The United Kingdom of Great Britain and Northern Ireland, better known as the UK, has one of the most developed economies in the world. In 2025, the UK has the sixth-largest GDP valued at $3.84 trillion, which is expected to grow by 1.1% this year. This means it’s a bastion of business. The country also has a labor force of over 35 million strong and full of highly educated and skilled workers.

There are several ways to hire these workers if you’re a foreign investor, and in this guide, we’ll focus on how to do it with the help of a UK EOR.

Hiring Workers in the United Kingdom

The UK once ruled a vast global empire and is now home to a wide range of people from around the world. It’s also home to London, one of the most dynamic and important cities in the world, which attracts workers of all types. You can find plenty of highly-skilled workers in this country, but if you’re not familiar with the labor market and local employment laws, it can be difficult to connect with and hire them. The options you have for hiring UK workers include:

Incorporating an Entity

If you want to hire employees yourself and have direct control over them, you can choose to incorporate an entity in the UK. This could take the form of a limited liability company (LLC), limited liability partnership (LLP), or public limited company (PLC). According to the World Bank, doing business in the UK is relatively easy. This country ranks 18th in the world in terms of ease of setting up a business, which can take as few as four-and-a-half days.

Setting up a business isn’t the only challenge you’ll encounter, however. You’ll need to manage HR for your employees over the long term and will likely need to work with legal and tax experts to ensure that you’re compliant with all local laws.  

Working with an Employer of Record (EOR)

Another option, and one that is becoming increasingly popular, is to work with an Employer of Record in the UK to hire employees. The difference is that you don’t need to own an entity in the UK to do it because the EOR hires employees on your behalf. In the rest of this article, we’ll look at how this arrangement works and what services EORs provide for their clients.

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Hiring Independent Contractors

If you don’t want to take on the significant administrative burden of managing your own employees, however, you could instead work with UK independent contractors. These self-employed workers are also known as freelancers and take on individual contracts for services instead of being permanently employed. They manage their own taxes and National Insurance Contributions (NICs), which means you have a much lower level of administration than with your own employees.

There are, however, significant challenges to working with contractors that you’ll also need to consider. Contractors make their own hours and work when it suits them, not on your schedule. They also produce their work however they see fit, and you have no right to control their time and production. If you try to, you’ll be treating them like employees, and if you don’t also provide them with the entitlements that all employees enjoy, you can be penalized for misclassifying them.

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Using an Employer of Record in the United Kingdom

It’s possible to hire full-time employees in the United Kingdom legally, even if you don’t have an entity incorporated there. This is because EORs are service providers that already own entities in the UK, and it’s these entities that actually enter into contracts with your employees.

They draw up compliant contracts and sign them with your employees, becoming their legal employers in the UK, while your role is that of a worksite employer. EORs manage HR administration for you, so all that’s left for you to do is manage your workers’ daily tasks and schedules. They also manage compliance with local laws so that you don’t have to worry about being penalized in any way. This lets you focus on creating value for your business.

An EOR’s job is to take care of the following important functions:

  • Payroll: Without an intimate knowledge of the regulations for managing workers’ earnings, taxes and deductions, processing payroll in the UK can be a minefield. That’s why your EOR will manage this function for you with its expertise and knowledge of local regulations. All you need to do is keep track of your workers’ time and attendance and provide the EOR with this data. It will process your payroll, calculating the gross pay, taxes, other deductions, and net pay of each employee. It will also pay your employees, keep all payroll records, and report to the authorities as necessary.
  • Benefits administration: In the UK, your employees are entitled to certain benefits that relate to leave and insurance. Your EOR will keep track of each employee’s benefits entitlements and make all necessary contribution payments on your behalf as well. If you choose to enhance their compensation packages by offering optional benefits like employee stock ownership and retirement plans, your EOR will manage these for you as well. Most EORs can connect you to plan providers and administer these plans on your behalf for an extra fee.
  • Taxes: In the UK, as in most other countries, employees must pay income tax on a pay-as-you-earn (PAYE) basis. The EOR will calculate these taxes based on your employees’ estimated tax burdens and withhold them from their paychecks. It will then remit these amounts to the HMRC (His Majesty’s Revenue and Collections) and issue tax forms to your employees.
  • Contracts: Your EOR will work with you to set compensation bands and benefits offerings that are appropriate for UK workers. It will then write these compensation details into the contracts it prepares for each of your employees, sign them, and store all contracts for you.
  • Terminations: You may need to terminate workers when closing down your operations, downsizing, or for individual reasons. You’ll explain these reasons to your EOR, and it will evaluate them to guide you forward. It will terminate your workers as their legal employer and manage notice periods and severance pay as required.
  • Compliance: Without an EOR, it can be very hard to navigate the labor and tax laws in the UK. However, when you partner with one, it manages compliance for you. It ensures that your contracts and working conditions are always compliant and files mandatory reports with various government agencies. This greatly reduces your risk of non-compliance in the UK.
  • Recruitment: Some EORs don’t offer tools or services for recruiting, but several do help you find workers in the UK. EORs can offer active recruitment services that help you directly to find the UK talent that you require. Others simply provide tools you can use to perform your recruitment function on your own.

