An Employer of Record (EOR) in the UK legally employs a worker on behalf of another company. The EOR signs the employment contract, runs UK payroll, deducts PAYE tax and National Insurance, administers statutory benefits and keeps the required employment records.
This guide was reviewed on ****.
The client company usually chooses the worker and manages their daily work, responsibilities and performance. This lets an overseas business hire in the UK without immediately setting up its own UK employing entity. An EOR arrangement normally involves three parties: the employee, the EOR and the client company.
Employer of Record UK: at a glance
| Question | Typical answer |
|---|---|
| Who signs the employment contract? | The EOR provider or its UK employing entity |
| Who pays the employee? | The EOR, through UK payroll |
| Who operates PAYE? | Usually the EOR, if it is the worker's employer |
| Who manages day-to-day work? | The client company |
| Who handles statutory employment administration? | The EOR, under the services agreement |
| Does the client need a UK entity? | Usually not for an EOR arrangement |
| Is the client free from all legal risk? | No. The contract and the working relationship both matter |
How Does an Employer of Record Work in the UK?
An EOR arrangement normally involves:
- The employee, who performs the work.
- The EOR provider, which employs the individual under a UK employment contract.
- The client company, which directs the employee's daily work.
The EOR and client sign a commercial services agreement. The EOR then signs an employment contract with the individual. The client decides the role, workload, reporting line and performance objectives.
The EOR usually takes responsibility for employment administration. The client manages the employee's operational work. The agreement should set out who is responsible for:
- Payroll
- Benefits
- Annual leave
- Disciplinary action
- Termination
- Confidentiality
- Intellectual property
- Workplace issues
The label "EOR" does not settle every legal question. The contract and the way the arrangement operates both need to be reviewed.
The UK EOR Process Step by Step
1. The Client Chooses the Worker
The client company usually sources, interviews and selects the candidate. It agrees the proposed salary, start date, working location, job duties and benefits with the EOR.
The EOR should review the proposed arrangement before onboarding, particularly if the role involves regulated work, immigration sponsorship or unusual working patterns.
2. The EOR Completes Onboarding Checks
Before employment starts, the employer must check that the person has the right to work in the UK. Depending on the worker's circumstances, this may involve original documents, a Home Office share code or an approved identity document validation service.
If the right to work is time-limited, the employer must complete a follow-up check before the permission expires. It must also keep evidence of the check.
3. The EOR Issues UK Employment Documents
The EOR provides the employment contract or written employment terms. UK employees and workers must receive a principal written statement on their first day.
The statement must cover information such as:
- The employer's name
- The worker's job title and start date
- Pay and pay intervals
- Working hours and working days
- Holiday entitlement
- Place of work
- Probation arrangements
- Notice information
- Sick pay and other statutory leave
The wider written statement must normally be provided within two months. It includes information about pensions, collective agreements, training, and disciplinary or grievance procedures.
4. The EOR Adds the Worker to UK Payroll
The EOR normally operates PAYE, deducts income tax and employee National Insurance, and reports pay and deductions to HM Revenue and Customs.
UK payroll reporting must be completed on or before the relevant payday. Employer National Insurance, pension contributions and other employment costs may also apply.
5. The Employee Works for the Client
The employee usually reports to the client's manager and works within the client's team. The client sets objectives, assigns work and reviews performance.
The EOR may provide HR support, but it does not usually manage the employee's technical or commercial work.
6. The EOR Administers Employment Obligations
Depending on the agreement, the EOR may manage:
- Monthly payroll
- PAYE and National Insurance reporting
- Statutory payments
- Annual leave records
- Sickness absence administration
- Workplace pension enrolment
- Employment documents
- HR advice
- Termination administration
Almost all UK workers are entitled to at least 5.6 weeks of paid annual leave each year. The calculation can vary for irregular-hours and part-year workers.
Eligible workers must also be automatically enrolled into a qualifying workplace pension. The criteria include being aged between 22 and State Pension age, earning at least £10,000 a year and ordinarily working in the UK.
7. The EOR Coordinates the End of Employment
If the client wants to end the relationship, it normally instructs the EOR to begin the process. The EOR should then apply the relevant contractual and statutory procedures.
An EOR is not a way around notice requirements, redundancy procedures, discrimination law, consultation or unfair dismissal protections. UK employment status determines which rights and responsibilities apply. The parties cannot choose a different status simply by changing the wording of the contract.
