence.
• Critical illness: £50,000 tax-free lump sum on diagnosis of a covered condition (cancer, heart attack, stroke, kidney failure, and more); children automatically covered at 25% of the employee benefit.

Wellbeing: Help@hand

24/7 services at no cost to employees: unlimited remote GP (video within 2 hours), mental health support and therapy, fast-track CT/MRI diagnostics, up to 8 physiotherapy sessions/year, lifestyle coaching, an EAP, and shopping discounts. Employees receive an invitation to download the Help@hand app.

Costs & Who Pays

What You Need to Know About Benefits

• Workplace pension auto-enrolment is statutory: you can't opt an employee out, though the employee can choose to opt out themselves.
• VitalityHealth, life insurance and critical illness all start automatically from the start date; allow up to about 8 days for VitalityHealth to appear in the employee's benefits app.
• Critical illness cover is reported through payroll as a taxable benefit in kind.
• Questions about the plans can go to benefits@toku.com. For the full employee-facing detail of each plan, see UK Supplemental Healthcare, Pension, Life Insurance and Critical Illness: VitalityHealth private medical cover, Smart Pension, and life and critical illness cover for your team.

Common Extras

Other common extras include income protection insurance, dental and optical cover, employee assistance programmes, enhanced maternity and paternity pay, cycle-to-work schemes, and gym memberships. Toku can advise on the cost impact of any of these.

Ending Employment

Dismissals require careful review of the reason, process, applicable protections and agreement. Ordinary unfair dismissal protection generally applies after two years of service, while some protections apply regardless of service. The government plans to reduce the ordinary qualifying period to six months for dismissals from January 1, 2027. Involve Toku early to confirm the current requirements. For the process, see How to Terminate an Employee or Contractor and the UK Fair Dismissal Process Guide.

Contractual notice is often longer, and payment in lieu of notice is possible where the contract allows. Statutory redundancy pay applies after 2 years of service: 0.5 to 1.5 weeks' pay per year depending on age, with weekly pay capped at GBP 751 (from April 2026) and a maximum payment of GBP 22,530; redundancy pay is tax-free up to GBP 30,000.

Annual Leave at Termination

This section describes statutory annual leave. Any additional contractual or company-provided leave above the statutory minimum may follow different carryover, expiry, or payout rules under the employee's agreement or applicable policy, subject to local law.

Statutory leave termination payout: Required. Outstanding statutory holiday that remains due is generally paid when employment ends.

Statutory carryover / look-back: Carryover depends on why leave was not taken. Sickness, statutory family leave, and employer failure to allow leave or properly inform the worker about their entitlement can preserve statutory holiday into later leave years.

Admin responsibility: Give employees clear holiday information and reminders, provide a genuine opportunity to use statutory leave, and track protected-absence carryover separately. Keep statutory leave distinguishable from any enhanced contractual entitlement.

Important exceptions: Sickness and family leave can create protected carryover, and an employer's failure to encourage or enable use can prevent normal expiry. Toku should review historic balances before final pay is communicated.

See the Annual Leave / PTO Carryover & Termination Payout Guide for the cross-country framework.

Hiring Someone from Overseas?

Since Brexit, EU nationals need immigration permission to work in the UK unless they hold settled or pre-settled status, and every employee must pass a right to work check before starting. The main employer-sponsored route is the Skilled Worker visa, but Toku cannot sponsor Skilled Worker or similar sponsored visas for UK employees; candidates may instead qualify for the self-sponsored Global Talent visa, which Toku can help them prepare for. Talk to Toku before extending an offer to a candidate who needs sponsorship.

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Last updated November 5, 2026 (onboarding link, annual leave and termination guidance only). Last verified October 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.