Employment Law in the UK

There are minor differences in employment law which governs England and Wales than that which governs Scotland and Northern Ireland. This memorandum serves to give you a short overview of employment law that applies in England and Wales.

Terms and Conditions of Employment

Employers are required to provide every employee with a written contract of employment within two months of the commencement of employment. The law provides that minimum information must be included in the contract (e.g. date from which continuous employment began, scale of remuneration, details regarding working hours, holiday, sick leave, pension, notice periods, any collective agreements affecting the terms and conditions of employment and the rules regarding grievance complaints and disciplinary procedures).

A number of implied terms are also incorporated into every contract of employment, the most significant being the duty of fidelity or good faith and that of trust and confidence. Employment contracts can be for an indefinite term or for a fixed term. Employees on fixed term contracts must not be treated least favourably than a comparable permanent employee. Further, when an employee has been continuously employed on a series of fixed term contracts for four years, the renewal or next contract takes effect as a permanent contract (unless this can otherwise be objectively justified).


The law governing how and when an employer can dismiss an employee is enshrined in the Employment Rights Act 1996 (“the ERA”).

All employees with one or more years’ continuous employment accrue the right not to be unfairly dismissed. Employees with less than one year’s continuous employment do not have such protection unless the reason for their dismissal is based on any discriminatory grounds (i.e. the employee’s race, sex, religion, sexual orientation, age or disability), on health or safety grounds, association with a trade union or asserting a statutory right. A dismissal can be found by the Employment Tribunal to be unfair if the employer does not have a fair statutory reason to dismiss the employee and/or if the employer has failed to follow a proper statutory procedure in carrying out the dismissal. There are five potentially fair reasons for dismissal set out in the ERA :

  • Capability or qualifications;
  • Conduct;
  • Redundancy;
  • Contravention of a statute;
  • Some other substantial reason.

The dismissal procedure must, as a minimum, incorporate the statutory minimum requirements. If it does not, the dismissal will be found to be automatically unfair. If employment is found to have been terminated unfairly, the Employment Tribunal can award an employee either reinstatement of his old job, re-engagement and/or compensation. The amount of compensation will depend largely on the employee’s salary, how long the employee reasonably remains out of work following the dismissal and whether or not the employer followed the statutory procedure. If the dismissal was on discriminatory grounds, additional compensation can be awarded for “injury to feelings” which, unlike unfair dismissal compensation, is uncapped.

Notice Entitlement

Every contract of employment will contain details of how the contract may be lawfully determined by either party. Except in certain circumstances (namely when employment is terminated due to the employee’s gross misconduct) this will involve one party giving notice to the other party. The notice period must be no less than the minimum set down in the ERA. The minimum notice periods are as follows :

  • One week’s notice – when employed between one month and two years;
  • An additional week’s notice for each year of employment – when employed for between two and twelve years.
  • Twelve weeks’ notice – when employed for twelve years or more.

If the contract of employment provides for a longer notice period than the statutory minimum, the longer period set out in the contract will apply. If the contract provides for a notice period lower than the statutory minimum, the statutory minimum period shall apply. If employment is terminated without providing the correct notice to the other party, an action for breach of contract can be pursued for various reasons. An employee may wish to decide to pay an employee in lieu of their notice period in which case it is wise for employers to make provision for the same within the contract of employment.


Employers are subject to the provisions set out in the National Minimum Wage Act 1998 which was introduced to produce a basic minimum hourly rate of pay for all workers. Legislation covers not only employees but also agency workers and home workers. Two rates of pay are set: one for workers aged 20 years and over, and a lower one for those workers aged 18 to 20 years. The minimum hourly rate of pay is usually increased in October of each year. In addition to providing for the right for workers to be paid the minimum wage, the Act also affords the right of access to wage records and the right not to suffer a detriment for asserting a right under the Act – the remedy being via a complaint to an Employment Tribunal.


All employees are entitled to a minimum 24 days paid holiday leave per annum. Holiday entitlement is set to increase to 28 days in April 2009. This minimum holiday entitlement can be deemed inclusive or exclusive of Bank and Public Holidays, of which there are 8 in England and Wales. During annual leave, the employee is entitled to receive his normal salary.

Employees rights upon a Business Transfer

It is automatically unfair to dismiss an employee’s employment if the reason for the dismissal is connected with a transfer of the business which falls within the Transfer of Undertakings (Protection of Employees) Regulations 2006. An employee can only bring a claim under this head, however, if they satisfy the one year’s service qualifying period. TUPE Regulations also set out certain requirements posed on both the seller and buyer of the business, namely governing what employee information must be imparted and the obligation on both parties to fully inform and consult the workforce about the impending transfer. TUPE Regulations not only govern the sale of an undertaking (or part of it) but also apply to businesses who are contracting out services or contracting their services back in.

Kelly-Lee Wright – Head of Employment, Sherrards Solicitors

Current at August 2008. This summary is for general interest only. Nothing in this article constitutes legal advice or gives rise to any solicitor/client relationship. If you have any specific legal issues related to anything raised then you should take specialist legal advice. Whilst every effort is made to ensure the accuracy of the article, no warranty is given, express or implied, as to any of the content and Sherrards does not accept any liability for any loss or damage (including loss of business or profit) arising in contract, taught or otherwise from use or reliance upon it.

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