If you want to hire in the UK but don’t want the cost, time, and admin of setting up a UK company, a UK Employer of Record (EOR) is often the fastest, lowest-friction route. With an EOR, you can onboard UK talent quickly while the EOR handles payroll, contracts, and employment compliance—without you incorporating a UK entity first.
This guide explains what a UK EOR is, how it works, what it costs, what you still control, and when it’s the right choice.
What is an Employer of Record (EOR) in the UK?
A UK Employer of Record is a third-party company that becomes the legal employer of your worker in the UK on paper, while the worker performs day-to-day duties for your business.
In simple terms:
You (the client): choose the candidate, define their role, manage their work, and approve salary/bonus decisions.
The EOR (the employer): issues the employment contract, runs payroll, handles UK employment administration, and supports compliance.
This lets you hire in the UK without opening a UK entity—useful for international companies expanding into the UK, remote-first teams, or businesses testing a market.
Why companies use a UK EOR (instead of opening a UK entity)
1) Speed to hire
Forming a company and establishing payroll, HR processes, and ongoing compliance can take time. A UK EOR approach can often onboard faster because the EOR already has UK payroll and HR infrastructure.
2) Reduced overhead
A UK entity typically brings ongoing obligations (banking, filings, payroll registration, HR compliance processes, bookkeeping/tax support, etc.). EOR compresses this into a monthly service.
3) Compliance confidence
UK employment has specific requirements around contracts, statutory leave, payroll deductions, pensions, and right-to-work checks. EORs handle these routinely.
4) Market testing
If you’re not sure you’ll hire long-term in the UK, EOR is a clean way to validate demand without committing to incorporation.
How a UK Employer of Record works (step-by-step)
Step 1: You select the candidate + compensation terms
You choose the talent, job title, working pattern, salary, start date, location (remote/hybrid), and any benefits.
Step 2: The EOR issues a UK-compliant employment contract
The EOR prepares the contract based on UK norms and legal requirements. You provide commercial terms; the EOR ensures the employment terms are structured properly.
Step 3: Right to work + onboarding checks
The EOR performs required onboarding steps, commonly including:
Right to work verification
New starter paperwork
Payroll setup (tax codes where relevant)
Policies and handbook acknowledgements
Step 4: Payroll + statutory deductions
The EOR runs payroll and handles required deductions and reporting. The employee is paid by the EOR.
Step 5: Ongoing employment administration
Typical ongoing coverage includes:
Payslips and payroll queries
Leave tracking (holiday/sick)
Statutory payments where applicable
Pension administration (where applicable)
Employment documentation support (letters, confirmations)
Step 6: Changes, performance input, and offboarding
You manage performance and day-to-day work; the EOR supports HR process steps if changes arise:
salary changes, promotions
disciplinary/performance processes (handled carefully)
resignation/termination processes aligned to UK standards
final payroll and documentation
What the EOR handles vs what you control
The EOR typically handles
Employment contract issuance and storage
Payroll processing, payslips, reporting
Statutory deductions and compliance processes
Leave administration (holiday, sickness)
Pension administration (where applicable)
HR documentation support
Offboarding paperwork and final pay administration
You typically control
Hiring decision
Role scope, KPIs, daily management
Work schedules (within legal/contractual boundaries)
Performance reviews and promotions (with EOR support on process)
Salary guidance and bonus approvals (implemented via payroll)
Think of it as: you run the business relationship; the EOR runs the formal employment relationship.
Key UK compliance areas a good EOR supports
A UK EOR is valuable because UK employment isn’t only “pay the salary.” Common compliance areas include:
1) UK payroll deductions (PAYE-style payroll)
Employees in the UK typically require payroll deductions and employer-side contributions that must be managed correctly and consistently.
2) Written employment terms and policies
UK employment contracts and documented policies matter—especially if disputes arise later.
3) Paid holiday entitlement and leave tracking
Holiday entitlement is a core compliance area. Tracking and correct accrual/payment are important.
4) Statutory sick pay and other statutory payments (where applicable)
Certain statutory payments can apply depending on eligibility. EORs help apply rules correctly.
