Compliance Mandates for New Employers Operating in Great Britain

New employers in Great Britain should understand and follow all the relevant rules. This article summarizes the main legal obligations and administrative requirements that apply to new employers.

Please note that this article does not cover Northern Ireland, where many of the principles are the same but specific laws may be different.

Pre-Employment Checks

Immigration

It is a criminal offense to knowingly employ an illegal worker or to have reasonable cause to believe this is the case. There is a civil penalty regime for employing someone who does not have permission to work in the U.K. An employer must also ensure it does not employ a person outside any restriction on the type of work they can do or the number of hours per week they can work.

An employer is responsible for checking that all its employees have the right to work in the U.K., even if they will be working at home. If the employer has performed the checks correctly, it will have a statutory excuse against liability for a penalty of up to £60,000 if a person turns out to be an illegal worker. The employer must carry out right-to-work checks in line with the Home Office document, “Right-to-work checks: an employer’s guide.” It is important to note that the employer will not have an excuse if it knowingly employs an illegal worker or has reasonable cause to believe it is doing so, regardless of any document checks carried out before or during a person’s employment.

To avoid potential reputational damage, businesses should also consider whether to carry out right-to-work checks on nonemployees (such as independent contractors) who are providing services to the business. Additionally, they should take steps to be satisfied that any third-party agency has carried out adequate checks on staff provided to the business.

Depending on the circumstances of the individual, a right-to-work check should normally be carried out as a digital, online, or manual check. The U.K. Home Office “Employers’ right to work checklist” covers the process for each of these. Where indicated in the “Employers’ right-to-work checklist,” or where an individual has an outstanding application, administrative review, or appeal, the employer should use the employer checking service and obtain a positive verification notice.

Immigration law is complex, particularly when a person has restrictions on their right to work or is a sponsored worker, and there are significant penalties for getting it wrong. Advice should be sought if required.

Other Checks

Employers usually take references from former employers and often check the prospective employee’s qualifications. Rules about rehabilitation of offenders and data protection laws mean that criminal record checks can be used only in limited circumstances.

Statement of Main Terms and Conditions of Employment

When an employer first employs someone, it is required to give them a statement of the main terms and conditions of their employment no later than the beginning of their employment. The contents of the statement are determined by statute. 

Employees also have a number of minimum rights which should be reflected in their contract, including:

• To be paid at least the National Minimum Wage.
• To be given sufficient rest breaks.
• To be allowed 5.6 weeks’ paid holiday each year.
• To be given minimum statutory notice on termination of employment.

Employment Policies

Employers are required to have certain policies and procedures. Some of these policies are a minimum legal requirement, while many others  are simply good practice to have in place. Legally required policies are:

• Disciplinary policy.
• Grievance policy.
• Suite of personal data policies that are compliant with data protection requirements, including a privacy notice, record of processing, breach policy, workplace responsibilities policy, and an external privacy notice.
• Equal opportunities/diversity policy (not strictly a legal requirement, but an essential element of a defense to a discrimination claim).
• Health and safety policy statement.
• If turnover is greater than £36 million in a financial year, a statement on modern slavery.

Other policies that may be useful to have include:

• Harassment and bullying policy.
• Sickness absence policy.
• Flexible working policy.
• Remote working policy.
• Whistleblowing policy.

Payroll

Pay As You Earn (PAYE) is the system that His Majesty’s Revenue & Customs (HMRC) uses to collect Income Tax and National Insurance contributions (NICs) from employees’ pay as they earn it. An employer has to register with HMRC and set up a payroll system. Once registered, the employer receives its employer PAYE reference and links to the HMRC website where it can download all the forms and information needed to operate PAYE.

Employers are required to deduct tax and NICs from employees’ pay each pay period and to pay Employer’s Class 1 NICs if they earn above a certain threshold. These amounts are paid to HMRC monthly or quarterly. If the correct amounts are not sent or are sent in late, interest may be payable. In order to make such deductions from an employee’s pay, the employer needs its employer PAYE reference, the employee’s tax code, and the employee’s National Insurance number. The employee will be able to supply their National Insurance number. The employee’s tax code is usually available from their P45 or P46. The employee’s gross pay, deductions, and net pay must be outlined in an itemized pay slip.

After the end of the tax year (which runs from April 6 to April 5 every year) an employer must send HMRC an employer annual return (form P35 and form P14). Almost all employers are required to file this online.

Pension Auto-Enrollment

All employers in the U.K. must automatically enroll eligible jobholders in a qualifying pension scheme or the National Employment Savings Trust, unless they are already members of a qualifying scheme. 

