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UK Professional Employer Organization (PEO)

Key points

  • A UK Professional Employer Organization (UK PEO) is a company which specializes in payroll, HR and benefits administration support for companies hiring in the UK.
  • A UK PEO may operate only in the UK market (where it is commonly known as an ‘umbrella company’, or they may be part of an international PEO company with operations in the UK.
  • When choosing a UK PEO it is important to choose a provider with extensive knowledge of UK employment laws and market conditions. 

With its influential global standing, mature market, and business-friendly regulations, the UK presents a lucrative opportunity for international businesses. Yet, mastering the intricacies of UK labour laws, tax structures, and cultural norms can be a complex task for overseas companies. This is where UK Professional Employer Organizations (PEOs) step in to simplify matters.

What is a UK PEO?

A UK Professional Employer Organization (PEO) is a service provider that offers all-inclusive Human Resources (HR) outsourcing to businesses intending to set up or expand their operations in the UK. In essence, PEOs become a co-employer to your staff, managing HR, payroll, tax compliance, and numerous administrative duties associated with employing staff in a foreign country.

A co-employment agreement is formed between the client company and the PEO: While the client continues to control the daily management of employees, the PEO assumes responsibility for HR management, payroll processing, and compliance with UK laws and regulations.

Where the UK PEO supports temporary or fixed-term workers, and where they have arrangements with existing recruitment agencies, they are commonly known as ‘umbrella companies‘. 

What services does a UK PEO Provide?

UK PEOs deliver a broad range of services to support companies operating within the country. These services include:

  1. HR Management: Comprehensive HR services, including benefits administration, resolution of HR issues, and compliance with UK labour laws.
  2. Payroll and Tax Administration: PEOs manage payroll processing and tax administration, ensuring accurate payments and deductions in line with UK regulations.
  3. Legal Compliance: PEOs offer expertise in the complex legal landscape in the UK to ensure your company remains compliant.
  4. Recruitment Services: Many PEOs provide recruitment services, assisting companies in sourcing, hiring, and onboarding new employees in the UK.
  5. Risk Management: PEOs help mitigate the risks associated with employing staff in a foreign country, including dealing with employment disputes and ensuring workplace health and safety.

What are the benefits of a UK PEO?

A Professional Employer Organization (PEO) can provide a number of benefits for businesses operating in the UK, particularly for small and medium enterprises or for foreign companies that are new to the UK business environment. Here are a few key benefits:

  1. Simplified Employee Management: A PEO becomes the employer of record, handling many of the complexities associated with human resources. This includes payroll administration, tax filing, and benefits administration, thereby freeing the client company to focus on their core business.
  2. Compliance: Navigating the UK’s employment laws and regulations can be tricky, especially for businesses new to the UK market. A PEO provides expertise in these areas, ensuring businesses remain compliant with employment laws, health and safety regulations, and other relevant legislation.
  3. Access to Better Benefits: PEOs can often negotiate better employee benefits packages due to their scale. This can make a business more attractive to potential employees and help with employee retention.
    Scalability: PEOs provide flexibility for businesses to scale up or down quickly. This can be particularly valuable for businesses in sectors with fluctuating staffing needs.
  4. Risk Management: By becoming the employer of record, the PEO shares certain employment-related risks. This can protect businesses from potential financial harm.
  5. Local Expertise: For foreign companies looking to establish a presence in the UK, a PEO provides valuable local knowledge and expertise. This can greatly simplify the process of setting up in a new country.

Remember to carefully consider the specific needs and circumstances of your business when deciding whether to partner with a PEO. Consulting with a legal or HR expert may be beneficial in making this decision.

What are the disadvantages of a UK PEO?

While there are numerous benefits, there can also be potential challenges to hiring a UK PEO:

  1. Loss of Control: While the client company retains control over the daily management of employees, many HR-related decisions are made by the PEO, which can lead to a perceived loss of control.
  2. Cost: While PEOs can be cost-effective in the long run, the initial cost can be a barrier for some businesses.
  3. Dependency on the PEO: The success of the partnership largely depends on the performance of the PEO. If the PEO fails to deliver on its responsibilities, it could cause significant problems for the client company.

Leading UK PEOs

Here are five of the top PEOs operating in the UK:

  1. Papaya Global: Papaya Global is a global PEO with a solid track record of offering HR solutions in the UK. Their services include recruitment, payroll, compliance, and more.
  2. Remote: Remote offers comprehensive PEO services in the UK. Their platform enables businesses to manage international teams, handling everything from legal compliance to payroll and benefits.
  3. Omnipresent: Known for its global reach, Omnipresent provides businesses with the tools needed to hire, manage, and pay employees in the UK. They handle all HR-related tasks, including compliance, payroll, and benefits.
  4. Velocity Global: Velocity Global is a well-established PEO with a strong presence in the UK. They offer a full suite of HR services, from payroll and tax administration to HR management and compliance.
  5. Bradford Jacobs: Bradford Jacobs is a UK PEO with extensive experience and deep understanding of the UK labour market. They provide a range of services, including HR management, payroll, and legal compliance.

These PEOs have a strong reputation for their services and expertise in the UK. However, it’s vital to conduct thorough research and choose the PEO that best aligns with your business’s unique needs and objectives.

UK PEOs — Choose wisely

UK PEOs provide invaluable services for foreign companies looking to establish a presence in the UK market. They offer a full suite of HR services and possess in-depth knowledge of the UK labour market, significantly simplifying the process of expanding into the UK.

However, potential challenges such as perceived loss of control over certain HR functions, upfront cost, and dependency on the PEO should also be considered. As with any business decision, it is crucial to weigh the pros and cons based on your company’s specific needs and capabilities.

Ultimately, a UK PEO can be a strategic partner in your business expansion into the UK. By understanding your business needs and choosing the right PEO, you can leverage their expertise to drive your company’s growth in the UK market.


A UK PEO provides a fast and efficient way for foreign companies to start operations in the UK without needing to establish a legal entity. They manage all HR-related activities, including hiring, payroll, benefits administration, and compliance with local laws.

UK PEOs have expert knowledge of local employment laws and regulations. They ensure that all HR activities, including payroll, tax deductions, and employment regulations, comply with UK laws, mitigating the risk of non-compliance.