Employer of Record in United Kingdom

An Employer of Record (EOR) is a company that legally employs workers on your behalf. This means the EOR handles all the legal and HR tasks that come with employment in the United Kingdom. You still manage your employee's day-to-day work, but the EOR takes care of the administrative side. This setup allows you to hire talent in the UK without needing to establish your own local legal entity. For companies looking to hire in the UK, an EOR provider like Rivermate can simplify the process.

How an Employer of Record (EOR) Works in United Kingdom

Using an EOR in the UK follows a straightforward process. The EOR becomes the legal employer, while you focus on managing your team.

Here is how it typically works:

• You Find the Candidate: You are responsible for sourcing and selecting the person you want to hire.
• The EOR Hires the Candidate: The EOR provides a UK-compliant employment contract and officially hires the employee.
• Onboarding: The EOR manages the onboarding process, ensuring all necessary paperwork is completed correctly.
• HR and Payroll: The EOR handles all HR administrative tasks. This includes processing payroll, managing taxes, and making National Insurance contributions, as required by UK law.
• Compliance: The EOR ensures that all aspects of the employment relationship comply with UK employment laws, such as the Employment Rights Act 1996 and the Equality Act 2010. You can find more information on employer responsibilities on the official UK government website (https://www.gov.uk/browse/employing-people).
• You Manage the Employee: You direct the employee's daily tasks, projects, and performance, just as you would with any other team member.

Why use an Employer of Record in United Kingdom

Using an EOR in the UK can save you time and reduce risk, especially if you are not familiar with UK employment regulations. It allows you to enter the UK market and hire talent quickly without the major step of setting up a local entity. This makes expanding your team much simpler.

Here are some key reasons to use an EOR:

• Stay Compliant: UK employment law is complex. An EOR understands the regulations, from working hours to pension contributions, and ensures you are always compliant. This includes adhering to laws like the National Minimum Wage Act 1998.
• Save Time: An EOR handles the administrative burden of employment. This frees you up to focus on your core business activities instead of managing payroll and HR tasks.
• Hire Faster: You can hire employees in the UK quickly without the lengthy process of establishing a legal entity in the country.
• Offer Better Benefits: EORs can often provide competitive benefits packages, including health insurance and pension schemes, helping you attract and retain top talent.
• Reduce Risk: The EOR takes on the legal responsibility for employment, which can protect you from compliance risks like employee misclassification.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in United Kingdom includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in United Kingdom.

Hiring in the United Kingdom is a great way to tap into a diverse and skilled workforce. The UK has a robust job market, making it a popular destination for businesses looking to expand. While the competition for talent can be high, employers find a strong pool of qualified candidates across various industries. The process typically involves online applications, with candidates submitting a CV and cover letter.

Employment contracts & must-have clauses

In the UK, you must provide employees with a written statement of employment particulars. This document serves as the employment contract.

Here are some essential clauses to include:

• Job Title & Responsibilities: Clearly define the employee's role and their main duties.
• Salary & Payment Terms: Specify the rate of pay, salary, and any bonus structures.
• Working Hours: Outline the expected working hours, including start and end times.
• Holiday & Sick Leave: Detail the holiday entitlement and sick pay policy. Full-time employees are legally entitled to a minimum of 28 days of paid holiday per year, which can include public holidays.
• Notice Periods: Specify the notice required from both you and the employee to terminate the contract. For employees who have worked for you for one month to two years, the statutory minimum notice period is one week.
• Pension & Benefits: Include information on pension contributions and any other benefits like private healthcare.
• Confidentiality: Add a clause to protect your business's sensitive information.

Probation periods

Probation periods are common in the UK and are used to assess a new employee's suitability for a role.

• Length: A typical probation period lasts between three to six months.
• No Legal Requirement: While not legally required, it's a standard practice for many employers.
• Employee Rights: Employees on probation still have statutory rights, such as the right to the National Minimum Wage and protection against discrimination.
• Dismissal: It is easier to dismiss an employee during their probation period if they are not a good fit for the role.

Working hours & overtime

The Working Time Regulations 1998 govern working hours in the UK.

• Weekly Limit: Most employees cannot work more than an average of 48 hours per week.
• Opting Out: Employees can choose to work more by signing an opt-out agreement.
• Rest Breaks: Workers are entitled to a 20-minute rest break if they work for more than six hours in a day.
• Overtime Pay: There is no legal requirement to pay employees for overtime. However, their average pay for the total hours worked must not fall below the National Minimum Wage. Any agreement on overtime pay should be included in the employment contract.

