Employer of Record UK: Ultimate Guide on Employer of Record 2025

An Employer of Record (EOR) is fast becoming an essential solution for companies looking to expand their workforce in the UK. It allows businesses to hire employees in the UK without having to establish a local legal entity. An EOR typically acts as a statutory employer, taking care of payroll and compliance and providing employee benefits but with control of the client company staying operational. There are potential benefits from this, namely, quicker market access than traditional methods, full compliance with UK labor law, and ease of HR management. This way, the UK business sector will be able to work through an EOR UK partner and focus on its core activity with easy access to the skilled labor market in the UK.

Table of Contents

• Overview about UK
• What is an Employer of Record in UK?
• Employer of Record vs Legal Entity
• Use Cases for Employer of Record UK
• Laws and Compliance for Hiring in UK
• Best EOR Companies in UK
• EOR Services in UK
• How to Hire Employees Through an EOR UK Partner
• Taxes in UK
• CTC Calculator for Hiring in UK
• Key Considerations for Hiring Employees Through EOR in UK
• Employee Benefits in UK
• Terminations in UK
• Choosing the Right EOR UK Services
• Benefits of Partnering with an Employer of Record in UK
• Risks or Drawbacks of EOR UK
• EOR vs HR Software in UK
• FAQs – EOR UK

Overview about UK

The UK is one of the most in-demand places globally by businesses. Strategically located between North America and Europe, it serves as a key hub for international trade and commerce. The country has more than 67 million citizens with very diverse and skilled workers.

Major business hubs include London, Manchester, Birmingham, and Edinburgh. These cities are finance, technology, and creative industries. London is especially a global financial center, and other cities such as Manchester and Birmingham are emerging as major players in innovation and tech development.

The UK is characterized by a stable political environment, diversified workforce, and focus on innovation, which is perfect for business growth. Such factors make the UK an attractive strategic destination for businesses looking to establish operations or scale through hiring employees in the UK.

What is an Employer of Record in the UK?

An Employer of Record UK is a third party that will take on employment responsibility from the client. This would include payroll preparation, tax compliance, as well as all labor regulations in the UK. The EOR can be considered the legal employer under tax and regulatory requirements, but the clients retain full control of daily responsibilities and performance of the employees involved. This division of responsibilities makes companies not burdened with issues of local employment laws, letting them focus on operations alone.

Some of the most critical services in EOR in the UK include payroll management, employment legislation compliance, management of employee benefits to include pensions and health care, and the development of employment contracts in compliance. An EOR can effectively help a business expand their workforce, manage risks and work their way through some of the finer points in the UK labor market.

Employer of Record vs Legal Entity

Aspect	Employer of Record (EOR UK)	Legal Entity (UK)
Setup Time	Quick and efficient; operations can begin within days or weeks.	Lengthy and complex; may take months to establish.
Cost	Lower upfront costs; no need for significant financial investment.	High initial costs, including registration fees and legal expenses.
Compliance	EOR ensures full compliance with UK labor laws and regulations.	Requires in-depth knowledge of local laws and ongoing compliance efforts.
Administrative Burden	Minimal; the EOR manages payroll, taxes, and employee benefits.	High; requires dedicated resources for HR, payroll, and tax management.
Autonomy	Limited control over employment processes (e.g., payroll structure).	Full autonomy in managing operations and employee policies.
Flexibility	Ideal for short-term or exploratory market entry.	Better suited for long-term strategic investments.
Risk	Reduced risk; the EOR handles legal and employment liabilities.	Higher risk; the company is directly responsible for all legal and compliance issues.
Scalability	Easy to scale up or down based on workforce needs.	Scaling requires more resources and time.
Reputation	May not offer the same level of local presence or brand visibility.	Establishing a legal entity enhances credibility and local presence.

This comparison highlights that an EOR UK is an excellent choice for businesses seeking quick market entry and cost-efficiency, while a Legal Entity UK is more suitable for companies with long-term operational goals and the resources to handle the complexities of setting up and managing a local entity.

