Hiring In The UK with an Employer of Record
Employer Of Record In The UK
What Is an Employer of Record Service in the United Kingdom?
When a company based in the US, India, or anywhere outside the UK wants to hire British talent, it faces a legal barrier: you cannot legally run payroll for a UK employee without a UK entity registered with HMRC for PAYE unless you use an employer of record.
An employer of record (EOR) solves this. The EOR already holds a registered UK entity and becomes the legal employer of your hire. It issues a compliant UK employment contract, runs PAYE payroll, deducts and remits National Insurance, enrols the employee in a workplace pension, and takes on employer liability while your company directs the employee’s actual work.
How Does an EOR Work in the UK?
The UK EOR model follows a simple three-party structure:
- You (the client company) select the candidate and define their role, salary, and responsibilities.
- The EOR becomes the legal UK employer issuing the contract, registering the employee with HMRC for PAYE, running payroll, handling National Insurance and pension auto-enrolment, and managing statutory compliance.
- The employee works for you day-to-day – you set their tasks, goals, and schedule, exactly as you would any team member.
This arrangement is fully compliant with UK employment law. The EOR carries the legal employer obligations; you keep the working relationship.
What Is the Difference Between an EOR and a PEO in the UK?
An EOR is the sole legal employer of your UK workers and does not require you to have a UK entity. A PEO (Professional Employer Organisation) operates a co-employment model and requires the client to already have its own UK legal entity. For an overseas company hiring in the UK without a local entity, an EOR is the appropriate model, a PEO is not.
Who Uses an EOR to Hire in the UK?
Company Type
| Use Case | Why an EOR |
|---|---|---|
US SaaS & tech companies | Hiring UK-based engineers, sales, and customer success staff | Access UK and European talent without incorporating; onboard in days, not weeks |
Indian IT & SaaS companies | Building UK sales and delivery teams to serve European clients | Establish a compliant UK presence before committing to entity setup |
EU companies post-Brexit | Re-establishing UK hiring without a UK subsidiary | Avoid the cost and admin of a separate UK entity |
Scaling startups (Seed–Series C) | First UK hire or small UK team | Entity overhead isn’t justified below ~20 employees |
Who Should Consider Using an EOR in Czechia?
- Choose a UK EOR provider with a UK-registered entity, PAYE infrastructure, and pension auto-enrolment capability.
- Sign the client service agreement – defining scope, fees, headcount, notice periods, and liability allocation.
- Share the offer details – salary in GBP, job title, start date, benefits, and probation period.
- The EOR issues a compliant UK employment contract, including the statutory ‘written statement of particulars’ required from day one of employment.
- The employee is onboarded – right-to-work check, PAYE registration with HMRC, pension auto-enrolment, and payroll setup.
- The EOR runs monthly PAYE payroll – deducting income tax and National Insurance, paying the employee, and remitting to HMRC.
- Ongoing HR and compliance – the EOR manages payslips, leave, statutory pay, contract changes, and offboarding.
How Long Does It Take to Hire Someone in the UK via EOR?
Hiring through a UK employer of record typically takes 3–5 business days from a signed offer to the employee’s first day. By comparison, setting up a UK limited company and registering it for PAYE and a business bank account usually takes 6–10 weeks before you can legally pay your first employee.
Employer of Record vs. Setting Up a UK Entity - Pros and Cons
The two main routes to legally employing someone in the UK are using an EOR and incorporating your own UK limited company. Here is a direct comparison:
Factor | Employer of Record (EOR) | UK Limited Company |
|---|---|---|
Setup time | 3–5 business days | 6–10 weeks (incorporation + PAYE + bank account) |
Setup cost | £0 registration cost | £12–£100 incorporation + £500–£2,000+/yr accounting |
Minimum headcount | 1 employee | No minimum, but overhead is fixed regardless of size |
Compliance burden | Fully managed by the EOR | You manage PAYE, RTI, Companies House, Corporation Tax |
Employment liability | Held by the EOR | Held by the entity and its directors |
Payroll setup | Already in place | Must register for PAYE and build/outsource payroll |
Time to first hire | Under 1 week | 6–10 weeks |
Exit / wind-down | End the service agreement | Formal dissolution via Companies House (3+ months) |
Best for | 1–20 employees; market testing | 20+ employees; long-term UK commitment |
Pros of an EOR: fast, no entity cost, compliance handled, easy to exit, ideal for testing the UK market.
Cons of an EOR: per-employee fee makes it less cost-efficient at high headcount; less direct control over HR processes than a wholly owned entity.
When an entity wins: once you pass roughly 20 UK employees or commit to a permanent UK base, your own entity usually becomes more cost-effective.
How Much Does an Employer of Record Cost in the UK?
What Pricing Models Do UK EOR Providers Use?
Pricing Model | Typical Range | Best For |
|---|---|---|
Flat monthly fee per employee | £100–£500 / employee / month | Predictable budgeting; higher salaries |
Percentage of gross salary | 5–15% of gross salary | Lower-salary roles |
Note that the EOR fee is separate from the cost of employment itself. On top of gross salary, a UK employer pays Employer National Insurance at 15% on earnings above the £5,000 Secondary Threshold, plus a minimum pension contribution. The EOR fee covers the management of all of this.
