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Why U.S. Companies Need to be Prepared for UK Employment Law

Expanding into the UK: A Strategic Opportunity

As global markets continue to evolve, more U.S. businesses are looking to expand operations overseas; and the United Kingdom remains one of the most attractive destinations.

With a shared language, a highly skilled workforce and a strategic location deemed a gateway to Europe, the UK is an ideal launchpad for American companies seeking international growth. However, while the business environment may appear generally familiar, the legal and regulatory framework in the UK, particularly around employment law, can differ significantly from the U.S. system. For this reason, it is essential for any U.S. businesses entering the UK market to seek early guidance from experienced UK employment lawyers.

Key Differences in Employment Law

UK employment law places a strong emphasis on employee rights and protections. For instance, here in the UK, workers benefit from statutory entitlements including paid annual leave, statutory notice periods, redundancy pay, and protection against unfair dismissal. Many of these apply from day one of employment. Unlike the U.S. ‘at-will’ employment model, UK law places a key emphasis on employers following specific legal procedures when handling disciplinary action, grievances, redundancies, and dismissals. Therefore, failing to follow the various statutory processes can lead to legal claims, regardless of whether employers have just cause to discipline or terminate an employee’s employment.

Legal Reach Beyond Borders

Additionally, the reach of UK employment law can extend beyond borders. For example, sexual harassment protections apply even if the parties involved are located in different countries. A UK-based employee subjected to inappropriate behaviour from a colleague overseas could bring a claim under UK law. Employers can be held vicariously liable unless they have taken all reasonable steps to prevent such conduct, including providing training and enforcing clear policies.

Laying the Groundwork for Compliance

Early preparation is essential when establishing a UK presence. From the outset, U.S. businesses should ensure employment contracts (required from day one of employment), HR policies, and internal procedures complaint with UK law are in place. This proactive approach not only reduces legal risk but also sets the tone for a healthy workplace culture.

The Importance of Due Diligence in Acquisitions

Moreover, when entering the UK market through the acquisition of an existing business, it is critical to conduct a full employment law audit. Without proper due diligence, U.S. companies risk inheriting non-compliant practices, unresolved disputes, or hidden liabilities that could result in costly claims or operational disruption.

Legal Guidance: A Strategic Advantage

Involving UK employment lawyers at an early stage helps ensure a smooth, compliant entry into the UK market (whether this is through organic growth or acquisition) while protecting both the business and its workforce.

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Quastels Acts for Gerald Edelman on Their Acquisition of Vista Partners

Quastels LLP is delighted to have acted for Gerald Edelman on their acquisition of Vista Partners.

Founded in 1946, Gerald Edelman is a London-based accountancy and business advisory firm with over 20 partners, serving middle-market companies across the UK and internationally. The firm offers a comprehensive range of professional services, including accountancy, auditing, tax planning, corporate finance and strategic business advice. Vista Partners is a long-established accountancy and tax advisory firm based in Redhill. The firm provides a full range of services including accounting, audit, tax compliance, business advisory, and personal tax planning, primarily supporting owner-managed businesses and SMEs across Surrey, Sussex, and the South East.

Quastels LLP, led by corporate partner Adam Convisser, oversaw legal due diligence, transaction structuring and execution. Adam was supported by colleagues in the corporate, commercial real estate and employment teams showcasing our strong cross-departmental collaboration.

“We are thrilled to have completed the acquisition of Vista Partners. It was a pleasure to work with Adam and the Quastels team. Their advice was invaluable and they put in the extra hours to ensure we got the deal over the line, for which we are very grateful. We look forward to working with the team again in the future on other projects.”

– Nick Wallis

Congratulations to Gerald Edelman and the whole team at Vista Partners, we look forward to seeing your continued success.

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The Rising Cost of Employment: Will Businesses Turn to AI and Outsourcing?

This article was published in the March/April 2025 edition of London Business Matters.

The forthcoming increase to national insurance (NI) to 15% and the lowering of the threshold from £9,100 to £5,00, means that businesses are facing a significant increase in their payroll costs. With increased workers’ rights under the Employment Rights Bill (ERB) also set to be rolled out over the next 12-24 months, businesses are assessing their workforce strategies, and AI adoptions and outsourcing are emerging as key considerations.

Businesses that may have been considering AI automation are now giving serious consideration to its’ value not only from a cost saving perspective but also an employment risk perspective. We are already seeing how basic administrative and routine tasks can be AI generated; customer service AI-powered chatbots and virtual assistants are fast replacing human agents for handling routine enquiries and AI tools are used to streamline hiring processes, automating CV screening, interview scheduling and even employee onboarding. Professional services industries are also not immune from the allure of AI with financial reporting, invoice processing and payroll management being automated reducing the need for manual intervention.

Businesses are also contemplating outsourcing tasks, not only as a cost saving measure but also to reduce their exposure to employment claims associated with upcoming changes under the ERB. The proposals include introducing day one unfair dismissal rights, extending the eligibility period for making a claim from 3 months to 6 months, restricting the circumstances in which an employer can vary employment terms and many other changes.

Outsourcing allows businesses to access lower labour costs and avoid the pressures of employment compliance, which is expected to have a greater impact on SMEs. Offshoring functions such as IT support, accounting and back-office operations gives businesses the opportunity to scale operations up and down more flexibly without the complexities and inherent risks associated with the hiring and firing of staff.

While job cuts in many sectors are likely, labour-intensive industries such as retail and hospitality are expected to be impacted the most. Those working part-time or on the lowest hourly pay, who were previously not eligible for employer NI, will now be brought into the fold from April 2025 and businesses will inevitably be looking to reduce headcount.

As businesses contemplate various strategies to manage increased costs and risk, a balance must be struck with maintaining quality service and a skilled workforce in what remains an increasingly competitive market.

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