Who Is Responsible for What?
| Responsibility | EOR Provider | Client Company |
|---|---|---|
| Employment contract | Yes | Provides role details |
| PAYE payroll | Usually | Supplies payroll information |
| Right-to-work process | Usually coordinates | Provides accurate work details |
| Salary payment | Yes | Funds the payroll |
| Day-to-day supervision | Usually no | Yes |
| Work allocation | Usually no | Yes |
| Performance management | Supports the process | Usually leads |
| Statutory leave administration | Yes | Approves operational leave |
| Pension administration | Usually | Funds agreed employer costs |
| Dismissal or redundancy process | Implements and advises | Usually makes the commercial decision |
| Intellectual property protection | Contract-dependent | Must ensure the client receives appropriate rights |
| Workplace health and safety | Depends on the workplace | Often shares practical responsibility |
The exact allocation depends on the EOR agreement and how the relationship operates in practice. HMRC rules can also apply to intermediaries that arrange for workers to provide services to a client. The structure should therefore be reviewed rather than assessed only by the label "EOR".
What Does an EOR Cost in the UK?
The total cost usually includes:
- The employee's gross salary
- Employer National Insurance
- Employer pension contributions
- Statutory benefits and paid leave
- Contractual benefits
- The EOR's service fee
- Possible onboarding, termination, currency-conversion or payment fees
An EOR provider may charge a fixed monthly fee, a percentage of payroll or a combination of charges. The service fee is not always the total employment cost. The quotation should state which employer costs are included and which are charged separately.
EOR Compared With Other UK Hiring Options
| Hiring model | Who employs the worker? | Best suited to |
|---|---|---|
| Direct UK employment | The client's UK company | Businesses with an established UK entity |
| Employer of Record | The EOR provider | Overseas companies hiring a small UK team or testing the market |
| Payroll provider | The client company | Businesses that already employ workers and need payroll support |
| Recruitment agency | Depends on the arrangement | Finding candidates or supplying temporary workers |
| Independent contractor | The contractor's business, if genuinely self-employed | Project-based services with genuine independence |
A payroll provider is not an EOR. A payroll provider processes payments for the client, while the client remains the employer. With an EOR, the provider becomes the contractual employer under the arrangement.
A contractor is not automatically a safe alternative. UK employment status depends on the facts, including control, personal service, mutual obligations and how the work is performed. HMRC and employment law use separate tests. Misclassification can lead to tax liabilities, penalties and employment claims.
The Main Limitations of a UK EOR
An EOR Does Not Remove Employment Law Obligations
The EOR can manage employment administration, but the client still controls the working environment and daily business decisions. Discriminatory treatment, unsafe working conditions, poor instructions or an unlawful dismissal can still create risk for the client.
The Contract Must Reflect the Working Relationship
UK authorities and courts can examine how the arrangement operates in practice. If the client exercises the level of control associated with a direct employer, the parties should obtain advice on whether the EOR structure accurately reflects the relationship.
Immigration Sponsorship Needs Separate Checking
Using an EOR does not automatically resolve a worker's immigration position. Sponsored workers must meet UK immigration rules, and an EOR structure may not be suitable where the worker is effectively supplied to and controlled by another organisation.
Businesses should obtain immigration advice before relying on an EOR for a Skilled Worker or another sponsored role.
Benefits May Not Match the Client's Existing Workforce
An EOR employee may join the provider's benefit, pension and insurance arrangements. If the client wants to offer equity, bonus plans, private medical insurance or other benefits, it should confirm how they will be documented, taxed and administered.
Is an Employer of Record Right for Your UK Hire?
An EOR is usually suitable when a company:
- Has no UK employing entity
- Wants to hire one or a small number of UK employees
- Needs to start quickly
- Wants local payroll and HR administration
- Is testing UK demand before creating a subsidiary
Direct employment through a UK company may be more suitable when the business expects a substantial or permanent UK workforce, needs full control over employment policies and benefits, or already has UK payroll infrastructure.
Before signing, ask the provider:
- Which legal entity will appear as the employer?
- Which entity signs the employment contract?
- Who operates PAYE and files payroll reports?
- Which pension scheme will be used?
- Does the quoted fee include employer National Insurance and pension costs?
- Who handles disciplinary action, redundancy and termination?
- How are intellectual property and confidentiality protected?
- Who is responsible for right-to-work checks?
- Can the structure support the worker's immigration status?
- What happens if the company changes EOR provider?
The answers will show whether the provider's fee, employment model and allocation of responsibility fit the planned UK hire.