How to Hire in the UK Using an EOR (Employer of Record)

Key takeaways

• Hiring in the UK is streamlined and fully compliant with an Employer of Record (EOR), eliminating the need to establish a local entity.
• EORs handle all legal, payroll, tax, and HR complexities in the UK, ensuring compliance with intricate UK employment laws.
• Understanding key aspects of UK employment, including contracts, PAYE, IR35, and National Insurance, is crucial, and an EOR provides expert guidance on all of them.
• Using an EOR can reduce time-to-hire from months to days, giving you a competitive edge in securing top UK talent.
• The total cost of employing someone in the UK goes beyond base salary; an EOR provides full transparency into every component.

Introduction

The United Kingdom is one of the top destinations for companies seeking to hire new employees. With a world-class workforce, a stable legal framework, and a thriving innovation ecosystem, the UK offers access to exceptional talent across technology, finance, life sciences, and creative industries.

However, navigating the intricacies of UK employment law, payroll, and tax regulations can be challenging, especially for foreign companies without a local presence. This is where an Employer of Record (EOR) steps in, providing a compliant, efficient solution for hiring in the UK without establishing a local entity.

Read on to discover how an EOR can be your strategic partner in unlocking the UK market.

Why hire in the UK?

The UK is renowned not only for its economic strength but also for its highly educated workforce, strong legal framework, and thriving culture of innovation. Its strategic location, well-developed economy, and diverse talent pool make it an ideal choice for businesses looking to expand their global footprint.

A talent pool like no other

Key sectors, including technology, finance, creative industries, and scientific research, are continually growing, offering diverse opportunities for skilled professionals. The UK produces over 700,000 graduates per year, with particular strengths in STEM, business, and law.

Business-friendly environment

The UK consistently ranks among the world's top destinations for foreign direct investment. Its common law legal system provides a predictable, transparent environment for businesses. The UK's commitment to hiring and innovation continues to attract international companies seeking to grow in a globally competitive market.

Access to global markets

Despite post-Brexit trade changes, the UK remains a gateway to European markets and a significant financial hub. London alone is home to thousands of multinational headquarters, making it one of the most connected business cities in the world.

Read our UK payroll & employment guide to learn about payroll, taxes, work permits, and more.

Why use an EOR to hire in the UK?

Hiring directly in the UK without a local presence means setting up a legal entity, a process that can be time-consuming, expensive, and administratively heavy. It involves company registration, opening local bank accounts, understanding UK tax codes, and ensuring compliance with a vast array of employment legislation.

An Employer of Record (EOR) in the UK eliminates these burdens entirely.

What an EOR actually does

An EOR acts as the legal employer for your UK-based staff, taking on all the legal responsibilities, including payroll, taxes, benefits administration, and compliance with UK labour laws. You, the client company, retain complete control over your employees' day-to-day activities and strategic direction.

Key benefits of using an EOR in the UK

• Speed to hire: Onboard UK employees in days, not months, bypassing the entity setup process.
• Full compliance: Stay compliant with HMRC requirements, employment law, and sector-specific regulations from day one.
• Cost efficiency: Avoid the high upfront and ongoing costs of maintaining a UK legal entity.
• Risk mitigation: Shift employer liability, including IR35, National Insurance, and statutory leave obligations to the EOR.
• Flexibility: Scale your UK team up or down without the complexities of local entity restructuring.
• Focused management: Keep your attention on business outcomes while the EOR handles administrative responsibilities.

How EOR works in the UK: Step-by-step guide

Using an EOR to hire in the UK is a straightforward, efficient, and compliant process.

Step 1: Identify your UK talent

You find the ideal candidates in the UK, just as you would for any other role, through job boards, recruitment agencies, referrals, or direct outreach.

Step 2: Partner with an EOR

Select an EOR provider with proven expertise in UK employment law and payroll. Evaluate their track record, pricing transparency, and the comprehensiveness of their compliance support.

Step 3: Onboarding and contract signing

The EOR drafts a legally compliant employment contract in accordance with UK labour laws. This contract is between the employee and the EOR, ensuring the employer-employee relationship is correctly established from the outset.

Step 4: Payroll and tax management

The EOR processes the employee's payroll, deducts income tax via the PAYE system, calculates National Insurance contributions, and handles all statutory deductions. They file all necessary tax returns and employer submissions with HMRC on time.

