Employer of Record UK: Complete Guide 2026

What the EOR handles

• UK employment contract (compliant with ERA 1996)
• PAYE registration and income tax deduction
• Employer and employee National Insurance
• Workplace pension auto-enrolment (The Pensions Regulator)
• Statutory sick pay, maternity, paternity, parental leave
• Right to work verification (UK immigration compliance)
• IR35 status assessments for contractors
• Redundancy, disciplinary, and dismissal compliance
• Holiday entitlement (28 days statutory minimum)

What you retain control of

• Day-to-day work direction and management
• Job scope, deliverables, and performance expectations
• Working hours and location (remote, office, hybrid)
• Promotions, salary increases, and bonuses
• Termination decisions (EOR manages the legal process)
• Tools, equipment, and systems the employee uses
• Team culture and onboarding experience

Step 1: You sign up with an EOR provider

You enter a Master Services Agreement with the EOR (e.g. Deel). This outlines the commercial relationship, service fees, liability allocation, and data processing terms (GDPR-compliant for UK employees). This typically takes 1–2 business days.

Step 2: You submit the employee’s details

Via the EOR’s platform, you enter the employee’s name, role, start date, salary, work location, and any additional benefits (private health, enhanced pension). The EOR uses this to generate a compliant UK employment contract.

Step 3: The employee signs the employment contract

The EOR sends a fully compliant UK employment contract to the employee. The contract is between the employee and the EOR entity — not your company. The employee signs digitally. Right to work checks are completed (passport/visa verification). This takes 24–48 hours.

Step 4: The EOR registers as employer with HMRC

The EOR handles PAYE registration with HMRC (if they do not already have a UK PAYE scheme). They are responsible for all Real Time Information (RTI) submissions to HMRC — the monthly payroll filing requirement for UK employers.

Step 5: Monthly payroll runs automatically

Each month, the EOR runs payroll: calculating gross pay, deducting employee National Insurance and income tax via PAYE, making the employer NI contribution, paying the employee directly into their UK bank account, and issuing a compliant payslip. They then invoice your company for total costs plus their fee.

Step 6: Ongoing compliance management

The EOR manages auto-enrolment pension contributions (minimum 3% employer, 5% employee on qualifying earnings), statutory leave requests, P60 and P45 generation, employment tribunal risk management, and any changes to UK employment law. You are notified of anything that affects your employee’s cost or contract.

Overseas company hiring first UK employee

The most common use case. A US, EU, or Asian company has found the right UK hire but has no UK entity. EOR provides a legal path to employment in days.

Testing the UK market before committing to an entity

Hiring 1–3 UK sales or operations staff to validate UK market fit before the cost and commitment of incorporating. EOR gives a 6–18 month runway to prove the market before entity setup.

Urgent hire with entity incorporation in progress

Your UK Ltd application is with Companies House (takes 2–5 days for formation but weeks more for PAYE and bank account setup). An EOR bridges the gap so you do not lose the candidate while waiting.

Remote-first companies with distributed UK teams

Fully remote companies that have UK employees across multiple regions but do not want to maintain a UK registered office, accountant, and PAYE scheme for a handful of remote workers.

Post-Brexit EU companies hiring UK talent

EU companies that previously relied on freedom of movement now need a formal UK employment structure to hire British workers. EOR removes the need to establish a UK subsidiary.

UK company hiring internationally via EOR

Not just inbound. UK-incorporated SMEs also use EOR services to hire employees in other countries (EU, US, India, Southeast Asia) without setting up foreign entities — Deel supports 150+ countries.

Flat fee model (most common)

Typical range: £400–£800 per employee per month (US$500–$1,000/month)

• Predictable monthly cost regardless of salary level
• Better value for higher-salaried employees
• Deel charges US$599/month per EOR employee
• Typically includes payroll, contracts, compliance, benefits admin

Percentage model (older providers)

Typical range: 10–15% of gross monthly salary

• Can be cheaper for low-salary employees
• Expensive for senior hires (15% of £80K = £12,000/year in fees alone)
• Less transparent — harder to budget
• Becoming less common as flat-fee providers dominate

Employment Contracts (Employment Rights Act 1996)

UK employees must receive a written statement of employment particulars on or before their first day. This must include: job title, start date, pay and pay frequency, hours of work, holiday entitlement, notice periods, sickness absence policy, and pension scheme details. The EOR generates and maintains this contract.

