Employer of Record in United Kingdom

How Employer of Record services work in the UK

Rivermate is a global Employer of Record (EOR) that enables companies to hire in the UK without establishing a local legal entity. Our EOR services are built on three pillars:

• Local HR experts who handle compliance in accordance with local employment laws.
• A network of UK partners that lets us offer competitive, market-aligned benefits.
• Our all-in-one platform, which simplifies every stage of employment.

UK hiring landscape: At a glance

The hiring market
Greatest hiring activity:	South East London, Manchester, Cambridge, Leeds, Bristol and Edinburgh
Hiring timelines:	Local roles: 1-3 weeks Foreign nationals: 4-12 weeks
In-demand sectors:	Technology, healthcare, professional services and renewable energy
Sectors with skills shortages:	Software engineering, data science, healthcare

The salary market
Employer tax contributions:	Employer's National Insurance (Class 1 Secondary): 15% of employee earnings above £5,000 annually Workplace pension: 3% of qualifying earnings Apprenticeship Levy: 0.5% of Annual pay bill over £3 million
Monthly minimum wage:	£12.71/hour (national minimum wage rate)
Average gross annual salary:	£39,039
Income tax rates:	England, Wales and Northern Ireland: 0% up to £12,570, then 20% - 45% Scotland: 0% up to £12,570, then 19% - 48%

What will it cost to hire in the UK?

The total cost of employment in the UK extends beyond the base salary. A more accurate reflection combines gross salary, employer taxes, pension contributions, statutory costs and additional benefits offered by an employer.

Base salary

UK salaries can vary depending on industry, role, seniority and location. The latest ONS Annual Survey of Hours and Earnings recorded median gross annual salaries of £39,039 for full-time employees. Salaries in London and other high-value markets such as Manchester, Leeds and Edinburgh sit considerably higher than the national median.

For employers, salary benchmarking should be done against location, industry and job title rather than the national average.

Employer taxes

Employment taxes in the UK consist of:

• Class 1 secondary National Insurance of 15% on earnings above £5,000 per year.
• Workplace pension contributions of 3% of qualifying earnings
• Apprenticeship Levy of 0.5% for employers with annual bills over £3 million.

Statutory employee benefits

UK employers must include paid annual leave, overtime, severance pay and several statutory benefits when calculating total employment costs.

Statutory Benefit	Description
Working hours	Adult, full-time workers may not work more than 48 hours in a 5-day work week.
Public holidays	England and Wales: 8 Scotland: 9 Northern Ireland: 10
Overtime	Employers have no statutory obligation to pay for overtime work.
Annual leave	5.6 weeks of paid annual leave per year, capped at 28 days for a 5-day per week full-time employee.
Sick leave	No limit on sick days per year, but employers can set their own company limits. Statutory sick pay is paid up to 28 weeks at a rate of £123.25 per week or 80% of average weekly earnings (whichever is lower). This is paid by the employer from day one.
Maternity leave	Statutory maternity leave is 52 weeks. Ordinary maternity leave: 26 weeks Additional maternity leave: 26 weeks Leave can start 11 weeks before the expected birth, and the mother must take 2 weeks after the child is born. Financial support is capped at 39 weeks. Statutory maternity pay is 90% of average weekly earnings for the first 6 weeks, followed by £194.32 a week or 90% of your average weekly earnings (whichever is lower) for the remaining 33 weeks.
Statutory redundancy pay	Ranges from 0.5-1.5 weeks’ pay per year, capped at 20 years' service. After 6 April 2026, weekly pay is capped at £751, and the maximum statutory payout is £22,530.

Additional benefits

Employers in the UK often use additional benefits to attract talent. Popular options are private medical insurance (PMI), dental and optical cover, life insurance and income protection.

The bottom line:
The UK is a moderate-to-high-cost employment market. Compared with Western European countries, it has lower statutory employer costs, but UK salaries are higher.

Employment cost calculator

Employee vs contractor. Which one do you need?

The UK provides several ways to hire talent, including permanent employees, fixed-term employees, part-time workers, agency workers and independent contractors.

Choosing the right structure matters in the UK because misclassifying a worker can create tax, National Insurance and employment-law exposure.