What's Included in a UK EOR Fee?
- UK employment contract drafting and the statutory written statement of particulars
- PAYE payroll processing and RTI submission to HMRC
- Income tax and National Insurance calculation and remittance
- Pension auto-enrolment setup and contributions
- Statutory pay administration (sick pay, holiday, maternity/paternity)
- Right-to-work checks and onboarding
- HR support and compliant offboarding
What must a UK Employment Contract Include?
UK employers must provide a written statement of particulars of employment from the first day of work. A full employment contract, the market standard for professional roles, typically covers:
- Job title, duties, and reporting line
- Salary (always stated in GBP), pay frequency, and benefits
- Working hours and place of work
- Holiday entitlement and notice period
- Probation period terms
- Confidentiality, intellectual property, and data protection clauses
Note: UK courts now limit post-termination non-compete clauses, and recent reforms cap their enforceable length. UK employment is not ‘at-will’ – contracts and dismissals must follow a fair, legally sound process. (Source: Employment Rights Act 1996).
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What Are UK Statutory Leave Entitlements?
Leave Type | Entitlement (2026/27) | Notes |
|---|---|---|
Paid annual holiday | 5.6 weeks (28 days for full-time) | May include the 8 public holidays; market norm adds 20–25 days on top of holidays |
Statutory Sick Pay (SSP) | £123.25/week (up to 28 weeks) | Or 80% of average weekly earnings if lower; payable from the 4th consecutive sick day |
Statutory Maternity Pay | Up to 39 weeks | 90% of average weekly earnings for first 6 weeks, then statutory flat rate |
Statutory Paternity Pay | Up to 2 weeks | Statutory flat rate or 90% of earnings if lower |
Public holidays (England & Wales) | 8 days | Scotland and Northern Ireland vary slightly |
Taxes and Payroll Deductions in the UK
Deduction / Contribution | 2026/27 Rate | Paid By |
|---|---|---|
Income Tax (PAYE) | 0% up to £12,570; 20% basic; 40% higher; 45% additional | Employee |
Employee National Insurance | 8% (£12,570–£50,270), 2% above | Employee |
Employer National Insurance | 15% on earnings above £5,000/year | Employer |
Workplace pension (auto-enrolment) | 3% employer minimum / 5% employee minimum | Both |
Employment Allowance (NI relief) | Up to £10,500/year offset against Employer NI | Employer benefit |
What Work Permits and Visas Apply to UK Hiring?
UK nationals and those with existing right to work need no sponsorship the EOR simply runs a right-to-work check. For overseas nationals who need permission to work in the UK:
- Skilled Worker visa: the main work route, requiring a licensed sponsor, an eligible job, and a minimum salary threshold.
- Sponsor licence: standard EOR arrangements generally do not include visa sponsorship — the EOR is the employer of record, not necessarily the visa sponsor. Confirm sponsorship capability before hiring a candidate who needs a visa.
- Right-to-work checks: mandatory for every UK hire, regardless of nationality; the EOR conducts these during onboarding.
Note: PamGro advises clients on right-to-work and visa requirements as part of UK onboarding. (Source: GOV.UK Skilled Worker visa; UK Visas and Immigration.)
What Statutory Benefits Are Required in the UK?
Benefit | Statutory Requirement | Market Norm (Tech Sector) |
|---|---|---|
Workplace pension | Auto-enrolment: 3% employer min / 5% employee min | Often enhanced above statutory minimum |
Paid holiday | 5.6 weeks including public holidays | 25 days + 8 public holidays common |
Statutory Sick Pay | £123.25/week (2026/27) | Many employers offer enhanced company sick pay |
Maternity / paternity pay | Statutory minimum | Enhanced parental packages common |
Private health insurance | Not required | Common benefit for professional roles |
What Is the UK National Minimum Wage in 2026?
From 1 April 2026, the UK National Living Wage for workers aged 21 and over is £12.71 per hour. Workers aged 18–20 are entitled to £10.85 per hour, and workers under 18 or in the first year of an apprenticeship are entitled to £8.00 per hour. These rates are set annually by the government on the recommendation of the Low Pay Commission and apply across all contract types.
Tech and professional salaries are typically well above these statutory minimums. An EOR ensures every UK contract meets the applicable rate. (Source: GOV.UK / Low Pay Commission).
What Are Standard Working Hours in the UK?
- The Working Time Regulations 1998 limit the average working week to 48 hours, calculated over a 17-week reference period.
- Employees may voluntarily sign an ‘opt-out’ to work beyond 48 hours – common for senior and professional roles.
- Workers are entitled to a minimum 20-minute rest break for shifts over 6 hours, 11 hours’ rest between working days, and one day off per week.
Is Overtime Mandatory in the UK?
There is no statutory right to overtime pay in the UK. Overtime, and any premium rate, is governed by the employment contract. The only legal constraint is that average pay must not fall below the National Minimum Wage and total hours must respect the Working Time Regulations. An EOR sets out overtime terms clearly in the contract.
What Is a Standard UK Probation Period?