Use Cases for Employer of Record UK

An Employer of Record UK can offer strategic advantages to any business willing to expand or hire staff within the UK. Some critical instances where use of EOR is strongly favorable are summarized below:

1. Business Expansion: Companies can test the UK market without having to set up a local legal entity. This allows for a rapid market entry with low financial and administrative risks, which is perfect for businesses looking into new regions.
2. Hiring remote employees. Given that working remotely is increasingly the choice of most employees, EOR streamlines the entire recruitment process of talents working within and for various UK companies, compliant with all UK labor laws; companies easily tap into the great skilled and diverse UK workforce.
3. Transitioning Contractors to Employees: For a business transitioning independent contractors to full-time employees, an EOR is extremely helpful by taking care to handle compliance, contracts, and employee benefits so that transition can be smoothly made.
4. Recruitment Globally: International talent recruitment in the UK for jobs with the support of an EOR would make it even easier while providing mitigation on risks related to compliance.

Suggested Read: EOR vs Payroll Solutions: What’s the Difference?

Laws and Compliance for Hiring in UK

UK labor laws are very complex, but an EOR UK simplifies this for businesses to ensure that they are compliant. Some of the key areas where an EOR provides support are as follows:

• UK Employment Laws: EOR helps employers follow all rules and laws in respect to minimum wage and overtime pay, working hour regulations, holidays and vacations, and any policy concerning dismissal of employees for various reasons. All these matters will prevent discrimination and decrease the risk of legal exposure.
• Health and Safety Acts: Health and safety measures in the UK have stringent laws imposed on the employers. An EOR helps employers to cover the required acts thus protecting them from the employee’s future claims of damage.
• Taxes and Contributions: The EOR manages Pay-As-You-Earn (PAYE) taxes, National Insurance contributions, and pension obligations. The EOR ensures all payments are accurate and submitted on time, reducing the administrative burden and keeping businesses compliant with local tax laws.

This is how handling such compliance aspects will help companies through the operations while staying in compliance by hiring employees in the UK.

Best EOR Companies in UK

Here’s a more detailed overview of the top 5 EOR companies in the UK:

1. Asanify

Asanify is renowned for its user-friendly and streamlined EOR services, making it an excellent choice for businesses expanding into the UK. The platform is designed for small and medium-sized enterprises, offering tools for international hiring, automated payroll, tax compliance, and employee benefits management. Their focus on simplicity and efficiency allows companies to onboard employees quickly and operate in full compliance with UK labor laws, minimizing administrative overhead.

2. Skuad

Skuad stands out for its end-to-end EOR services tailored to help companies expand globally, including in the UK. Their platform supports employers in hiring and managing remote teams without setting up a local entity. Skuad handles employee contracts, payroll processing, tax compliance, and statutory benefits, ensuring a smooth employment experience. Their flexibility and expertise in navigating complex labor regulations make them a popular choice for scaling businesses.

3. Deel

Deel is a global leader in EOR services, providing a comprehensive solution for hiring and managing employees in over 150 countries, including the UK. Their automated platform simplifies compliance, payroll, and benefits administration. Deel is particularly known for its quick onboarding process, allowing businesses to hire international talent in just minutes. With features like localized contracts and compliance support, Deel ensures businesses can scale globally with confidence.

4. Omnipresent

Omnipresent excels in providing localized expertise for businesses looking to expand into the UK. Their services cover everything from legal compliance to employee benefits and payroll management. Omnipresent’s in-house experts ensure that clients stay updated with ever-changing labor laws and regulations. They are known for their personalized customer support and tailored solutions, making it easier for companies to establish a presence in the UK without the hassle of setting up a legal entity.

5. Remote

Remote is a robust EOR platform offering services that help businesses manage international teams seamlessly. In the UK, Remote provides a full suite of services, including compliant employment contracts, benefits packages, payroll processing, and tax compliance. They also offer comprehensive benefits like health insurance, retirement plans, and employee wellness programs, making them a go-to choice for businesses that prioritize employee satisfaction and retention. Remote’s transparent pricing and intuitive platform further enhance its appeal to global businesses.

These companies are well-equipped to handle the complexities of hiring and managing employees in the UK, offering tailored solutions to fit diverse business needs.

EOR Services in UK

A UK EOR provider offers a full suite of services to simplify workforce management and ensure compliance with UK labor laws. The services enable businesses to focus on their operations while the EOR handles the complexities of employment. Key services include:

1. Payroll Management: The EOR processes employee salaries, manages tax filing, and handles deductions accordingly to ensure accuracy and follow the Payroll Management UK standards. The EOR streamlines HR-related tasks, from bringing new employees on board to administering benefits and compliance, ensuring that businesses save time and resources.
2. Employee Benefits: It ensures that the employees’ health insurance, pension plan, paid leave, etc., are in accordance with the rules of Employee Benefits UK.
3. Legal Compliance: A provider of EOR services monitors the latest UK labor laws to ensure an employment contract, tax contributions, and workplace policies will be in accordance with laws.