One surprising detail for first-time employers in the UK is that labour audits often test the nature of contract work. These audits ensure that ‘off-payroll’ workers pay the same income tax as employees (as per IR35).

In the UK, IR35 (off-payroll working rules) is designed to stop individuals from working as employees while supplying their services through either their own limited company or Personal Service Company (PSC). Medium and large-sector clients must determine whether off-payroll rules apply and, if so, issue a Status Determination Statement (SDS) explaining the conclusion.

Determining the correct worker classification

Use these questions as a practical starting point for determining whether a worker should be classified as an employee or a contractor.

Criteria	Employee	Contractor
The person will work as an ongoing part of your team rather than on a project or for a defined period	Yes	No
You will control when, where, and how the person works, and you will control their tasks.	Yes	No
The person will work only for your company and receive a salary and benefits.	Yes	No
The person must provide a specific service or expertise, invoice your company for their work, and is not entitled to statutory benefits.	No	Yes

For contractors to be correctly classified in the UK, they must pass the key-status test set by His Majesty’s Revenue and Customs (HMRC).

A contractor must have full control over their own work, the right of substitution (someone else can do the work), and mutuality of obligation (the right to accept/decline certain tasks). Any worker who fails this test can be reclassified as an employee.

For international employers, getting the structure right before engagement is important. The cost of correcting employee misclassification is considerably higher than assessing the relationship properly at the onset.

Realities of hiring in the UK

Changing workforce expectations are reshaping what candidates want from employers in 2026. Salary remains important, but employers increasingly need to compete on benefits, flexi/hybrid work arrangements, career development, job security and the quality of the role itself.

Where you hire talent in the UK makes a difference not only to the skills you can find, but also to the salaries you’ll need to offer to attract the best talent. Hiring an employee in London will be different from hiring an employee in Manchester, Leeds or Edinburgh.

For international employers, the opportunity is therefore not simply that the UK has a large talent pool. It is that the UK offers a deep and sophisticated talent market.

The hiring market in summary

The UK hiring market in 2026 is highly competitive, with talent availability varying by sector, location and skill level. Skills shortages continue to exist in the technology and healthcare sectors. Successful hiring in the UK depends on understanding where the talent is, what it costs and what it takes to attract and retain top candidates.

Market condition	What an employer needs to know
Talent availability	Moderate overall but highly variable. Generalist and junior positions are currently less competitive. Specialist roles, technology, healthcare and professional skills are experiencing a skills shortage.
Top-paying sectors	Financial services, technology, professional services and specialized healthcare.
Skills shortages	Healthcare, specialized engineering, cybersecurity, software engineers and cloud architects, data scientists, trade workers, HR, legal and senior management professionals.
Key employer challenge	Balancing cost control with access to scarce skills.

Where immigration can be challenging in the UK

Most foreign employers find relocating an employee to the UK challenging because it requires a clear understanding of how visa quotas, employer sponsorship, and minimum salary restrictions apply in practice.

Hightekers and Rivermate International Business Consultant Caroline Marques offered valuable insights on employee relocation from an EOR perspective.

Pre-application eligibility checks take time

Processing a visa application is a multi-step process that includes a feasibility check, requesting a foreign headcount increase, issuing a Certificate of Sponsorship and then initiating the application.

A feasibility study is required before proceeding with visa support. This process requires checking the employee’s eligibility for a work visa and various other elements as required by the UK's immigration regulations.

Visa timelines are difficult to predict

Clients often refer to online information that says work visas receive priority treatment and can be processed within a week. However, this doesn't apply to all cases. Misunderstanding this often creates frustration and raised expectations. In practice, turnaround times are usually 4 to 12 weeks. The Home Office handles most of the process and makes the immigration decision, so an EOR provider cannot guarantee visa turnaround times.

Frequent updates to immigration rules affecting the application process

UK immigration rules frequently change, making the process challenging. Changes have affected the Skilled Worker Visa route significantly this year, and more updates are expected. Qualifying roles and salary thresholds have been altered, affecting who can apply for a work visa.

One change significantly affecting turnaround times is the English proficiency test. A visa application cannot continue until the employee passes this test, creating significant delays. As the legal employer, staying abreast of these changes is critical because it affects an EOR’s sponsorship licence.

