Employer of Record in the UK
Skuad's United Kingdom’s Employer of Record (EOR) is a comprehensive solution to hiring a local workforce in the UK without investing in a UK entity. Every country has its own set of corporate laws that are different from that of other nations. It is a complex landscape, especially for small-and-medium-scale companies that wish to expand globally. Setting up offices in a foreign country like the UK and navigating through the administrative and legal formalities of the country can be a complicated process. With the support of a par-excellence hi-tech Employer of Record UK solution like that of Skuad's, the process can be much easier.
With the aid of an automated and hi-tech solution, Skuad gives you access to multiple resources online that help your business entity to recruit remote workers and handle complex legal compliances and administrative tasks related to payroll, visa processing, and more. Book a Demo to know more about the advantages of having Skuad as your EOR in the UK.
The UK at a Glance
Population: 67.96 million (2024 estimate)
Currency: Pound Sterling (£)
Capital City: London
Languages spoken: English
GDP: USD 3.070 Trillion (estimated growth by 0.7% in 2024)
Employment in the UK
Being one of the major globalized economies in the world, the UK is one of the most appealing nations for those looking to expand their businesses globally. What works favorably for the UK is that there is no language barrier, English being the most commonly spoken language here. Additionally, the country has a commendable standard of living, ranks fifth in total goods imported globally and tenth in total goods exported. However, there are certain barriers in the hiring process, such as those brought about by Brexit, which could be demotivating, especially to small and medium businesses and startup companies.
For most companies looking to hire employees in the UK, crucial time is lost in sourcing the right people. Typical recruitment processes like interviewing, onboarding, acquiring permits, visa approvals, etc., can consume a lot of time, especially for business entities that are not fully aware of the UK Labor laws. A smart solution is to use the services of an Employer Of Record UK. An EOR based in the UK helps eliminate outsourcing-related barriers by taking over end-to-end employment-related processes, including payroll, taxation, visa, benefits, leaves, etc.
| United Kingdom Labour law
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As per the United Kingdom Labour law, it is mandatory to have a detailed contract of employment. The contract should mention every facet regarding the employment terms, including compensation, working hours, salaries, wages, etc.
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| Statutory Working hours
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A maximum of 40 hours over 5 days with the flexibility to distribute the hours across the weekdays, Monday to Friday. However, employees can choose to work beyond these limitations voluntarily. |
| Overtime Eligibility |
Employees can work overtime only if their contract permits. By law, no one can be forced to work more than 48 hours averaged over 17 weeks. Overtime is usually not paid for by employers until mentioned otherwise in the contract, provided the employee's average pay is not below the National Minimum Wage. However, employees can be entitled to 'Time off in lieu' of overtime work; this should be mentioned in the contract.
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| Paid Public Holidays |
There are eight public holidays in the UK:
- Good Friday
- Easter Monday
- Spring Bank Holiday
- Early May Bank Holiday
- Summer Bank Holiday
- Christmas
- Boxing Day
- New Year's Day
However, employers are not obliged to give these days off. Employers may choose not to include bank holidays as part of paid leaves or holidays or include these in the statutory annual leave package. It means that employees are not eligible for extra pay if they work on these eight public holidays.
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| Leaves |
| Sick Leave |
As per the statutory requirements, employees earning a minimum of £120 per week are eligible for Statutory Sick Pay (SSP). Legally, these employees are entitled to £96.35 per week if they cannot work consecutively for more than four days a week. The SSP is valid for up to 28 weeks. Employers can extend Sick Pay as contractual or occupational pay, but they cannot reduce the sick pay. Also, employees are not required to contribute towards the payments of sick leaves. |
| Maternity Leave |
The statutory leave period is 52 weeks consisting of ordinary maternity leave of 26 weeks and additional maternity leave of another 26 weeks. While it is not mandatory for the entire 52 weeks, new mothers need to take two weeks' leave after the baby's birth. In the case of women employees working in a factory, it is mandatory to take four weeks off after delivery. |
| Paternity Leave |
Fathers are eligible to take up to 2 weeks of paternity leave, provided the leaves are taken in one go. |
| Holiday Entitlement/Annual Leaves |
Full-time employees in the UK are eligible for 5.6 weeks or 28 days' paid holiday annually. This is called annual leave or statutory leave entitlement. Part-time employees have the same entitlement of 5.6 weeks of paid holidays, but the number of days is less than 28. Of the 28 days, only eight days can be carried over to the subsequent year. At the end of flexible work, the accrued unused leaves are paid out. |
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| Compensation & Bonus |
The minimum wage is between £6.56 to £8.91 on an hourly basis. The wage is dependent on the employee's age. Besides this, the Living Wage Foundation, UK has determined a better living wage for employees, and most employers in the UK follow the same, even though it is not mandatory.