How Much Does an Employer of Record in the UK EOR Cost?

How much your company will pay for UK EOR services will depend on the package of services it offers, the size of your business, and the length of the agreement, among other factors. As a very rough guide, it would not be uncommon to pay fees of between £500 and £2.000 per employee per month or, for larger businesses, between 10% and 15% of each employee’s annual salary.

Employment and Labor Laws in the United Kingdom

Labor laws have been instituted in the UK since at least the 14th century to protect the rights of both employees and their employers. The modern country has a wide range of legal instruments that manage employment, most especially the Employment Rights Act (ERA).

When you work with an EOR, it will advise you and manage compliance with these laws. However, it can still be very useful to know some of the major points of law so that you’ll be prepared for what you’ll need to provide for your employees. 

Employment Contract Requirements

Employment agreements or contracts in the UK don’t need to be written. However, if they’re oral contracts, the employer also needs to provide a written statement of the particulars of the contract to their employee within two months of them starting work. These written particulars must include:

  • Names of employer and employee
  • Work start date
  • Job title and outline of duties
  • Duration (for fixed-term contracts)
  • Place of work
  • Hours of work
  • Pay rates 
  • Holiday entitlements
  • Sick pay
  • Pension schemes
  • Probationary periods (if applicable)
  • Termination conditions (notice periods and severance pay if applicable)
  • References to collective agreements (if applicable)

Fixed-term contracts are also allowed in the UK. There is no specific limit on the length of a fixed-term contract or the number of times it can be renewed. However, after four years of continuous employment on fixed-term contracts, employment must normally become permanent.

Working Hours

Most employees in the UK work 40 hours per week, generally between the hours of 7:00 am and 7:00 pm. If they work more than six hours a day, workers are entitled to at least one 20-minute break for rest or meals, which may or may not be paid depending on their contract details.

Overtime

In most cases, employees are not allowed to work longer than 48 hours a week over a period of 17 weeks. That means they can work more in some weeks as long as their average doesn’t exceed 48 hours. However, workers must receive 11 hours of rest between shifts, a period of 24 hours of rest once each week, and a period of 48 hours of rest once every two weeks.

Probation Periods

Probation periods in the UK are not highly regulated. A probation period can be used by an employer with a new employee they’ve never employed before. The maximum length of a probation period in the UK is 24 months, but whatever the length, it should be stated in the employment contract. During probation periods, employees are not protected against unfair dismissals and may essentially be dismissed without cause.

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Payroll and Employment Taxes in the United Kingdom

Fiscal Year

The government’s accounting and tax year starts on April 6th and ends on April 5th of the following year. This is the fiscal year that most employers also follow.

Payroll Cycles

Pay periods are not set by law in the UK. Most employees are normally paid monthly, bi-weekly, or weekly. Monthly pay periods are the most common, and employees typically receive their pay on the last work day of the month. 

Minimum Wage

The UK sets a national living wage (NLW) for all workers aged 21 and over, which is 12.71 GBP (around 16.15 USD) per hour starting on April 1, 2026. There’s also a development rate, which is 10.85 GBP/hour (around 13.80 USD) for workers aged 18-20 and a youth and apprentice rate of 8.00 GBP/hour (around 10.20 USD).