5) Workplace pension duties (where applicable)
Auto-enrolment and pension rules can apply depending on the worker’s circumstances. EORs typically have mechanisms to manage this.
6) Right to work checks
Employers must verify someone’s right to work. An EOR usually provides a structured process.
7) Data protection (GDPR/UK GDPR)
Employment involves collecting personal data (IDs, bank details, addresses). Good EOR setups include proper data handling practices and agreements.
When EOR is the best option (and when it’s not)
EOR is great when:
You need 1–10 hires in the UK and want speed
You’re testing the UK market
You want to hire quickly without entity setup
You want help handling HR admin & compliance
You need a clean solution for remote UK employees
Consider opening a UK entity when:
You plan to hire a larger UK team long-term
You need full control over every HR/payroll policy detail
You want local contracts directly with your company for brand/structure reasons
You need complex local operations (e.g., regulated operations, certain types of sponsorship requirements, etc.)
A common path is: Start with EOR → prove demand → open UK entity later (and transition employees when ready).
EOR vs PEO vs Contractor: what’s the difference?
EOR (Employer of Record)
You do not need a UK entity
EOR becomes the legal employer
Best for hiring employees quickly in new countries
PEO (Professional Employer Organisation)
Often assumes you have a local entity
“Co-employment” style service model is more common in some markets
More suitable once you already have a UK structure
Hiring as a contractor
Contractor classification must be handled carefully
Contractors can be right for genuine independent work, but misclassification can be risky
If the role looks and runs like employment, EOR is often safer
What does a UK EOR cost?
Most EOR arrangements are priced as:
A monthly service fee per employee, plus
Pass-through employment costs (salary + required employer costs), plus
Optional add-ons (benefits, enhanced HR support, equipment, etc.)
Costs vary mainly by:
Number of employees
Role complexity (standard employee vs complex compensation)
Benefits package specifics
Any special compliance needs (e.g., additional HR advisory)
If you want, tell me the target salary range(s) and number of hires and I’ll draft a client-friendly estimate structure you can use on your proposal page.
How fast can you hire in the UK using an EOR?
In many cases, onboarding can be done quickly once:
candidate details are confirmed,
compensation package is approved,
and right-to-work checks + onboarding docs are completed.
The biggest delays usually come from incomplete paperwork, unclear job terms, or waiting on employee-provided details.
Common mistakes to avoid when hiring in the UK via EOR
Treating the EOR like “just payroll”
EOR is a full employment framework—use it properly (policies, onboarding, clear job terms).Unclear job scope and management ownership
Decide who handles performance feedback and day-to-day management (usually you), and document the workflow.Misaligned notice periods and termination expectations
UK offboarding needs to be handled carefully. Plan termination clauses and processes upfront.Not planning benefits and holiday policy early
Decide what you want to offer beyond minimum expectations (if anything), so recruitment stays competitive.Data handling without proper agreements
Make sure employment data handling is covered via proper client–EOR agreements.
Mini checklist: hiring in the UK without an entity (using EOR)
âś… Confirm role type: employee vs contractor
âś… Define compensation: salary, bonus, benefits, holiday approach
âś… Confirm working model: remote/hybrid, hours, equipment
âś… EOR issues UK employment contract + onboarding pack
âś… Right-to-work check completed
âś… Payroll setup complete + start date confirmed
âś… Ongoing HR workflow agreed (leave requests, reviews, changes)
FAQs (good for SEO + can be used as FAQ schema)
Is Employer of Record legal in the UK?
Yes—EOR is a legitimate operating model when structured correctly through proper contracts and employment processes.
Do I need a UK company to hire a UK employee?
Not if you use a UK EOR. The EOR can employ the worker locally while you manage the day-to-day work.
Can an EOR help with UK work visas?
Sometimes—this depends on whether the provider has the proper licensing and capability. If visa sponsorship is needed, confirm it explicitly before proceeding.
Can I move the employee to my own UK entity later?
Yes. Many companies start with EOR and later transition employees to their own UK payroll once they incorporate.
Who manages performance and daily tasks?
You do. The EOR supports the employment framework and HR process steps if needed.