Step 5: Benefits administration

The EOR manages statutory benefits, including workplace pension contributions, Statutory Sick Pay (SSP), holiday pay, and parental leave entitlements, ensuring full alignment with UK regulations. Optional supplementary benefits can also be administered through the EOR.

Step 6: HR and compliance support

The EOR stays up-to-date with evolving UK employment laws and tribunal decisions, providing ongoing compliance support and handling HR-related queries, disciplinary guidance, and employment relationship issues as they arise.

Step 7: Ongoing operational management

You continue to manage your employee's day-to-day work, performance reviews, and strategic goals. The EOR handles the administrative, legal, and payroll responsibilities in the background invisibly and efficiently.

UK employment law: What you need to know

Understanding the nuances of UK employment law is crucial for compliant hiring. An EOR ensures compliance with these regulations, but awareness of key areas helps you make informed decisions.

Employment contracts

UK law requires employers to provide employees with a written statement of employment particulars on their first day. This document covers job title, duties, start date, remuneration, working hours, holiday entitlement, notice periods, and more. The EOR will draft this to be fully compliant with UK requirements.

Salaries, national living wage, and PAYE

Employers must pay at least the National Living Wage (for workers aged 21+) or the National Minimum Wage (for younger workers). Current rates are reviewed annually by the UK government.

The Pay As You Earn (PAYE) system is HMRC's method for collecting income tax and National Insurance contributions from employees' salaries. An EOR manages accurate calculation and remittance of these deductions directly to HMRC on your behalf.

IR35 and worker classification

IR35 (Intermediaries Legislation) determines whether contractors working through intermediary companies should be taxed as employees. Since 2021, medium and large private sector organisations bear responsibility for assessing IR35 status.

Misclassification carries severe financial penalties. A reputable EOR will help ensure all workers are correctly classified, significantly reducing your IR35 exposure.

National Insurance (NI) contributions

Both employees and employers contribute to National Insurance, which funds state benefits including the State Pension. Employer NI is a significant cost consideration, currently set at 13.8% on earnings above the Secondary Threshold. The EOR handles all NI calculations, deductions, and payments to HMRC.

Working time regulations

The Working Time Regulations stipulate a maximum of 48 working hours per week on average (though employees can opt out), minimum rest breaks, and mandatory rest periods between shifts. An EOR ensures your employment practices comply with these regulations.

Statutory paid leave entitlements

UK employees are entitled to a minimum of 5.6 weeks of statutory paid annual leave (inclusive of bank holidays). Additional statutory leave entitlements include:

• Statutory Sick Pay (SSP): Up to 28 weeks for qualifying employees.
• Maternity leave: Up to 52 weeks, with Statutory Maternity Pay (SMP) for up to 39 weeks.
• Paternity leave: Up to 2 weeks.
• Shared parental leave: Allowing parents to split up to 50 weeks of leave.
• Adoption leave: Equivalent protections to maternity leave.

An EOR manages all of these on your behalf, ensuring full statutory compliance.

Redundancy and dismissal rights

UK employment law provides significant protections against unfair dismissal. Employees gain unfair dismissal rights after two years of continuous employment. Statutory redundancy pay is calculated based on age and length of service. An EOR advises on proper procedures to mitigate legal risk when employment relationships end.

Right to work checks

All UK employers must verify that employees have the legal right to work in the UK before employment begins. An EOR will conduct these checks in compliance with Home Office guidelines, protecting you from penalties for illegal employment.

Post-Brexit hiring considerations

Since the UK left the EU's freedom of movement framework, hiring EU nationals in the UK now requires sponsors to verify their immigration status. EU citizens who arrived before 31 December 2020 may have settled or pre-settled status under the EU Settlement Scheme. For new hires from the EU or elsewhere, a visa or right-to-work verification is necessary.

An EOR with strong UK expertise will navigate these post-Brexit complexities, including visa sponsorship requirements, points-based immigration system assessments, and right-to-work documentation, reducing your compliance risk significantly.

Common risks to avoid when hiring with an EOR

While EORs significantly reduce compliance risk, being aware of potential pitfalls helps you maximise the value of the arrangement.