Public & regional holidays

The number of public holidays, known as bank holidays, varies across the UK.

• England and Wales: 8 bank holidays
• Scotland: 9 bank holidays
• Northern Ireland: 10 bank holidays

Here is a list of the 2025 bank holidays for England and Wales:

Hiring contractors in United Kingdom

Hiring independent contractors can be a flexible option for your business, especially for short-term projects.

An independent contractor is self-employed and responsible for their own taxes and National Insurance contributions. They are not entitled to the same rights as employees, such as sick pay or holiday pay.

A major risk when hiring contractors is misclassification. If a contractor is deemed to be an employee in practice, your company could face significant legal and financial penalties, including back taxes and fines. An Employer of Record (EOR) can help you mitigate this risk. An EOR ensures that your workers are classified correctly and that you comply with all local labor laws, protecting your business from potential misclassification issues.

Managing compensation and payroll in the United Kingdom means following a structured system. The government's Pay As You Earn (PAYE) system is at the core of this process. As an employer, you calculate and deduct the necessary taxes and contributions from your employees' pay before you pay them. You then send these deductions to HM Revenue and Customs (HMRC). This process ensures that employees' income tax and National Insurance contributions are paid directly to the government.

Payroll cycles & wage structure

In the UK, you typically pay employees on a monthly cycle. Payments are usually made between the 25th and 30th of the month. While weekly and fortnightly pay schedules exist, monthly is the most common for salaried employees.

An employee's pay includes their basic salary plus any additional earnings. These can include:

• Overtime pay for extra hours worked
• Bonuses for performance
• Allowances for specific needs like travel or housing

You must provide a detailed payslip for each pay period that shows the gross pay, all deductions, and the final net pay.

Overtime & minimums

Overtime in the UK is handled through the employment contract. Any work done beyond standard hours is considered overtime. The specifics of overtime pay are determined by the agreement between you and your employee.

The UK has a National Minimum Wage and a National Living Wage, which are updated regularly. The rates depend on the employee's age. As of April 2025, the minimum hourly rates are:

• £12.21 for employees aged 21 and over
• £10.00 for employees aged 18 to 20
• £7.55 for employees aged 16 to 17
• £7.55 for apprentices

Employer taxes and contributions

As an employer, you are responsible for several contributions. These are calculated as part of your payroll process.

Employee taxes and deductions

Employees also have deductions taken from their gross pay. You are responsible for calculating and withholding these amounts.

In the United Kingdom, you must provide certain benefits and leave to your employees. Understanding these legal requirements is the first step. Many employers also offer extra benefits to attract and keep the best talent. This approach shows you value your team and invests in their well-being.

Statutory leave

By law, you must provide several types of paid leave.

• Annual Leave In the UK, full-time employees get 28 days of paid annual leave. This can include public holidays. Part-time workers receive the same leave on a pro-rata basis.
• Sick Pay You are required to pay Statutory Sick Pay (SSP) to eligible employees who are off work due to illness for more than three days.
• Maternity and Paternity Leave Eligible employees can take up to 52 weeks of maternity leave. For the first six weeks, they receive 90% of their average weekly earnings. Paternity leave is up to two weeks.
• Parental Leave Parents can also share up to 50 weeks of leave and 37 weeks of pay through Shared Parental Leave (SPL).
• Carer's Leave Employees can take up to one week of unpaid leave per year to care for a dependent.

Public holidays & regional holidays

While employees are entitled to 5.6 weeks of paid leave, there is no automatic legal right for them to have public holidays off. An employee's contract should state whether they get paid time off for these holidays. Below are the public holidays for 2025.

Typical supplemental benefits

To compete for top talent, many companies offer benefits beyond the legal minimum. These are known as non-statutory or fringe benefits.

How an EOR can help with setting up benefits

Setting up a competitive and compliant benefits package in the UK can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR acts as the legal employer for your UK team. This means they handle all the administrative and legal tasks related to employment.

Here's how an EOR helps with benefits:

• Ensures Compliance An EOR stays up-to-date with UK employment laws. They make sure you provide all legally required benefits correctly.
• Provides Competitive Packages EORs have experience in the local market. They can advise you on the supplemental benefits that attract top candidates in your industry.
• Simplifies Administration From enrolling employees in pension plans to managing leave requests, the EOR handles the day-to-day work. This frees you up to focus on your business goals.
• Offers Better Rates Because EORs manage benefits for many employees across different companies, they can often access better rates for insurance and other perks.