Recordkeeping

An employer’s main legal obligations in relation to recordkeeping are:

• Payroll and wage records must be kept for six years from the financial year-end in which payments were made.
• PAYE records must be kept for not less than three years after the end of the tax year to which they relate.
• Sickness records required for the purposes of statutory sick pay must be kept for three years after the end of the tax year in which payments were made.
• Maternity records must be kept for three years after the end of the tax year in which the maternity pay period ends.
• Any report of a reportable accident, death, or injury in connection with work must be kept for at least three years from the date the report was made.
• Records in relation to hours worked and payments made to employees must be kept for six years beginning with the end date of the following pay reference period.
• Immigration checks must be kept until two years after the termination of employment.

Working Time

All employers must comply with the Working Time Regulations 1998, which set out limits on working time as well as employees’ entitlements to rest breaks and holidays. Employers are responsible for managing employees’ working time. 

The main obligations for employers in relation to employees who work during the day are:

• Take all reasonable steps to ensure that each worker’s average working time (including overtime) does not exceed 48 hours per week. The averaging is performed over a 17-week period.
• Give workers “adequate” rest breaks in situations where the pattern of work is such as to put their health and safety at risk, especially when the work is monotonous.
• Keep and maintain records showing whether the limits on average working time and provision of health and safety assessments are being complied with in the case of each worker.
• Allow workers the following rest periods unless they are exempt, in which case compensatory rest will usually need to be given: 1) 11 hours’ uninterrupted rest per day; 2) 24 hours’ uninterrupted rest per week (or 48 hours’ uninterrupted rest per fortnight); and 3) a rest break of 20 minutes when working more than six hours per day.
• Allow workers 5.6 weeks’ paid holiday a year (equivalent to 28 days for a full-time worker, including the eight U.K. bank holidays).

There are special rules for young workers and night workers.

Health and Safety

Employers are responsible for the health and safety of their employees while they are at work.

Recommended Steps

New employers in Great Britain should consider the following recommended steps:

• Appoint a “competent person.” This could involve appointing a specific employee to undertake particular responsibilities as a mobile health and safety manager or using an external consultant as and when required.
• Have a written health and safety policy statement. (All employers with five or more employees are legally required to have such a statement.)
• Manage health and safety risks in the employees’ workplace. In the case of remote workers, this will involve carrying out a risk assessment and taking appropriate measures in light of that assessment. 
• Consult all employees on health and safety and provide them with training and information relating to health and safety. There is certain information that employees must be provided with before starting or as soon as practicable after they have started. 
• Inform employees if there are changes that may have health and safety implications.
• Protect the safety and health of employees, including people with disabilities, and provide welfare facilities. “Welfare facilities” are those that are necessary for employees’ well-being, offering somewhere clean to wash, use the bathroom, rest, change, and eat and drink during breaks. The employer is responsible for providing employees with personal protective equipment free of charge where such equipment is necessary and paying for eye and eyesight tests for those who use computers.
• Make appropriate arrangements for first aid, accidents, and ill health.

Safety Recordkeeping and Reporting Obligations

Employers have recordkeeping and reporting obligations to the U.K. Health and Safety Executive in relation to work-related deaths, injuries, cases of disease, or near misses involving employees no matter where they are working. 

Employers who have 10 or more employees, regardless of location, must maintain an accident book to record all work-related injuries, accidents, and near misses. This should record:

• The name and address of the person injured or involved in the incident.
• What happened, and when and where it happened.
• Who witnessed the incident.
• Any other relevant details.

Employers’ Liability Insurance

Employees may be injured at work, or they (or former employees) may become ill as a result of the work they performed while in a company’s employment. They might try to claim compensation from their employer if they believe it is responsible. Employers are obliged to have at least a minimum level of insurance to cover against any such claims.

Modern Slavery Statement

If turnover exceeds £36 million in a financial year, an employer needs to publish a Modern Slavery Act Transparency Statement on its website. This must set out steps taken to ensure slavery and human trafficking are not taking place in its supply chain or any part of its own business; alternatively, it must state that the business has not taken any steps, though this is not typically an attractive option. The statement must be approved and signed off by senior management before publication on the website. 

Registration with the Information Commissioner’s Office

A prospective employer needs to notify the U.K. Information Commissioner’s Office (ICO) that it intends to process personal information before processing any personal data about employees; it must also pay a small data protection fee.

The ICO's Employment Practices Code considers data protection in employment records and makes a number of recommendations that an employer should consider when deciding on the retention of employee records, balancing an employer’s need to keep records and a worker’s right to respect for their private life.

Post-Brexit, the Data Protection Act 2018 and the U.K. General Data Protection Regulation (U.K. GDPR) contain the key recordkeeping requirements with respect to U.K. law. The ICO's guide to the U.K. GDPR is a helpful starting point.

Zoe Ingenhaag is an attorney with Lewis Silkin LLP in London. Hannah Price is legal director with Lewis Silkin LLP in Oxford, U.K. © 2025 Lewis Silkin LLP. All rights reserved. Reposted with permission of Lexology.