How to Hire Employees Through an EOR UK Partner

Partnering with an EOR UK provider simplifies the process of hiring employees in the UK. Here’s a step-by-step guide to streamline the process:

Step 1. Choose a Reputable EOR UK:  Select an EOR supplier with a good history in hiring employees in the UK and providing comprehensive compliance services.

Step 2. Job description and compensation: Collaborate with your EOR to define job specifications, responsibilities, and compensation as aligned with the UK labor market.

Step 3. Enter into an Employment Agreement: The service agreement is signed with the EOR, outlining the terms and conditions of employment and the scope of services to be provided.

Step 4. Onboarding through the EOR: The EOR manages the onboarding process, ensuring that employees receive contracts, payroll, and benefits in compliance with UK law.

Step 5. Ongoing Management: The EOR handles payroll, tax compliance, and benefits administration. Ongoing employee support is also managed by the HR department of the EOR company.

With an EOR UK partner businesses expand into the UK with less hassle, focusing on strategies while letting the experts deal with the administrative and legal aspects of employment.

Remote EOR Employee Onboarding Checklist for UK

Onboarding Step	Responsibility	Details
Before Offer Letter
Collect Employee Details	Company	Gather necessary details like name, DOB, contact info, address, previous employment documents, etc.
After Offer Letter
Draft Employment Contract	EOR	Create localized employment agreements compliant with German labor laws and regulations.
Background Verification	EOR	Conduct background checks with informed consent from the new hire.
Welcome Email	Company & EOR	Company sends a welcome email; EOR manages the local onboarding process.
On Joining Day
Employment Documentation	EOR	Ensure all paperwork like contracts, NDAs, tax forms, and other required compliance documents are completed.
Payroll Setup	EOR	Collect required documents and set up payroll systems, tax calculations, and social contributions.
Policy Briefing	Company	Explain leave policies, workplace code of conduct, company processes, and procedures.
Account Setup	EOR	Assist in setting up bank accounts for salary deposits as per German requirements.
Introduction to Systems	EOR	Provide an overview of payroll systems, HRIS platforms, and other HR tools.
IT Setup	Company/EOR	Deliver necessary equipment, software access, and IT training for smooth operations.
Mentor Assignment	Company	Assign a buddy or mentor to help the new hire adapt to company culture and processes.
Post-Onboarding
Payroll Explanation (First Paycheck)	EOR	Explain payslip components like gross salary, tax deductions, social contributions, and net pay.
Ongoing Support	Company	Conduct regular check-ins and 1:1 meetings to address concerns, offer support, and share feedback.
HR Operations	EOR	Manage ongoing payroll processing, statutory compliance, benefits administration, and HR tasks.

Taxes in the UK 

Understanding tax obligations is a necessity for businesses and employees alike in the UK. Below is an overview of the key tax responsibilities and processes: .

• PAYE System: Pay-As-You-Earn (PAYE) system is a method used for deducting income tax and National Insurance contributions directly from employees’ salaries. It is essential that employers do this correctly and timely in their submissions to HMRC.
• National Insurance: Payable by both employers and the employee, National Insurance pays a percentage of the salary grossed by the employer to fund state benefits on healthcare and pensions. There is also
• – VAT Overview: Value Added Tax is usually relevant to businesses engaged in the provision of either goods or services. Businesses operating in the UK would need to understand its relevance to their turnover.
• Tax Filing Deadlines: The employer is required to make strict payroll tax submissions under the PAYE system. In addition, annual reporting to HMRC is necessary. 

Engaging with an EOR UK guarantees that all these tax requirements are met correctly and thus avoid risks and are in compliance with Taxation in UK rules. 

CTC Calculator for Hiring in UK

Determination of Total Cost to Company (CTC) is a vital calculation undertaken by any UK-based companies employing staff. This information includes:

 Basic Salary:

 The gross annual salary with which an employee has an agreement.

•  Employer Contributions : National Insurance contributions, pension, and other statutory contributions of the company
•  Benefits are those which incur for any employee’s health insurance scheme, paid leaves, along with any extra perks, such as leave encashment or loan avails.
• Bonuses and Incentive: Any performance-based or contractual bonuses. 

A CTC Calculator UK or a partnership with an EOR makes it easy to ensure that the incurred expenses are fully covered when hiring employees in the UK.