Bonus is not a mandatory part of the UK salary system and is completely at the employer's discretion. Some industrial segments like engineering, R&D, science, public service, media, and technology are awarded bonus payments. Certain roles like directors, senior managers, etc., are also likely to get bonuses.
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| Employee Health Coverage |
The National Insurance Contributions (NICs) are a form of tax collected to fund employee health benefits in the UK. The contribution comes from employees' salaries and employers’ contributions. Employers can provide additional health benefits to their employees in addition to the federal program. Skuad's Employer Of Record UK solution helps business entities offer their employees supplementary health benefits at substantially economical rates.
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| Employee Protection and Anti-discrimination Rights |
This law offers protection from discrimination at work from recruitment, dismissal, pay, benefits, training, redundancy, promotions and transfers, and employment terms and conditions. This law protects employees from discrimination based on marital status, age, gender reassignment, pregnancy, disability, race, color, nationality, ethnicity, origin, religion, sex, belief, and sexual orientation. |
| Confidentiality of Personal Information |
Personal Information in the UK is protected by the Data Protection Act 2018. This Act implements the guidelines of the General Data Protection Regulations (GDPR) in the UK. Six data protection principles govern how personal data will be used lawfully and fairly. Further, the principles state that the data will be used for an explicit purpose in a relevant manner, with accuracy. Only updated data should be used and removed when no longer required. Organizations are obliged to handle data securely so that data is protected from unauthorized access and harm.
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Employment Laws in the UK
| Employment Rights Act 1996
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Mentions the rights of employees related to dismissal and leaves.
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| National Minimum Wages Act 1998
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Mentions the minimum wages and is reviewed by the government periodically.
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| Employment Relations Act 1999
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Establishes recognition of Trade Unions
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| Maternity and Parental Leaves etc. Regulations 1999
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States maternity and paternity related leaves
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| Part-time employees (Prevention of Less Favourable Treatment) Regulations 2000 |
UK employers need to treat their part-time employees comparably with full-timers.
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| The Equality Act 2010 |
Discusses discrimination at the workplace and during recruitment.
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| IR35 |
It is tax legislation that helps individuals save taxes by working as disguised employees. These work and act like employees but are on the payroll of limited companies.
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Why immerse yourself in understanding the nitty-gritty of the UK labor law, when Skuad can do it for you? Talk to us.
Contractors vs. Full-Time Employees
Here is the difference between a contractor and a full-time employee. An employee works with an employer under an employment contract in the UK. Employers are responsible for working out the status of the worker as per taxation laws and employment laws.
Full-time employees are entitled to Statutory Sick Pay, statutory maternity and paternity leaves, minimum notice periods, legal protection from unfair dismissal, Statutory Redundancy Pay, time-off for emergencies, and flexible work requests. These benefits are extended only to employees who meet the continuous employment criteria as per the employment contract in the UK.
Employees need to fulfill certain statutory hours of work and need to be paid on time. Also, such people cannot send in another worker to replace themselves. The employment agreement in the UK mentions all these details in length.
A contractor in the UK, on the other hand, can be self-employed or an employee or a worker of an agency and working for a client. Contractors work on a project-to-project basis, have their entity, pay their taxes, work for multiple clients simultaneously, and are not part of the payroll.
It is wise to hire full-time employees when it is a long-term role and want your workers to be committed to the vision and mission of the company. Consider hiring contractors for seasonal or short-term roles where the worker is not involved in the core business areas. If the role requires regular monitoring, supervision and regular reports, it is best to hire an employee.
Either way, compliance with the statutory laws is essential, and the right classification of workers to avoid penalties. Learn more about how Skuad can help you achieve compliance.
Hiring in the UK
To hire employees in the UK, the traditional route for global companies is to set up their branch offices or subsidiaries in the UK first. However, it can be time-consuming for the process to complete delaying your global plans substantially. Also, it could increase your costs significantly. Another way is to use job search portals or online hiring companies in the UK like Indeed, Reed, Monster, Glassdoor, CV-Library, WikiJob, Adzuna, LinkedIn, and more. While most of these sites have gained credibility in the past several years because of the quality of talent companies can hire online, there are cons. The entire hiring and onboarding process has to be handled by you or your HR department. If you are not well-versed with the employment laws and compliances in the UK, it could be a big problem. Additionally, you lose crucial time during the process.
