Employer of Record in United Kingdom

Who are we?

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 allows us to offer competitive, market-related benefits.
• Our all-in-one platform, which simplifies every stage of employment.

UK hiring landscape at a glance

The hiring market	Detail
Greatest hiring activity	South East London, Manchester, Cambridge, Leeds, Bristol and Edinburgh
Hiring timelines	Entry-level or high-volume roles: 4-6 weeks. Senior roles: 8-12 weeks
In-demand sectors	Technology, healthcare, professional services and renewable energy
Sectors with skills shortages	Software engineering, data science, healthcare

The salary market	Detail
Employer tax contributions	Employer's National Insurance (Class 1 Secondary): 15% of employee earnings above £5,000 annually. Apprenticeship Levy: 0.5% of annual pay bill over £3 million
Minimum wage	£12.71/hour for workers aged 21 and over
Median gross annual salary	£39,039
Income tax brackets	0% - 45%

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.
• Apprenticeship Levy of 0.5% for employers with annual bills over £3 million.

Statutory benefits

UK employers must include workplace pension contributions, paid annual leave, and several statutory benefits when calculating total employment costs.

• Pension contributions: Eligible employees are automatically enrolled in a workplace pension scheme, and employers must contribute at least 3% towards the scheme.
• Paid annual leave: Almost all workers are entitled to 5.6 weeks' annual leave per year.
• Statutory sick pay: Eligible employees can receive up to 28 weeks paid sick leave. Weekly rates apply.
• Statutory maternity pay: 90% of average weekly earnings are paid for the first 6 weeks, followed by £194.32 a week or 90% of average weekly earnings (whichever is lower) for the remaining 33 weeks.
• Notice period pay: Employees are entitled to full salary and contractual benefits for the duration of the notice period.

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.

Employee or 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 are responsible for determining whether off-payroll rules apply and, where they do, issuing a Status Determination Statement explaining the conclusion.

Determining the correct worker classification

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

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

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 or 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 misclassification is considerably higher than assessing the relationship properly at the outset.

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, flexible and 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 will 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 in technology, healthcare and professional services are experiencing a skills shortage.
Top-paying sectors	Financial services, technology, professional services and specialised healthcare.
Skills shortages	Healthcare, specialised engineering, cybersecurity, software engineers and cloud architects, data scientists, trade workers, HR, legal and senior management professionals.
Key employer challenge	Finding the balance between cost control and access to scarce skills.

Market condition	Current reality
Hiring momentum	🟡 Cautious
Talent availability	🟡 Moderate
Specialist talent	🔴 Competitive
Salary pressure	🟡 Moderate
Candidate expectations	🔴 High

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 statutory terms that apply.

The two most common types of employment contract in the UK are indefinite and fixed-term contracts. A standard UK contract must include several essential clauses and key pieces of information, and any modification requires 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 centred 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 the policies that apply to remote work. The employer is still obliged to pay statutory contributions and benefits for a remote-working employee.

Terminations

Understanding the nuances of notice periods, grounds for termination, procedural fairness and statutory entitlements such as 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. Failing to do so can result in an unfair dismissal claim. This matters for international employers who may assume a contract can 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.

Work permits and visas

A foreign national cannot simply be employed in the UK because they hold a valid passport or an overseas employment relationship. Where sponsorship is required, the employer must apply for a sponsor licence and comply with sponsorship obligations. The most common long-term visa is the skilled worker visa, and there are also visas that support companies relocating employees to the UK, categorised as global mobility visas.

Employing someone without the appropriate right to work can expose the employer to significant penalties and immigration consequences.

How an Employer of Record works in the UK

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

• You find the candidate: you source and select the person you want to hire.
• The EOR hires the candidate: the EOR provides a UK-compliant employment agreement and officially hires the employee.
• Onboarding: the EOR manages the onboarding process, ensuring all necessary paperwork is completed correctly. This takes 1-2 weeks if the worker is a UK resident, and 3-4 weeks if the worker is outside the UK.
• HR and payroll: the EOR handles all HR administrative tasks, including processing payroll, managing employment taxes and making National Insurance contributions as required by UK law.
• Compliance: EOR services ensure that all aspects of the employment relationship comply with UK employment law, such as the Employment Rights Act 1996 and the Equality Act 2010.
• You manage the employee: you direct the employee's daily tasks, projects and performance, just as you would with any other team member.

Ready to hire in the UK?

Hiring in the UK involves more than finding the right candidate. From managing payroll, taxes and benefits administration to ensuring full compliance with UK employment law, Rivermate handles the complexities so you can hire with confidence.