Using an EOR allows you to offer your UK employees great benefits without needing to become an expert in local laws and practices.

When an employee's time with your company comes to an end in the United Kingdom, it's important to handle the process correctly. This involves both termination, the official end of the employment contract, and offboarding, the steps you take to smoothly transition the employee out of the company. A clear and fair process protects your business and treats the departing employee with respect.

Notice Periods

In the UK, you must give employees a minimum amount of notice before their employment ends. This statutory notice period depends on how long they have worked for you.

• One month to two years of service: 1 week's notice
• Two to twelve years of service: 1 week's notice for each full year they have worked
• Twelve or more years of service: 12 weeks' notice

Your employment contract can specify a longer notice period, but it cannot be shorter than the statutory minimum. If the contract gives a longer period, you must follow that.

Severance Pay

In the UK, severance pay is most commonly associated with redundancy. If you are making an employee's role redundant, they may be entitled to statutory redundancy pay.

To be eligible, an employee must:

• Have worked for you for at least two continuous years.
• Be in a role that is genuinely redundant.

The amount of statutory redundancy pay is based on the employee's age, weekly pay, and length of service.

Here is how it is calculated:

There are caps on the weekly pay amount and the total number of years that can be counted. For 2025, the maximum weekly pay is £719.

How Rivermate Handles Compliant Exits

At Rivermate, we ensure the offboarding process is handled correctly and respectfully. We manage the entire process to make sure it is compliant with UK employment law.

Our process includes:

• Clear Documentation: We provide written notice of termination, clearly stating the reason and the final date of employment.
• Knowledge Transfer: We help you create a plan for the departing employee to hand over their tasks and responsibilities. This ensures a smooth transition for the rest of your team.
• Asset Recovery: We provide instructions for the employee to return all company property, such as laptops, phones, and access cards.
• System Access: We make sure to remove the employee's access to all company systems and software to protect your data.
• Final Pay: We work with you to process the employee's final paycheck, including any outstanding holiday pay or other entitlements.

Navigating the UK's visa and work permit system can feel complex. The rules are strict and require you to plan ahead. If you're not a UK citizen, you will likely need a visa to work in the country. The system is points-based, meaning you need to meet several requirements to qualify. For most work visas, a job offer from a licensed employer is the first step.

Employment visas & sponsorship realities

The most common route for working in the UK is the Skilled Worker visa. To get this visa, you need a job offer from an employer that holds a sponsor license from the UK Home Office. This license allows the company to issue a Certificate of Sponsorship (CoS), which is a key part of your visa application.

So, can an Employer of Record (EOR) sponsor your visa? Yes, but only if the EOR has a sponsor license. An EOR acts as the legal employer and can handle the complexities of visa sponsorship, including managing the necessary paperwork and compliance. However, not all EORs have this license. Before you partner with an EOR, you must confirm they are an A-rated sponsor license holder.

Here are some practical routes for employment visas:

• Skilled Worker visa: This is for individuals with a job offer in an eligible skilled occupation. You must meet salary and English language requirements.
• Global Business Mobility visa: This route is for employees of multinational companies who are being transferred to a UK branch.
• Temporary Worker visa: This category covers a range of short-term work, including creative, charity, and religious work.

Some visas do not require employer sponsorship. These are usually for individuals with specific qualifications or backgrounds. Examples include the High Potential Individual visa and the Graduate visa.

Business travel compliance

You can visit the UK for business for up to six months without a visa, but the activities you can perform are limited. These short-term visits are for things like attending meetings, conferences, or negotiating deals. You cannot do paid or unpaid work for a UK company or as a self-employed person.

For frequent business travelers, it's important to understand the tax implications. A Short Term Business Visitor (STBV) arrangement can simplify tax and payroll obligations. This agreement with the UK tax authorities, HMRC, allows for a relaxation of the usual payroll requirements, provided certain conditions are met.

To stay compliant, you should:

• Know the rules: Understand what activities are permitted during a business visit.
• Track your time: Keep a record of the number of days you spend in the UK for work purposes.
• Get the right advice: If you're unsure about your obligations, seek expert advice on tax and immigration rules.