By Travis Kliever
Updated April 6, 2024

Employer of Record (EOR) in UK

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Are you expanding your business to the UK? Don’t panic! The UK Employers of Record can help!

Did you know that a recent survey by Deloitte in 2023 revealed that 65% of businesses have realized that the biggest challenge in global expansion is keeping up with local laws and regulations?

That sounds like a headache, right? There’s a solution – UK Employers of Record (EOR).

Unlike the traditional routes, an Employer of Record is your business’s local guide in the UK. They’re informed and can handle the legal and HR functions on your behalf. UK EORs are the ones to ensure that your expansion is a well-calculated step forward.

But does this matter and why?

Yes, it matters! In fact, according to Gartner, businesses that use local experts in new markets can reduce their operational risks by up to 40%. That’s simply the difference between problems and solutions for your company.

What Exactly is a UK Employer of Record?

A UK Employer of Record (EOR) is the savvy team handling all the HR functions – hiring, payroll, taxes, and ensuring everything is above board with UK laws. They’re the ones who make sure your business ticks all the right boxes, legally and administratively, without you having to worry about the UK employment laws.

However, an EOR is not the same as a UK PEO (Professional Employer Organization).

While a UK PEO partners with you and shares the responsibility of your employees, an EOR becomes the official employer on paper.

And then there’s the umbrella company too. They are great for independent contractors, but temporary. Umbrella companies take care of contractors’ administrative tasks and payroll, while EORs are for your full-time employees in the UK, ensuring that employment contracts as well as worker rights are handled with care.

Top 5 Leading UK EORs

Deel

Deel has become known for their adaptable solutions. They excel in managing contractors across different countries and are ideal for businesses with many international teams. Their platform is user-friendly, reduces administrative burdens and allows businesses to focus more on growth.

Remote

Remote offers EOR services in the UK but goes the extra mile with its intellectual property (IP) protection. This means they help keep your business’s sensitive info safe. They are also good at handling local employment contracts and taxes, ensuring your UK expansion is smooth sailing.

Horizons

Horizons is great for businesses that want to hit the ground running. They promise fast and efficient onboarding – we’re talking days, not weeks. This with their expertise in UK employment law makes them a reliable partner for businesses that need things done on time.

Teamed

Teamed is known for its tailored approach, and it specializes in identifying and addressing specific HR challenges unique to each business. Their personalized service makes them ideal for businesses looking for dedicated HR support.

Omnipresent

Omnipresent offers wide-reaching services. They handle HR administration and focus on ensuring global teams feel supported. If you want an EOR that prioritizes comprehensive global HR solutions, Omnipresent is a good choice.

How These Companies Work

EORs stay updated on the latest changes to UK employment laws, so you don’t have to.

For instance, they’ll ensure you’re on top of the UK’s National Minimum Wage regulations, which can be updated yearly. And let’s not even get started on the UK’s Working Time Regulations – they’ve got that covered too.

EORs Manage the Payroll Tax in the UK

The UK payroll tax is a crucial part but can be confusing. Thankfully, an EOR company can manage everything payroll-related, this includes calculating deductions, and taxes and ensuring compliance with HM Revenue & Customs (HMRC). You won’t have to worry about the PAYE (Pay As You Earn) and National Insurance contributions. Your EOR makes sure every penny is accounted for correctly.

Sorting Out Employee Benefits

Yep, the UK EOR helps sort the employee benefits too. They can set up pensions as well as understand statutory benefits like maternity leave. These services ensure your employees get what they’re entitled to.

This helps in keeping your team happy and attracting top talent. And let’s be honest, happy employees mean a thriving business.

Employment Laws in the UK

These labor laws are crucial if you’re aiming to expand your business to the UK:

Contracts

Every employee in the UK must have a written statement of employment or contract from day one. It’s the law. This contract needs to cover the basics like job description, salary, working hours, and holiday entitlement.

Paid Leave

Employees in the UK are entitled to 5.6 weeks of paid holiday per year. That’s 28 days for the average five-day work week staff – bank holidays can be included in this. And when it comes to sick leave, things can get a bit complex. The Statutory Sick Pay (SSP) system works here, but this needs a bit more than just common sense.

Working Hours

The UK has specific laws about how long employees can be asked to work. Typically, 48 hours per week is the max, averaged over 17 weeks. But there’s flexibility here; employees can choose to work more if they agree. Just remember, health and safety laws are big in the UK, so no cutting corners.

Employers of Record Companies to the Rescue!

EORs can keep you in line with these laws. By partnering with a reputable Employer of Record, you’re essentially taking advantage of their expertise, and this ensures that your business in the UK starts on a firm, compliant footing.

Benefits of Using a UK Employer of Record

You might think the biggest benefit of a UK Employer of Record service is just handling the functions of HR and legal paperwork. Yes, that’s true. But there’s more to it.

