Some of our clients with an overseas parent company and a UK subsidiary have an extra challenge understanding employment law. For example, a US client employing UK employees needs to be aware of US and UK employment right differences. Here are some key differences.
Right to an employment contract
- UK: all employees must be provided with a written statement setting out the main contractual terms and conditions on or before their first day of work
- US: No legal requirement for a written contract of employment
Employment Laws
- UK: one set of laws with some slight differences in Scotland and Northern Ireland
- US: separate laws at federal, state, and municipal (city) levels
Entitlement to family leave
- UK: up to 52 weeks (partially paid) maternity leave but must take 2 weeks after the baby is born. Employees are also entitled to paid adoption, paternity leave, shared parental leave and unpaid paternal leave of up to 18 weeks per child
- US: up to 12 weeks unpaid leave for eligible employees per year to care for seriously ill family members, the arrival of a child, and job protection when an employee returns from family or medical leave
Right to annual leave entitlement
- UK: minimum entitlement of 5.6 weeks or 28 days for full-time employees (pro-rated for part-time employees and can include bank or public holidays)
- US: there is no federal or state statutory minimum paid holiday leave. Paid leave is at the discretion of the employer
Right to National Minimum Wage
- UK: employer must pay the minimum amount but depends on age and whether they are an apprentice
- US: several states have minimum wage laws. Where there are both state and federal minimum wage laws, the employee is entitled to the higher of the two
Right to a pension
- UK: the employer must automatically enrol employees into a pension scheme and contribute to their pension if eligible
- US: state pension for citizens of the USA only and is financed mainly through social security taxes paid by employees and employers
Right to sick pay
- UK: statutory sick pay for up to 28 weeks
- US: there is no national requirement in the US to offer paid sick leave, though many states have their own laws on this
Protection from unfair dismissal
- UK: to qualify for the right to claim unfair dismissal, an employee must have at least two years’ continuous service (but protection from discrimination still applies, see below)
- US: there is no developed uniform system of law protecting employees against unfair dismissal in the US, except in cases of violation of federal, state, and local discrimination or anti-retaliation laws (see below)
Right to healthcare
- UK: Most people don’t have private healthcare insurance and are happy to rely on the National Health Service (NHS), which is funded through taxes
- US: should be provided by employers of 50+ employees
Protection from discrimination
- UK: employees are protected against discrimination on the grounds of age, disability, sex, gender reassignment, pregnancy and maternity, race, sexual orientation, religion or belief, and marriage and civil partnership (protected characteristics)
- US: workers are generally protected against discrimination under federal law based on age (over 40 only), race, colour, religion, sex, sexual orientation, pregnancy, national origin, genetic information, retaliation, or union activity
At will employment
- US: either the employer or the employee can terminate the relationship at any time, for any lawful reason and without notice, so long as doing so is not a violation of a protected class (employer)
- UK: this is not recognised in the UK. Employees are entitled to prior notice of termination, which must be no less than the employee’s statutory entitlement – 1 week for each year’s employment, up to a maximum of 12 weeks
Right to work checks
- UK: the right to work checks need to be confirmed before the employee starts their employment. EU/EEA citizens’ automatic rights depend on how long they have lived in the UK
- US: For non-US citizens, a Visa and Employment Authorisation Document is required before they can work in the US
Working time regulations
- UK: limits applied to weekly working hours, rest breaks and night working. There are differences also for young workers. It is possible to contract out of the limits to some extent
- US: there is no regulation of working hours
Health and safety
- UK: health and safety law to ensure a safe working environment for employees. This requires employers to meet health and safety obligations, covered by a vast range of legislation. The main law is the Health and Safety at Work Act 1974
- US: occupational health and safety law aims to encourage and require safe working conditions with minimal risks for employees. All states have varying levels of regulations and requirements that apply to employers in their jurisdiction
What should I do next?
If you are an employer in need of advice or have a specific question concerning a UK subsidiary, please contact one of our experts here at Gravita.
