How to hire employees in the UK through an Employer of Record (EOR) [2026 guide]

Hiring in the UK is usually one of the easier international moves. The talent pool is deep, the business culture is familiar to most of the world, and the working day overlaps with both North America and Asia. The hard part comes after you've found the person: your company needs to be their legal employer, and a company with no UK presence can't be.

Setting up a UK entity solves that eventually. Companies House will usually incorporate you within 24 hours, but you can't pay an employee until you've registered with His Majesty's Revenue and Customs (HMRC) as an employer, set up a workplace pension with a UK provider, and opened a local bank account. You'll also need an employment contract that holds up as the Employment Rights Act 2025 phases in through 2027. For one or two hires, it's a lot.

An employer of record (EOR) is the other route. The EOR is the legal employer in the UK. It runs payroll, makes pension contributions, files with HMRC, and takes on the compliance liability. You just hire the person, set their pay, and manage their work. This guide covers how that works for a UK hire, what it costs, and what's changing in UK employment law this year and next.

What an employer of record does in the UK

An EOR becomes the legal employer of the people you hire in the UK. It issues the contract, registers them with HMRC, runs payroll under Pay As You Earn (PAYE), enrolls them in a workplace pension, and handles statutory pay, leave, and termination. You set the role, the salary, and the objectives, and the person reports to you.

The choice is entity or EOR because there's no third option. A company with no place of business in the UK can't run UK payroll, so a UK employee paid from head office would have to settle their own tax with HMRC through a Direct Payment scheme, and you'd still owe pension contributions. That's a contractor arrangement in everything but name, and HMRC judges employment status on how the relationship works, not on the paperwork. If someone has been contracting for you full-time, an EOR is the clean way to make them an employee.

EOR vs. your own legal entity in the UK

The question, really, is how committed you are to the UK. If the answer is one or two hires and you'll see how it goes, an EOR is the obvious route. If you're opening an office, building a team, or selling into the UK market, an entity will pay for itself.

The entity path has more steps than the Companies House form suggests. HMRC employer registration can't be done more than two months before your first payday. You'll need a workplace pension scheme in place before that payday, because auto-enrolment duties start on the day your first employee starts. UK banks take their time with foreign-owned companies, and you'll want UK-law contract templates before you make an offer. Two to three months from decision to first payroll is realistic.

The break-even point depends on how many people you hire and how long you keep them. Rippling's entity vs. EOR cost calculator runs the numbers for your headcount, and there's a longer walkthrough of how to make the call if you're on the fence.

Step by step: How to hire through an employer of record in the UK

Step 1: Choose an EOR that owns its UK entity

Almost every EOR operates in the UK, so coverage isn't what separates them. These five things do:

• Who is the employer in law? Some EORs employ your hire through a UK company they own. Others subcontract to a local partner, who becomes the employer. The partner model works, but it puts a third party between you and your employee, and it's that partner's payroll, support desk, and data handling you're relying on.

• Where does payroll run? An EOR that calculates PAYE and pension contributions in its own system can show you a pay run before it's approved. One that sends a spreadsheet to a UK bureau and re-keys the results can't, and that handover is where wrong tax codes and missed HMRC deadlines come from.

• Where does employee data live? National Insurance numbers, bank details, and sick notes will sit with the EOR, which makes it a data processor under UK law. You should get a Data Processing Agreement without asking twice, and be told where the data is hosted.

• Who does your employee call? Payslip queries, tax code changes, and pension opt-outs go to the EOR, not to you. Find out whether that support desk works UK hours.

• What does leaving look like? Moving employees between EOR providers is a re-hire in law. The notice period and how records are handed over decide whether it's a formality or a mess.

The payroll question is worth a closer look, because it's really about whether the EOR is a platform or an aggregator:

One UK limit applies whichever provider you pick: an EOR generally can't sponsor a work visa (see the FAQs), so this route is for people who already have the right to work in the UK. 

Looking to compare EOR providers? Check out our guide.

Step 2: Check right to work and collect what the EOR needs

Every UK employer, EOR included, must check a new hire's right to work before their first day. For British and Irish citizens, that's a passport check, in person or through a certified identity service provider. For everyone else, including EU citizens, it's a Home Office online check using a share code. An EU passport on its own hasn't been proof of right to work since Brexit; the person needs settled or pre-settled status or a visa.

Get it wrong and the civil penalty runs to tens of thousands of pounds per worker. A good EOR builds the check into onboarding and keeps the evidence on file.

