If you’re hiring in the UK, you’ll quickly run into two common options: Employer of Record (EOR) and Payroll Services. They sound similar because both involve paying workers correctly—but they solve different business problems.
This guide explains EOR vs Payroll Services and what each service does, when you should use one (or both), and how to choose the right approach for your UK hiring plan.
What is an Employer of Record (EOR) in the UK?
A UK Employer of Record is a provider that becomes the legal employer of your worker in the UK. Your company still directs the day-to-day work, but the EOR handles the legal and administrative side of employing someone locally.
Typically, a UK EOR will manage:
Employment contracts and onboarding documentation
UK payroll administration and statutory deductions
Compliance support around local employment obligations
HR administration aligned with UK requirements
If you don’t have a UK entity (or don’t want to set one up yet), EOR is often the fastest way to hire in the UK without building a full local infrastructure.
Learn more about UK EOR here: Employer of Record (EOR) in the UK
What are Payroll Services in the UK?
UK payroll services focus on paying workers accurately and managing payroll operations—usually when you are already the legal employer (for example, you already have a UK company or you’ve employed the worker directly).
Payroll services commonly include:
Payroll calculation (gross-to-net)
Payslips and payroll reporting
PAYE-related deductions handling and processing
Routine payroll support for employee queries
Payroll services are ideal when you want to reduce admin workload and improve accuracy—without changing who the legal employer is.
Helpful guide: How to Choose a Payroll Service
EOR vs Payroll: The key difference in one sentence
EOR = handles legal employment + compliance in the UK.
Payroll Services = handle payroll processing when you already employ the worker.
When you should choose EOR (common UK scenarios)
EOR is a strong fit if:
You don’t have a UK entity but want to hire a UK-based employee
You want faster onboarding without forming a company first
You want a provider to handle the employment paperwork and local admin while you focus on managing performance and delivery
When you should choose Payroll Services (common UK scenarios)
Payroll services are a strong fit if:
You already have a UK entity or you’re already the employer
Your main need is accurate payroll processing and reporting
You want to reduce payroll risk (missed deadlines, calculation errors, inconsistent records)
Can you start with EOR and later switch to payroll-only?
Yes—and it’s common.
Many businesses:
start with EOR to hire quickly (especially when testing the UK market), then
once the UK team grows, they establish a UK entity and switch to payroll services as the ongoing solution.
This approach keeps hiring fast early on and optimizes costs/structure later.
Quick decision checklist: EOR vs Payroll
Choose EOR if you answer “yes” to any of these:
Do we want to hire in the UK without setting up a company first?
Do we want the provider to handle the UK employment contract?
Do we want a lower-friction way to stay aligned with UK employment obligations?
Choose Payroll Services if:
Are we already the legal employer?
Do we mainly need help with running payroll smoothly and consistently?
Two reliable UK resources (outbound links)
If you want to understand the official payroll process in the UK, these are solid references:
Conclusion
If you’re hiring in the UK without a local entity, EOR is usually the simplest route to get started. If you’re already set up and just want payroll handled properly, payroll services are the better fit.
