The employee lifecycle in the United Kingdom, end to end
Reviewed by Mellow Editorial Team, HR & payroll content team
The employee lifecycle in the UK runs from the moment you decide to hire through to the day someone leaves — and each stage carries legal obligations that, if missed, create real risk. Here is what every employer needs to know at each step.
Attraction and recruitment
Before you post a role, you need a clear employment status decision. Are you hiring an employee, a worker, or engaging a contractor? The distinction affects tax treatment, rights and employer obligations from day one.
When advertising, the Equality Act 2010 requires you to avoid criteria that could indirectly discriminate on protected characteristics. Keep records of your shortlisting decisions — a defensible paper trail matters if a rejected candidate raises a complaint.
Right to work checks are mandatory before employment begins. You must check original documents or use a Home Office-approved online service for eligible overseas nationals. Failing to carry out checks correctly exposes you to a civil penalty.
Onboarding and the employment contract
A written statement of particulars must be given on or before day one. This is not optional — it is a legal requirement under the Employment Rights Act. It must cover pay, hours, holiday entitlement, notice periods, job title and location, among other items.
The Employment Rights Act 2025 has extended several protections to apply from day one of employment. This includes stronger unfair dismissal protections and parental leave rights. Employers who relied on the two-year qualifying period as a buffer now need robust probationary processes that are well-documented and fairly applied from the start.
Practically, onboarding also means:
- Enrolling the employee in your payroll system and submitting a Full Payment Submission (FPS) to HMRC on or before their first payday under Real Time Information (RTI) reporting
- Assessing auto-enrolment eligibility — if they meet the age and earnings thresholds, you must enrol them and begin paying at least 3% employer pension contributions alongside the employee's minimum 5% of qualifying earnings
- Issuing any required equipment, access and health and safety information
Pay, benefits and ongoing compliance
Payroll runs continuously throughout employment. Each payday, you must submit an FPS to HMRC reporting earnings, income tax deducted and National Insurance contributions. Employees pay NI at 8% up to the upper earnings limit and 2% above it; you pay employer NI at 13.8%.
Income tax is deducted through PAYE. Employees receive a personal allowance of £12,570 before tax applies; earnings above that are taxed at 20%, then 40%, then 45% at the higher thresholds.
Annual leave entitlement is a minimum of 5.6 weeks — 28 days including bank holidays for someone working a five-day week. You must track this accurately. Rolled-up holiday pay is now lawful for irregular-hours workers following post-Brexit case law consolidation, but you should document the arrangement clearly.
Statutory Sick Pay applies from the fourth qualifying day of sickness absence. Family-related pay — including statutory maternity, paternity and shared parental pay — follows its own eligibility rules and rates, which you are obliged to administer correctly and fund in part through HMRC recovery.
At year end, every employee must receive a P60 by 31 May. If you provide any taxable benefits in kind, you must submit a P11D to HMRC by 6 July and give a copy to the employee.
How Mellow runs payroll across six countries on one platform illustrates how these obligations stack up when a workforce spans borders.
Development, performance and retention
No specific statutory framework governs how you manage performance, but your approach must be consistent and non-discriminatory. Disciplinary and grievance procedures should follow the Acas Code of Practice — employment tribunals can uplift any award by up to 25% if an employer unreasonably fails to follow it.
Regular written appraisals, documented check-ins and clear performance improvement plans protect you if a dismissal is ever challenged. Under the strengthened day-one rights introduced by the Employment Rights Act 2025, this documentation is more important than before.
Pay reviews, flexible working requests (now a day-one right), and reasonable adjustments for disabled employees all sit within this phase.
Offboarding and termination
When employment ends — whether by resignation, redundancy, retirement or dismissal — the obligations do not stop.
Notice periods must be observed or paid in lieu. For redundancy, statutory redundancy pay applies to employees with at least two years' continuous service, calculated by age, length of service and weekly pay up to the statutory cap.
Final pay must be processed correctly through payroll, including any outstanding holiday pay, which is calculated on normal remuneration rather than basic pay alone following the Bear Scotland ruling and subsequent case law.
If you are dismissing someone, the reason must be one of the potentially fair reasons under the Employment Rights Act, and the procedure must be reasonable. Dismissal without following a fair process — especially now that day-one protections apply more broadly — significantly increases tribunal risk.
When the final payroll run is complete, issue the P45 promptly. HMRC is notified of the leaving date through the final FPS submission. Keep employment records for at least six years to cover potential tribunal claims and tax enquiries.
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