PAYE and National Insurance

The EOR operates a PAYE scheme, deducting income tax at the correct rate (20%, 40%, or 45% depending on earnings), employee NI (8% on earnings between £12,570 and £50,270), and paying employer NI (13.8% above £9,100/year). RTI submissions are made to HMRC each payroll run.

Workplace Pension Auto-Enrolment

All UK employees aged 22–66 earning above £10,000/year must be automatically enrolled into a qualifying workplace pension. Minimum employer contribution: 3% of qualifying earnings. Minimum employee contribution: 5%. The EOR handles enrolment, contributions, and The Pensions Regulator compliance.

Statutory Leave Entitlements

28 days paid annual leave (including bank holidays, or 28 days on top — your choice). Statutory Sick Pay: £116.75/week for up to 28 weeks. Statutory Maternity Pay: 90% of average weekly earnings for 6 weeks, then £184.03/week for 33 weeks. Statutory Paternity Pay: £184.03/week for 2 weeks. The EOR administers all claims.

Right to Work Verification

UK employers must verify that every employee has the legal right to work in the UK before employment begins. The EOR conducts document checks (passport, visa, settled status confirmation) and maintains records. Failure to conduct right to work checks can result in a civil penalty of up to £60,000 per illegal worker.

IR35 (Off-Payroll Working Rules)

Since April 2021, medium and large businesses must assess whether contractors working through personal service companies (PSCs) should be treated as employees for tax purposes. An EOR removes this risk by employing workers directly — there is no PSC, no IR35 ambiguity, and no backdated tax liability.

Remote

US$599/month per EOR employee. Strong UK compliance infrastructure. Slightly behind Deel on platform features and integrations but competitive on price. Good choice if your team already uses Remote’s contractor management tool. Full Deel vs Remote comparison →

Rippling

Variable pricing — typically higher than Deel for EOR-only use cases. Rippling’s strength is the full HR + IT + payroll suite for companies that want to manage everything in one platform. Overkill for 1–5 UK hires; excellent for 20+ employees who also need device management and US/UK HRIS integration.

Papaya Global

Percentage-based pricing (typically 8–12% of gross salary). Better suited to enterprise-scale global payroll than SME UK hiring. Higher cost for senior employees. Consider if you have 50+ employees across 10+ countries and need enterprise SLAs.

What is an Employer of Record (EOR) in the UK?

An Employer of Record (EOR) in the UK is a third-party company that legally employs staff on behalf of another business. The EOR becomes the legal employer under UK law — handling employment contracts, PAYE payroll, National Insurance contributions, pension auto-enrolment, and compliance with the Employment Rights Act 1996 — while the client company retains full day-to-day control over the worker’s tasks and performance. EORs allow companies to hire UK-based employees without setting up their own UK legal entity.

How much does an Employer of Record cost in the UK?

EOR management fees in the UK typically range from £350–£600 per employee per month, on top of the employee’s gross salary, employer National Insurance (15% on earnings above £5,000/year from April 2026), and any benefits. For a UK employee on £50,000 gross: approximately £4,167 salary + £575 employer NI + £125 employer pension + £400–£600 EOR fee = £5,267–5,467/month total. Most platforms (Deel, Multiplier, Remote) charge flat per-employee monthly fees.

How long does it take to hire a UK employee through an EOR?

Hiring a UK employee through an EOR typically takes 2–5 business days. The process: enter employee details into the EOR platform → EOR generates a UK-law compliant employment contract (required by law on or before day one) → employee signs digitally → EOR registers the employee under their PAYE scheme. The UK is among the fastest countries to onboard, compared to 5–10 days for more complex jurisdictions.

Do I need to set up a UK company to hire employees in the UK?

No. Using an Employer of Record means the EOR’s own UK entity employs the worker legally — you do not need to register a company. The alternative is setting up via Companies House (typically 1–4 weeks), which then requires ongoing PAYE registration, RTI monthly submissions, corporation tax, and pension auto-enrolment administration. For companies testing the UK market or hiring fewer than 5–10 employees, EOR is typically faster and more cost-effective than entity setup.

What are the employer National Insurance rates in the UK for 2026?

For 2026/27, UK employer National Insurance contributions are 15% on employee earnings above £5,000/year (£96/week) — up from 13.8% in previous years. For a UK employee earning £50,000 gross, the employer NIC cost is approximately £6,750/year (15% × £45,000 above the threshold). This is separate from employee NIC deductions. An EOR calculates and pays all employer NICs to HMRC automatically as part of the payroll service.