Employer of record (EOR) in the UK: A quick guide

With its skilled workforce, global business hubs, and English-language advantage, the United Kingdom is a top destination for companies expanding abroad. But while tapping into the U.K’s labor market is appealing, hiring across borders can quickly get complicated.

If you’re not ready to set up a local entity or subsidiary—or just want to skip the paperwork and steep expenses—a U.K. employer of record (EOR) can help you hire, onboard, and manage talent compliantly.

In this guide, we’ll explain what it takes to hire employees in the U.K., how EORs work, and the key benefits and regulations you need to know. 

What is an EOR in the UK?

An employer of record (EOR) is a third-party organization that becomes the legal employer of your new employees. While your team manages the day-to-day work, the EOR handles things like payroll processing, benefits administration, and pension contributions. 

Using an EOR is a simple, low-risk option to hire talent in the U.K., as it takes care of the legal and administrative heavy lifting. While you focus on organizational strategy, the EOR ensures that you’re always compliant with U.K. employment regulations and labor laws. 

Keep in mind that there are three main operating models for EORs, each with its own pros and cons. The ideal EOR model for bringing on workers in the U.K. will depend on your company’s specific needs and goals. 

4 steps to hire in the UK

Hiring new employees anywhere requires your team to navigate a maze of paperwork and legal jargon—unless, of course, you partner with an EOR that handles the legal and administrative complexities.

With the right support, hiring in the U.K. can be straightforward. Here’s how to approach the labor market in four simple steps: 

1. Weigh the benefits of using an EOR

Before diving into that stack of CVs, it’s important to understand why an EOR can be such a great ally when hiring in the U.K. With an EOR, you offload responsibilities like payroll, benefits, and pensions while adhering to local employment laws. Compared to setting up an independent legal entity, it’s a quick and cost-effective way to hire talent across borders. 

2. Consider alternatives available in the market

While an EOR is often the simplest option, alternatives like establishing a legal entity offer more direct control over HR operations. However, this involves higher upfront costs, ongoing compliance obligations, and more administrative responsibilities. If you need a hassle-free way to hire in the U.K., an EOR is the most efficient solution. 

3. Hire and onboard employees

Once you’ve chosen an EOR, it’s time to hire and onboard. While you focus on finding the right talent, an EOR takes care of all the logistics. This includes managing benefits, ensuring compliance with pension and healthcare requirements, and guiding new employees through the specific details of their contracts. 

4. Process payroll

An EOR performs all payroll-related tasks, from calculating wages to ensuring timely payments. In the U.K., specifically, it also oversees all required employee documentation, including registering employees for the government’s National Insurance program, ensuring compliance with His Majesty’s Revenue and Customs (HMRC) tax laws, and setting up pension contributions according to U.K. regulations. 

Benefits of using an EOR in the UK

Expanding into new labor markets can mean major growth for your business. But dealing with the intricacies of local tax regulations and labor laws brings ongoing challenges. Here’s why using an EOR in the U.K. simplifies the process and helps your business thrive:

• Simplify the hiring and onboarding process: An EOR manages the entire hiring process, from drafting employee contracts to setting up tax contributions. This lets you focus on finding the right talent—not the paperwork.
• Ensure compliance with local labor laws: U.K. labor laws are complex and vary by region. An EOR ensures full compliance with national and local regulations, including tax obligations, pensions, and working hours.
• Handle payroll, taxes, and benefits: An EOR oversees payroll processing, tax filings, and employee benefits while providing legal expertise to keep your operations compliant. This lets you focus on growing your business without worrying about regulatory risks.

How much does it cost to hire in the UK?

The cost of hiring in the U.K. involves more than just paying salaries. Employers are responsible for National Insurance contributions, mandatory pensions, and holiday pay. Some businesses also offer other benefits-in-kind, such as employer-provided housing, company vehicles, or vouchers for things like child care, meals, and public transport. In short, the cost of a new employee varies on individual salary, tax considerations, and benefits packages. 

The cost of using an EOR also depends on the scope of services, employee location, and the number of employees the EOR manages. Most EORs charge a flat monthly fee or a percentage of the employee’s salary. While this adds an expense, partnering with an EOR allows you to offload the complexity of payroll, benefits, and compliance—potentially offsetting the cost by reducing administrative workloads. 

What to know before hiring in the UK

Every country approaches labor differently. From working hour caps to data privacy laws, here are the basics you need to understand when hiring in the U.K.: 

1. Working hours

The U.K. limits the average working week to 48 hours over a 17-week reference period. However, employees aged 18 and over can voluntarily opt out of this limit by signing a written agreement if they choose to work longer hours. Employers must also provide minimum rest periods, including a 20-minute uninterrupted break when working more than six hours in a day, at least 11 hours of rest between working days, and either 24 consecutive hours of rest each week or 48 hours over a two-week period. 

2. Healthcare

In the U.K., the National Health Service (NHS) provides employees with free healthcare, funded by National Insurance contributions (NICs) from the employer and employee salary deductions. Some employers in the U.K. also offer private health insurance as an added employment benefit.

3. Data protection

Employees in the United Kingdom are protected under the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018. These laws regulate how employers collect, use, store, and share personal information, requiring them to process workers’ data transparently, fairly, securely, and only for legitimate purposes with a lawful basis.

4. Maternity leave

Pregnant employees in the U.K. can take up to 52 weeks of leave, including 26 weeks of paid leave, if they meet eligibility requirements. Employers must also provide statutory maternity pay for qualifying employees. 

5. Termination

U.K. employment law requires employers to give employees notice before termination. The notice period is determined by either the employment contract or statutory law—whichever provides more protection.

6. Payroll and payroll taxes

U.K. employers deduct income tax and National Insurance from employee pay and report to HMRC. This means navigating the U.K.’s Real Time Information (RTI) system, using the PAYE (Pay As You Earn) method, applying the correct tax codes, and submitting filings on time. 

7. Labor law compliance

U.K. labor laws require employers to pay the National Minimum Wage, enroll eligible workers in a pension scheme, and follow laws on working hours and holiday entitlements. Employers must also follow employment rights (like statutory sick pay) and antidiscrimination protections. 

Start hiring in the UK with Oyster

Expanding across borders, whether to the U.K. or elsewhere, creates exciting new possibilities for your business. But complex local labor laws and tax regulations can slow your momentum. With Oyster’s built-in compliance, local expertise, and hands-on support, you can confidently manage the challenges of hiring in 180+ countries, including the U.K.

Oyster’s employer of record solution makes it easy to hire, pay, and care for employees worldwide—all through a single, easy-to-use platform. We simplify every stage of the process—from hiring and payroll compliance to benefits management—helping you grow your team without legal or financial risks. We handle the complexities so you can stay focused on building your business.

Book a demo to learn more.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.