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Bonus Payments

Thirteenth-month bonuses are not mandatory or customary in the UK. Employers can reward their employees with bonuses, but they must report these as employee earnings for tax purposes.

Employer Tax Contributions

Employers in the UK contribute between 18% and 18.5% of their employees’ gross earnings to three programs: workplace pensions, NIC, and the apprenticeship levy.

  • Workplace pensions: Workplace pensions are mandatory in the UK, and contributions vary by employer and pension type. However, the minimum contribution for employers is 3% of an employee’s earnings.
  • Apprenticeship levy: All employers who have a payroll of more than three million GBP into a fund that supports apprenticeships. This levy is just 0.5% of their total payroll in excess of three million GBP.
  • National Insurance Contributions: NICs are similar to social security in other countries and are applied at a flat rate to employee earnings. The rate in the 2025-2026 fiscal year is 15.00% on employee earnings above 96 GBP/week.

Employee Payroll Contributions

Employees in the UK also pay national insurance contributions. In general, they pay 8% to NICs on income over 242 GBP/week and 2% on earnings over 967 GBP/week. They also must contribute at least 5% of their earnings to their workplace pension programs. 

Individual Income Tax Contributions

The UK levies a personal income tax that employers are required to calculate and withhold from employee paychecks. The amount an individual pays depends on their income as well as possible deductions. All people can deduct 12,570 GBP in the 2025-2026 tax year and must pay taxes on income in excess of this, according to this table:

Income (GBP)Tax Rate
0 – 12,5700%
12,570 – 17,5700% (for savings only)
12,570 – 50,27020%
50,271 – 125,14040%
Over 125,14045%

Note that these rates are for England, Wales, and Northern Ireland. In Scotland, the rates vary from 19%-48% along different income bands.

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Time Off and Leave in the United Kingdom

Mandatory Leave Entitlement

UK employees are entitled to a minimum of 28 days of paid annual leave. This leave is continuously accrued throughout the working year, and employees may take leave as soon as it has been accrued.

Public Holidays

In the UK, the term “bank holiday” is generally used to refer to public holidays, but true bank holidays are simply official days when banks are closed for business. There are eight in England and Wales, nine in Scotland, and ten in Northern Ireland. However, there are only eight public holidays in all of the UK, which include:

  • New Year’s Day (January 1)
  • Good Friday (date varies)
  • Easter Monday (date varies)
  • Early May Bank Holiday (date varies)
  • Spring Bank Holiday (date varies)
  • Summer Bank Holiday (date varies)
  • Christmas Day (December 25)
  • Boxing Day (December 26)

Workers are not, however, automatically entitled to time off or holiday pay on these days. Instead, their entitlements depend on what is included in their contracts. Many employers close their businesses and give these days off, some with pay.

Sick Leave

Employees in the UK can take up to seven days of sick leave without a medical certificate. After this, they need a certificate to prove their inability to work and may collect statutory sick pay for up to 28 weeks.

Parental Leave

Pregnant mothers are entitled to 26 weeks of ordinary maternity leave and another 26 weeks of additional maternity leave, during which time their right to return to work is protected. Mothers are paid 90% of their regular earnings for the first six weeks of leave and 187.18 GBP/week or 90% of their average weekly earnings, whichever is less, for the next 33 weeks. The last 13 weeks of maternity leave are unpaid. Partners of mothers giving birth can take one or two weeks of leave and are eligible for 187.18 GBP/week or 90% of their average weekly earnings, whichever is less.

Parents are also entitled to take as many as 18 weeks of unpaid parental leave up to their child’s 18th birthday. They can take this leave anytime, but for a maximum of four weeks per year.

Bereavement Leave

There is no mandate for employers to provide bereavement or compassionate leave, but most will allow absences of between three to five days.

Terminations and Severance in the United Kingdom

Termination

Employees in the UK can choose to terminate their contracts, or they can be terminated by mutual agreement with the employer. Employers can terminate workers’ contracts for several reasons, including redundancy, gross misconduct, and inadequate performance. Employees must be provided with justifications for their dismissals.

