Employer of Record (EOR) in the United Kingdom: How to Hire, What It Costs, and How to Stay Compliant

An Employer of Record (EOR) in the UK lets a foreign company hire British employees legally without setting up a local entity. The EOR becomes the legal employer — running PAYE payroll, National Insurance, pensions, and HR compliance — while you keep operational control. UK employer on-costs are relatively low (about 115% of gross salary), but 2026 brings significant change: employer National Insurance is now 15% from a £5,000 threshold, and the Employment Rights Act 2025 starts to reshape sick pay and day-one rights.

The UK combines an advanced service economy, a transparent legal system, and a highly skilled English-speaking workforce, making it a key destination for international expansion. An EOR is the fastest, most compliant way to hire there — especially when testing the market or running a regional project.

Key benefits of hiring in the UK through an EOR

• Hire employees without establishing a local entity
• Compliance with UK employment, tax, and pension rules
• Simplified PAYE payroll, auto-enrolment pensions, and RTI reporting
• Fast market entry with a lower administrative burden
• Focus on growth while your EOR manages compliance and HR

Why choose an EOR in the UK?

An EOR acts as the legal employer for your staff while you direct their daily work. It is ideal for testing the market, hiring a key individual quickly, or running a regional project — without incorporating a UK company and taking on PAYE, pension, and compliance obligations directly.

How much does it cost to employ someone in the UK in 2026?

On top of gross salary, a UK employer pays 15% National Insurance on earnings above £5,000 a year, plus a minimum 3% pension contribution under auto-enrolment — roughly 15–16% in total, lower than most of Western Europe. (An Apprenticeship Levy of 0.5% applies only to employers with a pay bill above £3 million.) The example below uses £4,000/month gross.

The United Kingdom at a glance

Employment framework

Employment contracts

Every employee must receive a written statement of employment particulars from day one, covering job title and description, salary and benefits, working hours, paid leave, and notice and probation terms. Contracts may be permanent, fixed-term, or (less commonly, and now more tightly regulated) zero-hours. Wages are paid in GBP and terms must comply with the Employment Rights Act 1996 and the reforms introduced by the Employment Rights Act 2025.

Probation period

Probation is typically 3 to 6 months and set by employer policy, with more flexible notice during the period. (Note: the Employment Rights Act 2025 will introduce a statutory “initial period of employment” once day-one unfair-dismissal protection takes effect — expected around 2027.)

Working hours & overtime

A full-time week is typically 37–40 hours, Monday to Friday. Under the Working Time Regulations 1998, average working time is limited to 48 hours per week (averaged over 17 weeks) unless the employee opts out in writing. Overtime pay is not legally required unless set out in the contract.

Minimum wage (from April 2026)

The National Living Wage for workers aged 21 and over is £12.71 per hour from 1 April 2026 (a 4.1% increase). Younger bands are £10.85 (18–20) and £8.00 (16–17 and apprentices). Rates are reviewed each April, and the (voluntary) Real Living Wage sits higher again.

Payroll & taxation

Income tax (PAYE) 2026/27

Income tax is deducted at source through PAYE. The personal allowance is £12,570, and the following bands apply in England, Wales, and Northern Ireland (Scotland sets its own bands). All thresholds are frozen to 2030–31, so real tax rises as pay grows (“fiscal drag”).

National Insurance & pensions

Employers pay National Insurance at 15% on each employee’s earnings above £5,000 a year (both the rate and the £5,000 threshold apply for 2026/27 and are frozen to 2030–31). No employer NIC is due below £50,270 for employees under 21 or apprentices under 25. Employees pay NIC at 8% on earnings between £12,570 and £50,270 and 2% above. Under pension auto-enrolment, the employer contributes a minimum of 3% and the employee 5% (8% total) on qualifying earnings (£6,240–£50,270). Employers with a pay bill over £3 million also pay the 0.5% Apprenticeship Levy. Payroll is reported to HMRC in real time (RTI).

Employee benefits & leave

• Annual leave: 5.6 weeks statutory — a minimum of 28 days for a five-day week, which may include the 8 bank holidays.
• Sick leave (reformed for 2026): Statutory Sick Pay is £123.25/week (or 80% of average weekly earnings if lower), and from 6 April 2026 it is payable from day one with no lower earnings limit — extending cover to lower-paid and part-time staff. Paid by the employer for up to 28 weeks.
• Maternity leave: up to 52 weeks, with 39 weeks paid — 90% of pay for 6 weeks, then £194.32/week (or 90% if lower) for 33 weeks.
• Paternity leave: 2 weeks paid — now a day-one right from April 2026 (statutory pay still needs 26 weeks’ service). Shared Parental Leave of up to 50 weeks is available.
• Pension: auto-enrolment into a workplace pension (3% employer minimum).
• Common extras: private medical insurance, life assurance, and performance bonuses are widely offered.

Termination & notice periods

Termination must follow a fair process and statutory minimum notice, given in writing:

Employees must give at least 1 week’s notice. Employees with 2+ years’ service are entitled to statutory redundancy pay — 0.5 week’s pay per year under age 22, 1 week per year for ages 22–40, and 1.5 weeks per year for age 41+, capped at 20 years. A week’s pay is capped at £751 from 6 April 2026, giving a maximum statutory redundancy payment of £22,530.

What changed for 2026 — the Employment Rights Act 2025

The Employment Rights Act 2025 received Royal Assent in December 2025 and is being phased in over 2026–2027. The main changes landing in 2026:

• Sick pay from day one: SSP is payable from the first day of absence (three waiting days abolished) and the lower earnings limit is removed, so all employees qualify.
• Day-one family leave: paternity leave and unpaid parental leave become day-one rights, and a new Bereaved Partner’s Paternity Leave is introduced.
• Higher minimum wage: the National Living Wage rose to £12.71/hour from April 2026.
• Employer NI at 15%: the 15% rate from a £5,000 threshold (introduced April 2025) continues, keeping employment costs higher than before 2025.
• Stronger enforcement: a new Fair Work Agency (from April 2026) enforces minimum wage, sick pay, and holiday pay with penalties, and employment-tribunal time limits extend from 3 to 6 months in October 2026.
• Coming next: day-one protection from unfair dismissal (removing the current two-year qualifying period) is expected around 2027.

Work permits & immigration

Since Brexit, non-UK and non-Irish nationals need a valid visa to work. Common routes include the Skilled Worker visa (points-based, with minimum salary thresholds that have risen in recent years), the Global Business Mobility visa for intra-company transfers, the Graduate visa, and the Innovator Founder route. An EOR that holds a sponsor licence can manage sponsorship, Home Office registration, and right-to-work compliance.

Data protection & confidentiality

Employers must comply with the UK GDPR and the Data Protection Act 2018 when processing employee data. NDAs and confidentiality clauses are enforceable where reasonable and necessary to protect legitimate business interests.

Frequently asked questions