Legal Compliance

A UK Employer of Record is always laser-focused on compliance. We all know that the UK’s employment laws can be daunting. For instance, did you know that UK employment contracts must detail specific employment terms from day one, or the employer risks fines?

A UK EOR keeps you on the right side of these laws and ensures that your business avoids hefty fines.

Payroll Processing

Payroll in the UK comes with National Insurance contributions, pension schemes, and tax codes that can leave anyone scratching their head. A UK EOR service processes payroll and ensures everything complies with HM Revenue and Customs regulations. This not only saves you time but also spares you the headache of deciphering complex tax laws.

Employee Benefits

Employee benefits in the UK are a key factor that attracts and retains top talent. A UK Employer of Record can provide a competitive edge here. They know the most sought-after benefits. More so, they can manage these benefits easily and add value to your employee experience without adding stress to your day-to-day operations.

Risk Mitigation

Working with an EOR company reduces your exposure to employment-related risks. They ensure that your business adheres to the Employment Rights Act, the Equality Act, and other critical legislation, guarding you against potential disputes and legal challenges.

Flexibility and Scalability

Employing a UK EOR service gives you the flexibility to scale your UK operations up or down without the usual HR constraints. Whether you’re starting with a small team and have plans to expand, or need to adjust your workforce based on market demands, an EOR adapts to your business needs.

The Cons of UK Employers of Record

We’ve only discussed all the good stuff about using an Employer of Record in the UK. But while they can be of help for your business expansion, an EOR service sure comes with its own set of challenges.

Cost

Partnering with a UK Employer of Record isn’t always cheap. They provide many services, sure, but those come with price tags. It’s crucial to weigh the costs against the benefits. Are you getting enough bang for your buck?

One Size Doesn’t Fit All

Sometimes EORs fit perfectly, and other times, well, not so much. Your business is unique, and a standard EOR solution might not cater to every specific need of your operation. To avoid this, look for an EOR that’s willing to understand and adapt to your specific business requirements.

Loss of Control Trade-offs

When you partner with a UK Employer of Record, you’re handing over the reins of certain HR functions. This means less direct control over these elements, which can be a bit unsettling. You’re essentially trusting someone else to handle parts of your business. But you need to stay involved, ask questions, and keep communication lines open.

How to Pick the Perfect UK Employer of Record

How do you pick the perfect EOR company for your business?

Understand Your Business Needs

Before you start looking, be crystal clear about what you need. Are you a small startup or a well-established company? Different UK Employers of Record might cater to different business sizes or sectors. For instance, if you’re in tech, you might want an EOR with a strong tech client portfolio.

Expertise and Experience Matter

Look for a provider with a solid track record. A quick search on platforms like LinkedIn can give you a sense of their industry standing and experience.

Check Their Compliance Record

Ensure your chosen EOR has a clean record when it comes to compliance. This is crucial because UK employment laws and tax regulations can be tricky.

Technology and Support

In today’s world, tech is a must-have. Your UK Employer of Record should offer robust technology solutions for smooth payroll processing and HR management. Also, check if they’re just an email away when you need support or if you’ll be left on hold.

Reviews and Testimonials

What others are saying can be useful information. Check those reviews and testimonials. Don’t just settle for surface skimming; read between the lines. Are there any red flags or recurring praises? Websites like Trustpilot can be a great place to start.

Cost Transparency

Discussing money might not be fun, but it’s essential. Make sure there are no hidden fees. A good UK Employer of Record will be upfront about their pricing structure.

Cultural Fit

This one’s often overlooked but think about it – if they don’t ‘get’ your company culture, how can they represent you effectively in the UK? Choose an EOR that aligns with your company’s ethos and values.

UK Business Guides

FAQs

How does a UK EOR differ from a UK PEO?

A UK Employer of Record (EOR) differs from a UK Professional Employer Organization (PEO) primarily in terms of employment liability and the scope of services.

An EOR legally becomes the employer of record for your employees in the UK, and handles employment contracts, payroll, taxes, and compliance with local labor laws, effectively taking full legal responsibility for your employees. Whereas, a UK PEO co-employs your staff and shares the employment responsibilities with your company. While a PEO provides HR services like payroll and benefits administration, the legal responsibility of the employees remains with your business, not the PEO.

How does a UK EOR differ from an umbrella company?

A UK Employer of Record (EOR) and an umbrella company both serve as intermediaries for managing employment-related tasks, but they cater to different needs. The key difference is the type of employment they support. A UK EOR becomes the legal employer for your employees and takes over all employer responsibilities, including HR, payroll, taxes, and compliance with local employment laws. This is particularly beneficial for companies that want to expand into the UK without setting up a legal entity there.

On the other hand, an umbrella company is designed for contractors and freelancers. It acts as an employer for these independent professionals on a contractual basis, handling their payroll, taxes, and some employment benefits. However, unlike an EOR, it doesn't engage in the broader scope of HR responsibilities and doesn't cater to traditional employees of a company.

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