Another fast becoming popular route is to use an Employer of Record UK solution, like Skuad. Our futuristic solution enables hiring full-time employees and contractors on your behalf and assigning them to work as per their employment contract in the UK. Skuad's progressive tech platform helps organizations hire both types of workers with ease and simplicity. You can also make informed decisions regarding making employment offers to full-time employees and contractors with Skuad's resources. Learn more on how you can leverage the expertise of Skuad for your hiring needs in the UK.
Probation & Termination
Probationary Period in the UK
The UK's standard probation period is three months from joining, especially if it is an internal move. However, the general probationary period is six months from the date of joining. Please note that probation in the UK does not come under statutory law.
Termination of employment in the UK
Termination or dismissal is when the employer terminates or ends the employment contract. In case of termination, the employer needs to give the employee the statutory notice period or, as mentioned in the contract, whichever is more. However, there are circumstances when the employee can be terminated immediately. As per the law, employers must give the reason for dismissal within 14 days of asking you to leave, and the reason behind it.
Skuad’s expertise and its robust global employment platform will help you achieve all goals for your global expansion. To know more about the EOR services of Skuad, click here.
EOR Solution in the UK
The Employers of Record (EOR) model is a smart solution for companies seeking to enter and expand in the United Kingdom fast and agilely. With the help of Skuad's Employer of Record service, business entities abroad can quickly source and hire the right professionals as per the organization's requirements. Hired employees get onboard seamlessly, helping your business save up to 85% of hiring and onboarding costs. End-to-end solutions help manage employment contracts, process payroll and income tax, blend statutory benefits, and manage overall administration of the backend HR processes. Our platform works as a unified employment platform with automated workflows, digital signatures, employee payroll, contractor payout, and all types of compliance solutions.
General Employer of Record Service Terms:
- Taxes that apply to invoices for a UK business is 7% GST while it is zero GST for a foreign company
- The minimum duration of service is three months
- The currency accepted is British Pound Sterling.
- The required details & documents for UK citizens include personal information, a copy of passport, bank details, copy of NRIC (for permanent residents), job description.
- For foreigners, the required documents include personal information, job description, educational qualifications, technical qualifications, CV, a copy of passport, a copy of ID, bank details, photographs, police verification, medical exam results.
Outsourcing employment through an EOR
When your organization decides to expand its business into the United Kingdom, it is prudent to analyze the various options to do so and to make a decision on which route to take. Building a subsidiary from the ground up, while managing all tasks from finding talent to hiring and managing payroll can be an extremely cumbersome and difficult process. This is where outsourcing employment through an EOR can come in handy. An EOR will not only manage hiring or payroll, but the entire employee lifecycle. Skuad can assist you with the same and provide remote services allowing you to focus on your core business activities while our unified platform takes care of the entire lifecycle of every employee - from hire to fire.
Feel free to connect with us, to learn more.
Types Of Visas in the UK
Having the right employees in your organization is a critical factor in the growth of your business, especially when expanding your business in the UK. You can choose between having your in-house team relocate to the UK or trust a credible Employer Of Record UK to handle the visa process on your behalf.
The UK work visa is based on the Points Based System (PBS). There are five tiers of work visas, and applicants need to apply for one of the tiers. Each tier is associated with specific entitlements, conditions, and entry requirements. The types of work visas in the UK are as follows:
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Tier 1
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For highly skilled employees, investors, and entrepreneurs outside the EU and EEA.
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| Tier 2 |
For skilled employees from outside the EEA. Professional sportspeople also fall in this tier.
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| Tier 3 |
For low-skilled employees usually looking for temporary work outside the EU.
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Tier 4
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For students aged 16 years and above from outside the EEA. |
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Tier 5
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For temporary employees, and has six sub-tiers. |
Work visa requirements in the UK
- Requirements differ based on the tier type.
- Work visas in the UK need to be sponsored by a sponsor or an employer.
- The general requirement includes an application form, two colored photos, valid passport, accommodation proof, financial proof, test results of TB, travel itinerary, paid visa fees, biometric information, translated documents in English and Welsh.
Work Permits
For non-EU workers, it is mandatory to obtain a work permit in the UK. The permit needs to be sponsored by a licensed incorporated business entity in the UK. A Certificate of Sponsorship from the UK government is also mandatory. The relevant UK work permit for foreigners is usually the General work visa or the Tier 2 visa. Only Tier 1 applicants can apply for a UK work permit without a job offer. As per the laws in the UK, an EOR or any other third-party organization cannot sponsor work permits. However, Skuad’s hi-tech platform and expertise can be of great help in obtaining UK work permits optimally and in compliance with the UK immigration system.