Notice Periods

Notice periods are mandated in the UK and are required for all employees, unless they are dismissed for gross misconduct. The lengths of notice periods vary according to the years of service the employee has provided to their employer, according to this schedule:

Duration of EmploymentLength of Notice Period
Less than 1 monthNone
1 month to 2 years1 week
2 – 12 years1 week for each year of employment
12 years or more12 weeks

Employers may only provide payment in lieu of notice if this possibility has been included in an employee’s contract.

Severance and Redundancy Pay

Severance pay isn’t mandatory in the UK except for workers made redundant, meaning their jobs disappear for economic reasons, and they aren’t replaced by anyone else. In this case, their redundancy pay is provided based on their age and years of service.

Workers are paid half a week’s pay for each year of service provided under the age of 22. They receive one week’s pay for each year they worked between the ages of 22 and 40, and 1.5 weeks’ pay for years of service when they were 41 and older.

Why Hire in the United Kingdom with an EOR

There are many great reasons to hire UK workers, and for many employers, partnering with an EOR in the UK to employ them provides lots of advantages, including:

  • Language and cultural compatibility: English is the language of business in the UK, and language and cultural similarities can make working with UK employees easy and convenient.
  • Compliance: EORs help employers navigate the complex and complicated system of law in the UK. They help ensure compliance and therefore reduce risk for international employers trying to enter the UK market.
  • Attractive economy: As one of the biggest economies in the world, the UK represents a highly attractive market that many investors can enter by employing UK workers. This country also offers political stability that reduces risk when entering this market.
  • Educated and skilled workers: The UK is home to a well-educated workforce that has highly sought-after skills in many industries. Employers can access these workers quickly by partnering with EORs.

How to Choose an EOR in the United Kingdom

Choosing a service provider is always a challenge. If you’re planning to work with an EOR in the UK, focus on these criteria to help you select the best provider for your needs:

Experience

Look for a provider with extensive experience hiring workers in the UK. It will have the knowledge of local laws and systems necessary to help you manage UK employees compliantly. 

Price

Prices can vary widely for EOR services in the UK. Plan a budget that represents your hiring needs and then choose a provider that can offer you all the services you need within your budget.

Services

If you need only basic services, any EOR will do. However, if you need extra support like supplementary benefits administration and recruitment, you’ll need to look harder to find an EOR that can provide everything you require.

Hire Employees With the Best United Kingdom EOR

Remote People

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At Remote People, we offer comprehensive EOR services in the UK, combining recruitment support, fast onboarding, and full compliance management through our intuitive, cloud-based platform. We help you source talent, generate and store compliant contracts, and integrate employees into payroll with speed and accuracy. Our team manages all statutory obligations, including National Insurance Contributions and leave entitlements, and we also support optional benefits like private health coverage and equity plans.

When you’re ready to establish a local presence, we assist with entity setup to ensure a smooth transition from EOR to direct employment.

Deel

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Deel is a widely trusted EOR provider offering services in the UK and across 150 countries, backed by a powerful all-in-one HR platform. It streamlines onboarding—typically within seven days—by handling contract generation, document collection, and registrations with tax and social security authorities. While the platform excels in HR automation and compliance, it lacks recruitment tools or services, making it best suited for companies that already have candidates in place and need efficient, tech-driven employment support.

Remote

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Remote.com delivers full-featured EOR services in the UK through a powerful HRIS platform designed for end-to-end team management. It includes time and attendance tools that support real-time payroll and PAYE tax reporting—critical for UK compliance. While Remote doesn’t offer active recruitment, it provides tools like an ATS, access to talent pools, and AI-driven candidate matching to help clients hire efficiently. With onboarding typically completed in three days, Remote is a strong choice for companies that want a tech-driven, self-managed hiring and employment solution.

 

Expand into the UK Easily with Remote People’s Employer of Record in the United Kingdom

Remote People offers professional Employer of Record (EOR) services to support your hiring needs in the UK. If you’re looking for a reliable, cost-effective solution to expand your team without setting up a local entity, we’re here to help. Contact Remote People today to simplify your UK hiring with expert support and full compliance.