Country Guides
Hiring Employees in UK with an EOR
A beginners' guide comparing the cost, complexity and process of hiring through an Employer of Record (EOR) vs. setting up an entity in the United Kingdom.
How to Hire Employees In the United Kingdom
Last updated: January 20, 2025
You've got three options when it comes to hiring employees in the United Kingdom:
Assuming you are looking to hire employees in the UK rather than contractors, let's compare your two options head-to-head in more detail.
Using an EOR vs an Entity in the United Kingdom
| Aspect | EOR Services | Setting up an Entity |
|---|---|---|
| Setup Time | 1-2 business days | 2-3 months |
| Initial Cost | £0 | £40,000-60,000 |
| Ongoing Costs | £499-699/month per employee | Legal, accounting, compliance fees |
| Legal Responsibility | Managed by EOR | Internal responsibility |
| Employment Compliance | Managed by EOR | Internal responsibility |
| Benefits Management | Managed by EOR | Internal responsibility |
| Tax Filing and Contributions | Managed by EOR | Internal responsibility |
| Penalties for Non-compliance | Managed by EOR | Up to £20,000 per violation |
| Scalability | Highly flexible | Requires additional investment |
| Exit Process | Simple contract termination | Complex entity dissolution |
What are the best EOR Services in the United Kingdom?
Not all EOR services have an established entity in the UK, and some rely on third parties. These three operate UK entities directly, while providing 24/7 support and comprehensive services.
These services handle all aspects of employment including payroll, benefits, and compliance, acting as the legal employer while you maintain day-to-day management of your team.
From £599/month
- Owns an entity in UK
- Payroll
- Benefits management
- Legal Compliance
- Tax management
- Employee onboarding
Recommended
From £499/month
- Owns an entity in UK
- Payroll
- Benefits management
- Legal Compliance
- Tax management
- Employee onboarding
From £599/month
- Owns an entity in UK
- Payroll
- Benefits management
- Legal Compliance
- Tax management
- Employee onboarding
Some links above may be affiliate links. We may receive a commission for purchases made through these links at no additional cost to you.
Recommended EOR Service
OysterHR
OysterHR
Taxes in the United Kingdom
The UK has a comprehensive tax system affecting both corporations and individuals. Here are the key taxes to consider:
Corporate Taxes
- Corporation Tax: 25%
- Employer's National Insurance: 13.8%
- Apprenticeship Levy: 0.5% (if payroll > £3M)
- VAT (Standard Rate): 20%
- Pension Auto-enrollment: Min 3%
- Employers' Liability Insurance: Required
Individual Taxes
- Income Tax: Progressive 20-45%
- Employee's National Insurance: 12%
- Capital Gains Tax: 10-20%
- Pension Contributions: Min 5%
Note: Tax rates and regulations are subject to change. This information is for general guidance only. Please consult with a qualified tax professional for specific advice.
Mandatory Benefits
Holiday Leave
- 28 days per year (inc. bank holidays)
- 8 public holidays
Health Coverage
- NHS access
- Statutory Sick Pay (SSP)
- Employers' Liability Insurance
Parental Leave
- 52 weeks maternity leave
- Up to 2 weeks paternity leave
- Shared parental leave available
Employee Rights in the United Kingdom
Basic Rights
- Written Statement: Must receive within 2 months
- Minimum Wage: National Living Wage for 23+ years
- Safe Workplace: Health and safety protection
- Union Rights: Freedom of association
Additional Protections
- Anti-discrimination: Protected characteristics
- Data Protection: GDPR and UK DPA 2018
- Flexible Working: Right to request
- Whistleblower Protection: Legal safeguards
Hours of Work
Standard Working Hours
- Weekly Hours: 48 hours maximum
- Daily Rest: 11 consecutive hours
- Break Time: 20 minutes per 6 hours
- Weekly Rest: 24 uninterrupted hours
Working Time Regulations
- Opt-out Option: Available for 48-hour week
- Night Work: Special protections
- Record Keeping: Required for compliance
- Young Workers: Additional restrictions
End of Employment
Notice Periods
- Under 1 month: No statutory notice
- 1 month to 2 years: 1 week
- 2+ years: 1 week per year
- Maximum: 12 weeks
Redundancy Pay
- Eligibility: 2+ years service
- Basic Award: Age-based calculation
- Maximum: £17,130
- Consultation: Required process
Labor Laws in the United Kingdom
Key Employment Acts
- Employment Rights Act 1996: Core employment rights
- Equality Act 2010: Anti-discrimination
- Working Time Regulations 1998: Hours and leave
- National Minimum Wage Act: Pay regulations
Employment Tribunals
- Time Limits: Usually 3 months
- ACAS Early Conciliation: Required
- Compensation: Varies by claim type
- Legal Representation: Optional
Frequently Asked Questions
Using an Employer of Record (EOR) service, you can typically hire an employee in the UK within 1-2 business days. This is significantly faster than setting up your own entity, which can take 2-3 months.
UK employers must provide: pension auto-enrollment (minimum 3% employer contribution), 28 days paid holiday (including bank holidays), statutory sick pay, maternity/paternity leave, and employers' liability insurance. The EOR service will handle all these requirements.
The EOR handles all tax obligations including PAYE (Pay As You Earn) income tax, National Insurance contributions, and any other statutory deductions. They ensure compliance with HMRC regulations and handle all tax filings and payments on your behalf.
Yes, you can transition from using an EOR to setting up your own entity when your business is ready. Most EOR services will help facilitate this transition, ensuring continuous employment for your team members and compliance with UK employment laws throughout the process.
The EOR will ensure compliance with UK employment law regarding terminations, including proper notice periods, documentation, and any required severance payments. They'll handle the administrative process while ensuring all legal requirements are met to minimize risks of wrongful termination claims.