With right to work confirmed, the EOR will ask you for:

• Legal name as it appears on their bank account

• Date of birth, UK home address, and start date

• National Insurance number

• P45 from their previous employer, or a completed HMRC starter checklist if they don't have one

• Student loan plan type, if any

• Bank account details for a pounds sterling account

• Agreed salary in GBP, plus any allowances or bonuses

Step 3: Issue a compliant employment contract

The contract comes from the EOR on its UK template, but the terms inside it are yours to set, within what UK law allows. The one hard deadline is that the employee must receive a written statement of employment particulars on or before their first day. What UK law fixes:

• Probation has no legal maximum, but from January 2027 anything longer than six months stops giving you a clean exit, because that's when unfair dismissal protection kicks in.

• Hours are capped at an average of 48 a week unless the employee opts out, which most professional contracts include.

• Leave is at least 5.6 weeks a year. Maternity leave runs to a year, paternity leave is two weeks from day one, and sick pay starts on the first day off.

• Notice has a statutory minimum that grows with service, but most professional contracts set one to three months.

• Termination needs a fair reason and a fair process. There's no at-will employment in the UK.

Two things regularly catch foreign employers out.

Tax isn't uniform across the UK. Scotland has six income tax bands where England, Wales, and Northern Ireland have three, so two employees on the same salary can take home different amounts. The EOR applies the right tax code based on where the employee lives.

Pension auto-enrolment isn't a one-off at onboarding. Eligibility is reassessed every pay period, so someone hired below the earnings trigger has to be enrolled the month they cross it, and anyone who opts out has to be re-enrolled every three years. Enrollment can be postponed for up to three months, which many employers line up with probation.

Your decisions are salary, allowances, probation length, and whether the role is remote or hybrid. Rippling EOR flags non-compliant leave policies and tells you how to fix them, and if you want to give UK employees more than the statutory minimum, you can.

Step 4: Run payroll and pay the statutory contributions

Most UK employees are paid monthly. On each pay date, the EOR:

• Pays the net salary in pounds sterling

• Withholds income tax and National Insurance under PAYE

• Deducts the employee's pension contribution and any student loan repayment

• Pays the employer's National Insurance and pension contribution on top of salary

• Reports the pay run to HMRC on or before payday under Real Time Information (RTI)

Late RTI submissions attract monthly penalties, so this is one of the things you're paying the EOR never to miss. The contribution rates are in the FAQs below.

Where the payroll runs matters here. An EOR that uses a UK bureau sends you a report after the fact; Rippling EOR calculates UK payroll on its own software, so UK employees appear in the same pay run, with the same approvals and reporting, as everyone else you pay.

Below is a preview of how Rippling's one-click global payroll system works:

What's changed in 2026 for employers in the UK

The Employment Rights Act 2025 became law on December 18, 2025. It's the largest change to UK employment law in decades, and it's taking effect in stages. Here's where it stands.

Already in force, from April 2026

• Statutory Sick Pay from the first day of sickness, with the earnings threshold removed. Everyone now qualifies, at the lower of £123.25 a week or 80% of average weekly earnings.

• Day-one rights to paternity leave and unpaid parental leave.

• The Fair Work Agency, a single enforcement body for minimum wage, holiday pay, sick pay, and agency worker rules.

From October 1, 2026

• Employers must take "all reasonable steps" to prevent sexual harassment, and become liable for harassment of staff by third parties such as customers.

• The time limit for bringing most employment tribunal claims doubles from three months to six.

• A written statement telling new and existing workers they have the right to join a trade union.

From January 1, 2027

• The qualifying period for unfair dismissal claims drops from two years to six months, and the compensation cap is removed. This applies to people already in post, so anyone you hire from July 2026 onward is covered the day the change lands.

Still to come in 2027: guaranteed-hours offers for zero-hours and low-hours workers, restrictions on fire and rehire, and stronger dismissal protection for pregnant employees and new mothers.

For a foreign employer, the unfair dismissal change is the one to plan around. You used to have two years to part ways with a hire that wasn't working out. From January 2027 you have six months, so probation periods, performance reviews, and documented decisions need to be in place from the start. A good EOR updates its contracts and processes as each wave lands.

Why Rippling is the right EOR for hiring in the UK

The UK is rarely the last country a company hires in. Whatever you choose for this hire, you'll be living with it when the next one is in Germany or Singapore, and that's where most EORs start to show their seams: a separate login, a separate payroll report, an employee who exists in the EOR's system but not in yours.

Rippling's EOR employs your UK hires through Rippling's own UK entity, and their payroll runs on Rippling's HMRC-recognized software rather than through a bureau. PAYE, National Insurance, pension contributions, and RTI submissions are all calculated in the platform, which means you can see a UK pay run before it's approved, in the same screen as your other countries. When the next stage of the Employment Rights Act takes effect, the contract templates and payroll rules change in the product, not in a PDF you're sent.

It also means your UK employee is a normal record in Rippling's global platform. Same org chart, same permissions, same device provisioning, same reporting as the people on your home entity. Crate, a 29-person company with staff in the UK, France, the Netherlands, Trinidad and Tobago, and the Philippines, brought its EOR employees into Rippling to close that gap and got back about 10 hours of HR and payroll admin a month. What Head of HR Jisselle Baldwin-Todd talks about, though, is the support.

