How to Hire Employees in the United Kingdom: Costs, Rules and the 2027 Dismissal Reset

No. Since 6 April 2025 employer National Insurance has been 15%, and it starts at £5,000 a year (£417 a month) instead of £9,100. Many cost guides still quote the old figures, which understate cost by about £87 a month on a £3,750 salary. Both figures are unchanged for 2026 to 2027. A UK company can offset up to £10,500 a year through the Employment Allowance, but not if its only employee is a sole director, and an EOR’s allowance is used across its own payroll rather than yours.

Only until 31 December 2026. For any dismissal with an effective date on or after 1 January 2027 the qualifying period is 6 months, and the cap on the compensatory award (currently £123,543 or a year’s pay) is removed. Anyone who started before 1 July 2026 is protected from that date. Because unpaid statutory notice extends the effective date for the service test, a dismissal in late December 2026 can still fall under the 6-month rule, although the old cap then still applies. Run a fair process for anyone past 6 months.

No. From 6 April 2026 SSP is paid from the first day of sickness, and the lower earnings limit has gone, so part-time staff earning under £129 a week now qualify. The rate is £123.25 a week or 80% of average weekly earnings, whichever is lower, for up to 28 weeks. Employers cannot recover SSP from HMRC. Contractual sick pay on top is common in UK offers but is not required.

Sometimes. The EOR must hold its own sponsor licence and the role must be a genuine vacancy in its business, because Home Office guidance bars sponsoring a worker to supply them to a third party. Some EORs decline UK sponsorship for that reason; others offer it for a small number of roles. The job must pay at least £41,700 or the going rate and sit at RQF 6. Sponsor costs, including the Immigration Skills Charge of £1,320 a year for a large sponsor, cannot be passed to the worker.

The off-payroll rules that make the client decide status apply only to UK-based medium and large clients. With no UK branch or office, the contractor’s own company makes the status decision and accounts for the tax. The tax exposure stays: if HMRC finds the arrangement is employment, PAYE, National Insurance and interest are due, and a long-term contractor can also claim worker or employee rights at a tribunal. Read our IR35 guide before converting a contractor.

Not by law. The statutory minimum is 5.6 weeks, which is 28 days for a 5-day week, and the 8 bank holidays in England and Wales can be counted within it. Most UK offers say “25 days plus bank holidays”, which is 33 days in total. Scotland has 9 bank holidays and Northern Ireland 10, so state in the contract which calendar applies to a remote employee.

For most of them. Employees aged 22 to State Pension age earning £10,000 a year or more must be enrolled from their start date, with the employer paying at least 3% of earnings between £6,240 and £50,270. Younger or lower-paid staff can opt in, and those earning over £6,240 then get the employer contribution too. Enrolment is mandatory; the employee can opt out afterwards, but the employer must re-enrol them every 3 years.

Not yet confirmed. The Low Pay Commission gave a central estimate of £13.18 an hour for the National Living Wage from 1 April 2027, within a range of £13.02 to £13.34, against £12.71 now. The government normally confirms the rate alongside the Budget, due on 28 October 2026. Plan 2027 pay at the £13.18 estimate until the rate is confirmed, and remember that the minimum applies to average hourly pay, so unpaid overtime can push a salaried junior below it.