There is no statutory right to overtime pay in the UK. Overtime, and any premium rate, is governed by the employment contract. The only legal constraint is that average pay must not fall below the National Minimum Wage and total hours must respect the Working Time Regulations. An EOR sets out overtime terms clearly in the contract.
- There is no statutory probation period in the UK – it is set by contract.
- The market norm is 3–6 months for professional roles.
- Notice periods are typically shorter during probation (often 1 week) than after confirmation.
- Statutory employment protections still apply during probation; probation does not remove the need for a fair dismissal process.
How Does Termination of Employment Work in the UK?
UK employment is not at-will. Terminations must follow a fair process and respect statutory notice and, where applicable, redundancy obligations:
- Statutory minimum notice: 1 week after 1 month of service, rising by 1 week per year of service up to a maximum of 12 weeks. Contracts often specify longer.
- Fair reason required: dismissals must rest on a fair reason (conduct, capability, redundancy, etc.) and follow a fair procedure to avoid unfair dismissal claims.
- Redundancy pay: statutory redundancy pay applies after 2 years’ continuous service, calculated on age, length of service, and weekly pay (subject to the statutory weekly cap).
- Final pay: outstanding salary, accrued holiday, and any contractual entitlements must be settled.
(Source: Employment Rights Act 1996; ACAS; GOV.UK – Redundancy: your rights.)
How to Onboard Employees in the UK Through an Employer of Record
PamGro’s UK onboarding gets your hire from signed offer to first day in 3–5 business days. The steps:
Step | What Happens | Owner |
|---|---|---|
| Client signs the EOR service agreement and shares salary, role, and start date | Client + PamGro |
2. Contract issued | PamGro issues a UK-compliant employment contract and statutory written statement | PamGro |
3. Right-to-work check | PamGro verifies the employee’s legal right to work in the UK | PamGro |
4. PAYE & pension setup | Employee registered for PAYE with HMRC and enrolled in a workplace pension | PamGro |
5. Payroll setup | Employee added to payroll; first pay cycle scheduled | PamGro |
6. First day | Employee begins work; payslip issued on first pay run | PamGro + Employee |
How to Terminate Employees in the UK Using an Employer of Record
An EOR manages the full UK offboarding process compliantly, protecting the client from unfair dismissal risk:
- Client notifies the EOR of the intent to end the engagement and the reason.
- The EOR advises on the correct fair process and notice period required under UK law and the contract.
- The EOR issues formal notice and manages any required consultation (for example, in a redundancy).
- Statutory and contractual entitlements are calculated — notice pay, accrued holiday, and redundancy pay where applicable.
- Final payroll is processed, the employee is removed from PAYE, and pension obligations are closed out.
- The EOR issues the P45 and any required documentation to the departing employee.
Why Use PamGro for Employer of Record in the United Kingdom
PamGro is built for companies hiring across the UK, Europe, and India — not just a single market. For UK hiring specifically, PamGro combines a UK-registered entity with 17 years of EOR experience and the UK’s leading compliance accreditation.
PamGro’s UK EOR advantage |
FCSA Accredited: The UK’s gold-standard employment compliance accreditation, requiring annual audits of payroll accuracy, legal compliance, and financial transparency. Self-owned UK entity: You work with PamGro directly, not a third-party in-country partner, which means clearer accountability and faster resolution. 17 years of EOR experience, 8,500+ contractors employed, and $150M+ in payroll processed to date. UK - Europe - India corridor specialists: Uniquely positioned for companies building teams across all three regions at once. Onboarding in 3–5 business days, with a dedicated relationship manager for every engagement. |
FAQs – Employer of Record in UK
1. How do employer of record companies help US businesses hire in the UK?
An EOR lets a US business hire UK employees without setting up a UK entity. The EOR becomes the legal UK employer – running PAYE payroll, handling National Insurance and pension auto-enrolment, and ensuring compliance with UK employment law while the US company manages the employee’s work. This avoids 6–10 weeks of entity setup and removes UK compliance risk.
2. What are the typical fees for employer of record services in the United Kingdom?
UK EOR fees typically range from £100–£500 per employee per month (flat fee), or 5–15% of gross salary. This covers payroll, PAYE and National Insurance administration, pension auto-enrolment, contracts, and HR support. The fee is separate from the cost of employment itself, which includes Employer National Insurance at 15% above £5,000/year and a minimum pension contribution.
3. What are the best EOR platforms for small businesses hiring in the UK?
Leading UK EOR providers include PamGro, Oyster, Globalization Partners, Papaya Global, Deel, and Remote. For small businesses and startups making their first UK hire especially those also hiring in Europe or India, PamGro offers a self-owned UK entity, FCSA accreditation, transparent per-employee pricing, and a dedicated relationship manager, without the platform minimums some larger providers require.
4. Can an employer of record handle UK payroll and tax filings?
Yes. A UK EOR runs full PAYE payroll: calculating and deducting income tax and National Insurance, paying the employee, submitting Real Time Information (RTI) to HMRC on or before each payday, paying Employer National Insurance, and managing pension auto-enrolment. The client never registers with HMRC or files UK payroll taxes directly.