"Rippling's customer support is so on it." – Jisselle Baldwin-Todd, Head of HR, Crate

Rippling AI picks up the routine questions a UK employee sends to HR in their first few months: why the tax code changed, how many holiday days are left, what the pension line on the payslip means.

If you have a UK hire waiting on an employer, see how Rippling EOR works.

Benefits of using an employer of record in the UK

Hiring in the UK means handling PAYE, National Insurance, pension auto-enrolment, and employment law that's changing through 2027. An EOR takes on all of that. The main benefits:

• You can hire this month. The entity, pension scheme, and payroll registration already exist. Your part is the offer and the contract terms.

• Someone else owns the rulebook. PAYE, RTI deadlines, pension assessments every pay period, right-to-work evidence, and three more waves of the Employment Rights Act. The EOR is the employer, so the EOR is liable.

• Nothing to unwind. If the role doesn't work out or the UK plan changes, you end an EOR agreement. There's no company to strike off and no final accounts to file.

• Room to change your mind. Companies that grow a UK team through an EOR often move those employees onto their own entity later. A good EOR treats that transfer as part of the job rather than a lost customer.

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Frequently asked questions about hiring through an EOR in the UK

How much does an EOR cost in the UK?

Pricing is either a flat amount per employee per month or a cut of that employee's payroll, and some providers add setup or offboarding charges. Fees only apply to the people employed through the EOR, so one UK hire on an EOR alongside a home-entity team is a normal arrangement. When you compare the EOR fee with an entity, add the employer National Insurance and pension contribution to both sides; those are costs of employing someone in the UK, not costs of the EOR.

What's the difference between a PEO and an EOR in the UK?

A professional employer organization (PEO) shares employer responsibilities with you under a co-employment arrangement, and that only works if you already employ the person through your own UK entity. An EOR is the employer outright and doesn't need you to have one. For a company with no UK entity, an EOR is the only one of the two that applies.

What happens if a UK hire doesn't have the right to work?

The employer faces a civil penalty of up to £45,000 per worker for a first breach and £60,000 for a repeat, and up to five years in prison for knowingly employing someone illegally. A correctly completed check before the start date gives the employer a statutory excuse against the civil penalty, which is why the EOR does it before day one, not after.

Is using an employer of record legal in the UK?

Yes. The UK has no restriction on a third party employing staff who work for your business, and the model is widely used. The EOR is the employer in law, which means it carries the employment obligations, and you're a client of the EOR rather than an employer. What matters is that the EOR is a registered UK employer running its own compliant payroll.

Can an EOR sponsor a foreign national to work in the UK?

Generally, no. Sponsoring a Skilled Worker visa requires a Home Office sponsor licence, and sponsor guidance doesn't allow a licence holder to sponsor someone who will work for a third party under that party's direction. That's exactly the EOR arrangement. So the EOR route is for people who already have the right to work in the UK: British and Irish citizens, people with settled or pre-settled status, and holders of visas that permit the work. If you need to relocate someone into the UK on a work visa, you'll usually need your own entity and your own sponsor licence.

How do EORs protect employee data?

The UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018 apply, with the Information Commissioner's Office as regulator. The EOR is processing your employees' personal data on your behalf, so you need a Data Processing Agreement with it, and you should know whether that data stays in the EOR's own systems or gets passed to a payroll bureau. Rippling publishes its security and compliance practices.

Does an EOR handle UK tax filings?

Yes. As the employer, the EOR operates PAYE: it withholds income tax and National Insurance, submits the RTI report for every pay run, pays HMRC monthly, and issues the employee's P60 at year end. Pension contributions go to the workplace scheme on the same cycle. There's nothing for you to file with HMRC, because you aren't the employer.

What are the mandatory employee benefits in the UK?

Employees in the UK are entitled to:

• A workplace pension, with a minimum 3% employer contribution on qualifying earnings, for anyone aged 22 to State Pension age earning over £10,000 a year

• Statutory Sick Pay from day one

• 5.6 weeks of paid holiday a year (28 days for a full-time employee, which can include bank holidays)

• Statutory maternity, paternity, adoption, shared parental, parental bereavement, and neonatal care leave and pay

• Statutory redundancy pay after two years' service

• National Living Wage of £12.71 an hour for workers aged 21 and over, from April 2026

The benefits guide for the UK covers each in detail, plus what's typically offered on top, like private medical insurance and enhanced pension contributions.

What are the employer costs for full-time employees in the UK?

On top of salary, employers in the UK contribute to the following for 2026/27:

Employees also pay income tax through PAYE. The 2026/27 rates for England, Wales, and Northern Ireland are:

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