Employer of Record in the UK: 2026 Cost and Compliance Guide

The UK is often the first international market for US companies: no language barrier, a deep talent pool in London, Manchester, Edinburgh and Bristol, and employment law that is more flexible than continental Europe. Employer costs are also relatively low: 15% National Insurance on earnings above £5,000 and a minimum 3% pension contribution.

Setting up a UK limited company is quick, but running UK payroll (PAYE), pensions and HR compliance takes ongoing work. An Employer of Record (EOR) handles all of it under a UK employment contract while you manage the work.

UK employment law is also changing. The Employment Rights Act 2025 is rolling out reforms in stages, including changes to statutory sick pay and the qualifying period for unfair dismissal claims. This guide covers costs, rules, provider comparison and when to set up a UK Ltd. Figures link to official sources. We do not test or use the providers listed; see our methodology.

An Employer of Record is a company with a UK entity that employs staff on behalf of foreign businesses. It issues the UK employment contract, runs payroll through HMRC's PAYE system, deducts income tax and employee National Insurance, pays employer National Insurance, auto-enrols the employee into a workplace pension, and handles statutory sick pay, leave and terminations.

You pay the EOR a monthly invoice for salary, employer costs and its fee. The employee works in your team under your direction.

Because your company directs the work, the employee may in some set-ups count as an agency worker. Under the Agency Workers Regulations, agency workers gain equal treatment on basic pay and conditions after 12 weeks in the same role. Ask your provider how its UK model is structured and which rules it applies.

UK employment cost has three layers: gross salary (12 monthly payments), employer costs (National Insurance, pension and, for large employers, the Apprenticeship Levy) and the EOR fee.

Employer National Insurance is charged at 15% only on earnings above £5,000 a year, and the minimum pension contribution only applies to a band of earnings. The tables and estimator apply both.

Annual cost at example salaries

What these figures include and exclude

• Employee National Insurance and income tax are deducted from gross pay under PAYE and are not employer costs.
• The pension figure is the legal minimum on the qualifying earnings band. Competitive employers often contribute 5–8% of full salary.
• The Employment Allowance (which reduces employer NI for many small businesses) is unlikely to benefit an EOR arrangement.
• Statutory sick pay, statutory maternity pay and similar payments are partly or fully funded by the employer.

Estimate your own cost

Enter a salary to see the estimated annual cost, including mandatory employer contributions and an EOR fee. Change the fee to match the quotes you receive.

UK employment law sets fewer minimums than most of Europe, but several reforms under the Employment Rights Act 2025 are being phased in during 2026 and 2027. Check the current position before you make an offer.

Written statement

Employees must receive a written statement of key terms on or before their first day.[5]Verify

Probation

Not set by statute. Three to six months is typical and is agreed in the contract.[5]Verify

Working time

Maximum average 48-hour week unless the employee opts out in writing, with rest-break and night-work rules.[6]Verify

Annual leave

5.6 weeks of paid leave a year (28 days for a five-day week), which can include the 8 bank holidays.[7]Verify

Sick pay

Statutory Sick Pay is paid by the employer. Under the Employment Rights Act, SSP becomes payable from the first day of sickness from April 2026.[8]Verify

Many employers offer enhanced company sick pay on top.

Family leave

Up to 52 weeks of maternity leave, of which up to 39 weeks carry statutory maternity pay (largely recoverable by the employer from HMRC).Verify

Notice periods

Statutory minimum notice from the employer is one week per complete year of service (minimum one week after one month), up to 12 weeks. Contracts often set longer periods.[9]Verify

Unfair dismissal

Employees with the qualifying period of service can claim unfair dismissal. The Employment Rights Act 2025 reduces this from two years to six months, with the change scheduled for 2027.[9]Verify

Dismissals must be for a fair reason and follow a fair procedure. Redundancy pay is due after two years' service under a statutory formula.

Right to work

Employers must check every employee's right to work in the UK before employment starts.[10]Verify

These EOR providers publish information about employing in the UK. Prices are their own published starting rates in USD. Quote-only providers are marked.

In the UK, ask whether the provider uses its own UK entity, which pension scheme it auto-enrols employees into and at what contribution rate, and whether the Apprenticeship Levy is passed through.

For each provider's products, pricing model and fit signals, see the EOR provider directory.

A UK private limited company (Ltd) is one of the fastest and cheapest entities in the world to set up: online registration with Companies House takes about a day, and there is no minimum share capital. You then register as an employer with HMRC for PAYE and choose a pension provider.

Ongoing costs are modest compared with continental Europe: an accountant, payroll software or bureau, annual accounts and corporation tax returns (25% main rate, 19% for small profits), a confirmation statement, and HR and employment-law support.

For a step-by-step version of this calculation, see EOR vs local entity: a break-even framework.

1. 1

   Define the role and salaryDay 0

   Agree an annual gross salary, notice period, holiday entitlement and any bonus or equity terms.

2. 2

   Compare itemised quotes1–3 days

   Request UK quotes covering the fee, deposit, pension contribution level, benefits and offboarding. Use the estimator to sanity-check totals.

3. 3

   Sign the service agreement

   Review liability for termination costs, IP assignment, and data protection (UK GDPR) terms.

4. 4

   Contract and right-to-work check2–5 days

   The EOR issues a UK contract and written statement, and completes the right-to-work check before day one.

5. 5

   Payroll and pension set-up

   The EOR adds the employee to PAYE payroll (with their National Insurance number and tax code) and auto-enrols them into its pension scheme.

6. 6

   Ongoing administrationMonthly

   Monthly payroll, RTI submissions to HMRC, pension contributions, holiday and sickness records.

Rates and rules on this page are based on the following official sources. Numbers in brackets in the tables above link to these entries.

1. 1
   Rates and thresholds for employers 2026 to 2027

   HM Revenue & Customs (GOV.UK)

   National Insurance rates and thresholds, pension and statutory payment rates.

2. 2
   Automatic enrolment: employer duties

   The Pensions Regulator

   Auto-enrolment eligibility, qualifying earnings and minimum contributions.

3. 3
   Pay Apprenticeship Levy

   GOV.UK

   Who pays the 0.5% levy and how it is calculated.

4. 4
   National Minimum Wage and National Living Wage rates

   GOV.UK

   Current hourly minimum wage rates by age.

5. 5
   Employment contracts and written statements

   GOV.UK

   What must be in a written statement of employment particulars.

6. 6
   Maximum weekly working hours

   GOV.UK

   The 48-hour week and opt-out rules.

7. 7
   Holiday entitlement

   GOV.UK

   Statutory 5.6 weeks of paid holiday.

8. 8
   Statutory Sick Pay: employer guide

   GOV.UK

   SSP rates and rules for employers.

9. 9
   Dismissing staff and notice periods

   GOV.UK

   Fair dismissal, notice and redundancy pay.

10. 10
    Check a job applicant's right to work

    GOV.UK

    Mandatory right-to-work checks.

The UK is one of the cheapest major markets to employ in. Total cost through an EOR runs at roughly 1.2–1.3× gross salary, and the fee is a smaller share at senior salaries.

Because a UK Ltd is quick and inexpensive, an EOR makes most sense for first hires or market tests. Plan to compare against your own entity once you have two or three UK employees.

Watch the Employment Rights Act timeline, which changes sick pay and dismissal protection through 2026–2027, and see our Ireland guide if you're weighing an EU base nearby.