Choosing the wrong EOR provider

Not all EORs are equal. Look for a provider with deep, demonstrable expertise in UK employment law, transparent pricing, and a track record of reliable compliance. Ask for references and check case studies.

Misunderstanding cost structures

Request a comprehensive breakdown of all costs, including statutory contributions, EOR fees, and any additional service charges. Avoid providers that bundle costs in ways that obscure the true total.

Inadequate communication channels

Establish clear communication protocols between your company, the EOR, and the employee. Ambiguity about who manages what, especially in HR issues or performance matters, can lead to friction and mismanagement.

Failing to define the scope of services

Confirm precisely what the EOR covers: payroll only, or also benefits administration, expense management, equipment provision, and HR support? Scope misalignment is a frequent source of dissatisfaction.

Ignoring employment law updates

While the EOR manages compliance, maintaining a basic understanding of significant UK legal changes, such as National Minimum Wage updates or changes to parental leave rights, enables more informed strategic decisions.

Overlooking the employee experience

Remember that the EOR is the legal employer, but your employee's day-to-day experience reflects on your company. Ensure the EOR communicates professionally, pays accurately and on time, and handles HR issues with care.

Comparing top EOR providers in the UK

Note: Price estimates are illustrative and vary based on services included, employee count, and specific circumstances. Always request a custom quote.

What to look for when choosing a UK EOR

When evaluating EOR providers for UK hiring, consider the following criteria:

• UK-specific compliance expertise: Does the provider have in-house UK legal and payroll specialists?
• Transparent pricing: Are all costs clearly itemised, including employer NI and pension contributions?
• Speed and onboarding efficiency: How quickly can they onboard a new employee?
• Breadth of benefits administration: Can they manage pensions, private healthcare, and other supplementary benefits?
• Customer support quality: Is dedicated support available, and how responsive are they?
• Scalability: Can the provider grow with your team from 1 employee to 100+?
• Technology platform: Is the platform intuitive for both HR admins and employees?

Costs of hiring in the UK using an EOR

The full cost of employing someone in the UK extends well beyond the gross salary. Here is a detailed breakdown using an example of an employee earning £40,000 per year:

This transparency is one of the core advantages of using an EOR. You know exactly what you're paying before making a hiring commitment.

Additional cost considerations

• Private health insurance: Many UK employers offer this as a supplementary benefit; costs vary based on coverage and provider.
• Equipment and tools: If the EOR manages equipment provision, this adds to the total cost.
• Expense management: Reimbursements for travel, accommodation, or client entertainment may need to be factored in.
• Severance and redundancy costs: If employment ends, statutory redundancy pay may apply depending on length of service.

Hire in the UK with Native Teams as your EOR

Native Teams offers a comprehensive and compliant Employer of Record solution for hiring in the UK. Our platform covers work payments, operations, and global employment, handling all aspects of payroll, tax, HR, and compliance, enabling you to integrate UK talent into your team quickly and confidently.

What Native Teams delivers for UK hiring

• 100% compliance assurance: Navigate the complexities of UK employment law with confidence, from PAYE to IR35.
• Automated payroll: Automate payroll processing, PAYE deductions, and National Insurance contributions effortlessly.
• Benefits administration: Provide competitive and compliant benefits packages, including statutory pension, sick pay, and leave entitlements.
• Expert support team: Access UK-specialist HR and legal experts dedicated to your hiring needs.
• Scalability: Grow your UK team from one person to a full department without ever setting up a local entity.
• Transparent pricing: No hidden fees. Full visibility into every cost component before you commit.

Focus on building your dream UK team, and let Native Teams handle the rest.

Conclusion

Hiring in the UK presents exceptional opportunities for businesses seeking to expand their global presence and access world-class talent. While the intricacies of UK employment law, post-Brexit immigration requirements, and tax obligations can seem daunting, an Employer of Record provides a robust, compliant, and efficient solution.

By partnering with an EOR, you can tap into the UK's rich talent pool, ensure full compliance with all legal requirements, and streamline your international operations, enabling your business to thrive without the complexities of establishing a direct entity.

Whether you're hiring your first UK employee or scaling an entire team, an EOR is the most practical path forward for global businesses in today's fast-moving talent market.

Ready to hire in the UK? Book a demo with Native Teams to discover how our EOR solution can get your UK team up and running quickly and compliantly.