Key Considerations for Hiring Employees Through EOR in UK

While hiring employees through EOR UK These points should be carefully assessed for successful employment.

1. Employment Contracts: The contract should clearly state the conditions of employment, such as job role, salary, and benefits, in relation to the Employment Contracts UK law.
2. Leave Policies: UK statutory leave entitlements, such as annual leave, maternity/paternity leave, and sick leave, have to be followed. EOR ensures that these are followed in accordance with Leave Policies UK laws.
3. Pension and Health Benefits: Employers have a legal obligation to register eligible employees in a workplace pension scheme. Additionally, employers may need to provide additional health benefits according to the role and industry.  These key considerations can help ensure smooth and compliant hiring through an EOR UK partner, hence helping to develop good relationships between employees and the organization, as well as enhancing the efficiency of operations.

Employee Benefits in UK

Employee benefits in the UK Can be classified into statutory benefits, that is, legally required and optional benefits, which are provided at the discretion of the employer.

Statutory Benefits: These are statutory benefits mandated by UK law and include many essential protections for employees.  Some of these include

• Pension Plans: The UK law mandates employers automatically to enroll eligible employees into a workplace pension scheme. Both the employer and the employee contribute to the pension fund, thereby ensuring that after retirement, there is provision for financial support.
• Paid Leave: All employees are entitled to at least 28 days paid annual leave. Sick leave, maternity and paternity leave, and parental leave are also available for employees under their personal situations.
• Public Holidays: In UK, there are many public holidays every year that include Christmas Day and New Year’s Day, and employers should provide employees with time away from work to observe these.

Optional Benefits: Above and beyond the statutory requirement, employers can offer employees benefits to improve their satisfaction and retention.

•   Flexible Working: Flexible working can take the form of flexible hours, the right to work from home, or even a compressed work week where the employee can better balance work and personal life.
• Wellness programs : Well, most organizations have wellness programs aimed at supporting the overall physical and mental health of employees. These could include membership to a local gym, stress management workshops, and other initiatives focused on enhancing employees’ overall health and well-being.
• Health Insurance: Even though the NHS is free in the UK, a lot of employers will add private health insurance as part of their benefits package, which will give employees more rapid access to medical attention, dental care, and more comprehensive health care.

Suggested Read: EOR India: A Detailed Guide on Employer of Record 2025

Terminations in UK

Termination of an employee’s contract in the UK is a formal process, and strict employment laws govern it to ensure fairness and prevent unlawful dismissal.

Notice Periods: In the UK, notice is given by both parties when they want to end the employment relationship. Notice periods depend on the employee’s service. For example, employees with more than one month but less than two years of service receive at least one week’s notice. For employees with over two years of service, the notice period is one week per year of service, up to a maximum of 12 weeks.

Redundancy Pay: Employees receive redundancy pay if made redundant, provided they meet certain conditions. In the UK, redundancy pay is calculated based on the employee’s age, years of service, and weekly wage, subject to a specified cap.

There are different types of termination in UK law.

1. Resignation: This is a period when an employee takes it upon themselves to leave a particular company. An employee, under the contract stipulations or law, owes his employer a notice period.
2. Dismissal: When the employer terminates his/her employee’s contract in accordance with misconduct or failing in performance.
3. Redundancy: It occurs when a job is no longer needed, typically due to changes in business operations or economic circumstances. The employer needs to follow a formal process for redundancy and consult employees involved.

Navigating termination policies and ensuring compliance with Termination Policies UK can be complex. However, an EOR UK provider handles these procedures fairly, reducing the risk of legal challenges.

Choosing the Right EOR UK Services

Choosing the right UK EOR provider is considered a critical decision for UK business expansion or hiring. Getting the right EOR makes it easy to manage the workforce and ensures compliance with any local regulations, avoiding extra administrative burdens and potential legal hazards. Here are some points to consider when choosing a UK EOR partner.

• Expertise: EOR provider has the proper experience in management of UK employment laws, payroll systems, and HR processes. These professionals have deep knowledge of everything, ranging from taxation in the UK to employee benefits UK, which ensures that the business stays in good stead with HMRC and respects the law.
• Service Offerings: Analyze services provided through an EOR. One should look to have as a minimum provision of payroll management services, along with HR, tax compliance services, benefits managing, and onboarding employees service. Ideally, an extensive EOR service package assists you manage every aspect involved in your employee lifecycle without a lot of hassle from the procedure.
• Scalability: Your business will probably need more workers at certain periods in the growth of the business. The EOR needs to be able to scale with your business by allowing for flexibility in the amount of employees managed and by being able to meet diverse services that may be necessary for a business that could either hire a few workers or expand for more work.
• Technology: An effective EOR will allow for easy, secure websites in order to manage the employee payroll, HR operations, tracking of compliance issues, and employee data. Technologies may be able to simplify many processes and make timely, pertinent information available more efficiently.