Work visas are expensive, and costs change according to individual requirements

UK work visas are expensive, and costs vary by individual circumstances, including the visa duration and the type of support clients need. Processing times and costs also depend on whether an employee applies for a work visa inside or outside the UK because different employer sponsorship and employee eligibility rules apply.

Skilled worker visa: Snapshot

Key point	Description
Eligible role	The employee’s role must be checked against an eligible list of occupations that qualify for the Skilled Worker Visa.
Salary threshold	At least £41,700 per year or the going rate for the occupation code
English proficiency	Candidate must demonstrate English proficiency at CEFR B2 level.
Employer sponsorship	Employer must have a current sponsorship licence and is responsible for issuing the Certificate of Sponsorship.

Compliance risks that employers must know about

The UK is one of the easiest places to understand employment practices because they are clearly defined, but it is one of the most expensive places to get them wrong.

Employment contracts

UK employment agreements must accurately reflect the nature of the employment relationship and the applicable statutory terms.

The two most common types of employment contracts in the UK are indefinite and fixed-term contracts. A standard UK contract must include several essential clauses and key information, and any modifications require agreement from both the employer and the employee.

For international employers, using a locally compliant contract is therefore an important compliance step.

Tax for foreign workers and companies

Employing foreign workers or operating as a foreign company in the UK adds tax complexities that businesses should understand.

• Residency status: UK tax liability depends on an individual’s tax residency status, which determines how their income is taxed.
• National Insurance Contributions: UK National Insurance Contributions depend on where the work is performed. Special rules affect whether NICs are due in the UK or another country, particularly for seconded workers.
• Permanent Establishment: Employing staff in the UK can cause a foreign company to be considered to have a permanent establishment and become liable for UK corporation tax.
• PAYE for Foreign Employers: Overseas companies employing people in the UK may still need to operate PAYE and meet UK payroll obligations, even without a UK office or branch.

Remote working policies

In the UK, the legal framework for remote and flexible work is primarily centered on employees' statutory right to request flexible working arrangements. As of April 2024, this right became a "day one" right, meaning employees can request it from the start of their employment, rather than waiting 26 weeks.

If the employer grants an employee the right to work remotely, the employment contract should be amended to include policies that apply to remote work. The employer is still obligated to pay statutory contributions and benefits for a remote work employee.

Terminations

Understanding the nuances of notice periods, grounds for termination, procedural fairness, and statutory entitlements like redundancy pay is crucial for any employer operating in the UK.

Employers must have a legitimate reason for terminating a contract and follow a fair, transparent process. You must also follow a fair, transparent process and failing to do so can result in an unfair dismissal claim. This is important for international employers that may assume a contract may be terminated during a probation period without a formal process.

One 2026 point worth knowing: the UK government has legislated to reduce the ordinary qualifying period for unfair dismissal protection from two years to six months, with the change scheduled for January 2027.

How Rivermate can help you hire in the UK

UK employment law spans four distinct countries, namely England, Scotland, Northern Ireland and Wales, creating a complex compliance framework. Furthermore, employment and immigration regulations are frequently updated, making it difficult to keep up with current practices unless you have the expertise to do so.

Our Rivermate experts, along with our network of partners, can provide the support and resources you need to enter the labor market and fully comply with UK law. When you partner with us for UK hiring, you can expect:

• A team of experts to walk you through the entire process and answer any questions you have about employment regulations.
• Initial employee onboarding, including all statutory checks, documents and registrations.
• Ongoing HR, payroll, tax and benefits management.
• Support during difficult compliance processes such as immigration and terminations.
• Simple day-to-day operations that let you focus on your core business and your employee’s performance.
• 24/7 support from real HR experts, not chatbots.

Ready to take the first step in the UK?

Schedule a 30-minute session to discuss your hiring needs with our UK experts.

Talk to a UK Hiring Expert

Sources:

Rates and thresholds for employers 2026 to 2027 - GOV.UK
Income Tax rates and allowances for current and previous tax years - GOV.UK
Statutory Sick Pay (SSP) : Overview - GOV.UK
Maternity pay and leave
UK bank holidays - GOV.UK
https://www.gov.uk/redundancy-your-rights/redundancy-pay