Payroll & taxes in the UK
Whether you hire local British workers or relocate professionals from your country, it is imperative to ensure complete compliance with the local laws on payroll & taxes in the UK. All these formalities can be a long-drawn and daunting process for foreigners, which is why it is helpful to hire a local specialist for payroll outsourcing in the UK to help you manage all of this.
Taxation in UK
Employee Taxation
The income tax depends on how much higher the income of the employee is above the Personal Allowance. The standard Personal Allowance in the UK is £12,570. In case employees claim Marriage Allowance and Blind Person's Allowance, their Allowance is higher. If the income is over £100,000, then the Personal Allowance is lower.
For an employee with a standard allowance of £12,570.
Employer Taxation
UK employers need to operate the Her Majesty's Revenue and Customs (HMRC) PAYE system. This system is used for the collection of income tax and National Insurance. It is mandatory to make deductions while making payments to employees, such as salary, wages, bonus, tips, maternity pay, Statutory Sick pay for PAYE, etc.
| Tax
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Explanation
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| Employer Taxation
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Tax explanation contribution to Social Security 12% on weekly salary (GBP 183.01 to GBP 962) |
| Contribution to social security system |
13.8% on weekly salary |
| Corporate Income Tax |
19% |
Employers with in-house payroll management must inform the HMRC about employee payments and deductions just before payday. In case of any reduction claim, employees need to submit another report. With Skuad's EOR solution, all of this is managed by a team of professionals on your behalf. Talk to us.
Bonuses
Employees are generally awarded both cash and non-cash bonuses but that’s not legally required.
Incorporation
How to set up a subsidiary for your business in the UK?
A UK subsidiary is formed in the UK and incorporated as per the laws of company formation. The subsidiary capital can be run by the company with a local partner or fully owned by the parent company.
The first step is to have a registered office address. You can open up a Sole Director subsidiary, in which you need to provide your residential and service address. The Companies House takes about 24 hours to get back to you with its decision. Changes to the subsidiary are allowed after incorporation. There are multiple business opportunities in the UK and different structures available. Understanding all of it and picking the right one can be tricky. Hiring Skuad's Employer Of Record UK solution helps partners fulfill their HR requirements seamlessly without the need to incorporate their subsidiary or incorporating a holding company in the UK. Book a demo today to set the ball rolling.
Professional Employer Organization (PEO)
A Professional Employer Organization (PEO) leases employees to an employer. The PEO handles multiple employee-related liabilities where organizations can outsource their HR functions, including payroll, compensation, benefits, taxes, and payroll administration.
Comparing the services of a professional employer organization in the UK and an EOR in the UK.
- A PEO works as a co-employer whereas an EOR works as a full-legal employer of the payroll employees.
- A PEO has some liabilities of the workers, whereas an EOR has complete liabilities.
- With a PEO, you need to arrange insurance for your employees, whereas an EOR takes care of employee insurance.
- A PEO handles State Unemployment Tax and Federal Unemployment Tax Act rates, while EOR offers insurance coverage for all.
- With a PEO, you need to make decisions all the time; with an EOR, all HR-related decisions and paperwork are made by the EOR, giving you more time to look after your business.
How can Skuad help? Skuad helps handle all the HR-related functions in the backend, including compensation and payroll, contracts, visas, and collection of documents, ensuring compliance with UK laws, taxation, and more. Skuad’s Employer Of Record UK solution helps discover global talent and facilitates the onboarding of full-time employees and contractors optimally, cost-effectively, and flawlessly.
Conclusion
Skuad is an HR-tech platform with expertise in building up remote teams for your businesses, while as the top management, you focus on your core business operations. To learn more about how our unique tech-enriched platform can add value to your global expansion plans, book a demo with Skuad today.
FAQs for EOR in the UK
What is EOR in the UK?
Employer of Record (EOR) in the UK refers to a third-party service that employs staff on behalf of another company, handling all legal and HR responsibilities. The EOR manages payroll, tax compliance, employee benefits, and ensures adherence to UK employment laws, allowing businesses to efficiently onboard and manage talent in the UK without establishing a local legal entity.
Who provides EOR Services in the UK?
Skuad provides Employer of Record services in the UK. Skuad specializes in managing employment-related responsibilities, ensuring compliance with UK employment laws, and providing expert HR support. We help businesses seamlessly build and manage their workforce in the country.
How much is the Employer of Record cost in the UK?
Typically, EOR services charge a fee based on a percentage of the employee's salary or a flat fee per employee. With Skuad, you pay as low as USD 229 per month per employee.
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