With a good EOR, you can focus on strategic growth and leave the complexity of managing employees to trusted experts.

Benefits of Partnering with an Employer of Record in UK

Partnering with an EOR UK brings quite a number of advantages in terms of hiring employees in the UK without having to establish a local legal entity. The main benefits include:

1. Legal compliance is a significant advantage of using an Employer of Record (EOR) in the UK. An EOR ensures adherence to all local employment laws, including tax regulations, health and safety standards, and labor laws. The EOR assumes full responsibility and ensures employees are treated fairly according to UK regulations. As a result, it minimizes the risk of legal issues.
2. Quick Market Entry: EORs help businesses source employees quickly, thus avoiding the time and complexity of opening a legal entity in the UK. As a result, companies can expedite their entry into the UK market, test new markets, and scale operations with minimal bureaucracy.
3. Cost Saving: Formation of a local entity is costly and very time-consuming. An EOR dramatically reduces overhead costs to establish a legal presence in the UK, which includes registration fees, legal fees, and maintaining a local office.
4. Reduced Risk: Outsourcing employment obligations to an EOR reduces the risks for businesses in terms of non-compliance, payroll mistakes, and employee misclassification. Businesses can then focus on business expansion while the EOR assumes the complex HR tasks.

These are some of the reasons why an EOR UK is a solution that will appeal to businesses looking to expand or hire in the UK with minimal upfront costs and reduced legal complexity.

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Risks or Drawbacks of EOR UK

There are, however, several risks and challenges involved while partnering with an EOR UK. The following points are also to be taken into consideration while using the services of EOR in the UK:

1. Less Flexibility: EOR UK primarily uses a general system to handle employee benefits, payrolls, and other issues related to human resource compliance. Therefore, it cannot be perfectly tailored to the specific nature or requirements of the organization’s culture or preferences.
2. Compliance Risks if the EOR Fails to Deliver: Although an EOR in the UK can reduce certain compliance risks, it is crucial to select a reliable and competent provider to ensure compliance. If the EOR fails to get the employment laws right in the UK, such as getting taxes or benefits wrong, or not conducting termination procedures properly, it will result in costly penalties to the business.
3. HR Process Delay: Immediate concerns of an HR process which entails payroll error, performance issues and benefits may also involve handling an outside party; there could be delays in this respect as a response will usually take a little more time than a more related or aligned internal HR department..
4. Over-reliance on the EOR:. An EOR handles so many of its critical functions, and in case a business wishes to expand operations or alter its strategy, it becomes too difficult and lengthy a process to switch over to a direct employment model from an EOR model.
5. More Expensive for Small Companies: For companies with very few employees, an EOR UK is more expensive. If the EOR charges a flat fee per employee, the cost may become impractical for companies with few employees. In this case, the savings from avoiding the need for a legal entity are outweighed by the recurring service fees.

EOR vs HR Software in UK

The difference between EOR services UK and HR software UK fundamentally lies in understanding which option best serves the business’s needs. This helps in selecting the most suitable tool and service for managing the UK workforce effectively.

Employer of Record: An Employer of Record can provide comprehensive services that embrace all the legal, tax, and compliance requirements associated with hiring employees in the UK. The EOR will assume the role of a legal employer; this means they will assume control over the payroll, taxes, employment contracts, and employee benefits while also maintaining complete compliance with the labor laws of the UK. Besides, it assumes responsibility over termination procedures and statutory benefits.

HR Software :HR software is mainly concerned with operational HR functions, such as managing the data of employees, recruiting, performance management, time tracking and communication. HR software manages HR processes but does not relate to legal, tax, and compliance matters. You can use it alongside an EOR to gain operational efficiencies, but it lacks the statutory frameworks and compliance responsibilities of an EOR.

EOR UK offers a solution for businesses seeking complete compliance management and responsibility in employment. On the other hand, HR software in the UK improves in-house human resources operations and streamlines employee management processes. Ultimately, the choice between the two will depend on your business’s specific needs.

FAQs – EOR UK

 

Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant  or Labour Law  expert for specific guidance.