Your Guide to Employer of Record (EOR) in the UK

Expanding your business into the UK offers exciting opportunities, but navigating local employment laws and compliance can be complex. An Employer of Record (EOR) makes it easier by allowing you to hire employees in the UK without setting up a local legal entity. In this guide, we explain how EOR services work, when they’re the best fit, and what you can expect when hiring in the UK through an EOR.

How EOR works: Key questions answered

1. What is an Employer of Record (EOR)?
An Employer of Record is a third-party organization that legally employs staff on behalf of your company in a specific country. While your business manages the employee’s daily tasks and performance, the EOR handles all employment-related responsibilities, such as contracts, payroll, taxes, and compliance with local labor laws. This allows you to hire in countries where you don’t have a legal entity.

2. When should a company consider using an EOR?
An EOR is especially useful when:

• You want to hire talent in a country where you don’t have a local entity.
• You need to hire quickly without going through a long and complex company registration process.
• You want to ensure compliance with local employment laws and tax regulations.
• You’re testing a new market before making a long-term investment.
• You need temporary or project-based hires abroad.

3. What are the benefits of using an EOR?

• Full compliance with local labor laws and tax requirements.
• Faster hiring timelines compared to setting up your own entity.
• Reduced administrative workload for HR and payroll.
• Lower costs and risks compared to establishing a company abroad.
• Access to local HR expertise and guidance.

4. What is the difference between an EOR and a staffing agency / PEO / payroll provider?

• Staffing agency: Focuses on recruiting and placing candidates, often for short-term or temporary roles, but usually does not act as the legal employer.
• PEO (Professional Employer Organization): Offers HR outsourcing services but typically requires you to have your own legal entity in the country.
• Payroll provider: Manages salary payments and related administration but does not take on the legal employer role.
• EOR: Legally employs the worker on your behalf, handling all compliance, contracts, and payroll, so you don’t need a local entity.

5. Who is the legal employer when using an EOR?
The EOR is the legal employer on paper and is responsible for contracts, payroll, and compliance. However, you remain in control of the employee’s day-to-day work, goals, and performance.

6. Is the employee on our payroll or the EOR’s payroll?
The employee is on the EOR’s payroll. The EOR processes salary payments, handles tax deductions, and ensures all statutory contributions are made according to local laws.

7. Can we hire both local nationals and foreign employees through EOR?
Yes. EOR services can cover both local nationals and foreign employees. For foreign hires, additional visa or work permit requirements apply, and the EOR can often support with the application process.

Hiring in the UK through an EOR

1. Can a foreign company hire employees in UK without setting up a legal entity?

Yes! You don’t need to set up a local legal entity to hire in the UK. By working with an Employer of Record (EOR) like Parakar, you can employ talent locally while we handle all the legal and administrative tasks, contracts, payroll, taxes, and compliance with UK labor law.

This allows your team to start quickly and compliantly, while you stay focused on managing their work and growth.

2. What type of employment contracts do you offer under EOR in UK?

Through Parakar’s EOR service in the UK, we offer both indefinite (permanent) and fixed-term contracts. Fixed-term contracts are used for specific projects, seasonal work, maternity cover, or short-term specialist roles. Fixed-term employees must receive the same pay, conditions, benefits, and protections as permanent staff, and anyone with 2+ years continuous service has the same redundancy rights as permanent employees.

All contracts are drafted in English to ensure clarity and compliance with UK employment law.

With Parakar, all contracts are fully compliant, fair, and legally sound. This means your employees have legally compliant contracts from day one, giving you peace of mind while you focus on growing your team.

3. What are the standard working hours and overtime rules in UK?

In the UK, standard working hours are regulated by the Working Time Regulations 1998. The average working week is limited to 48 hours, although employees can choose to opt out if they wish. The standard working day averages 8 hours, and employees are entitled to paid leave and rest breaks.

Parakar ensures all working hours and leave entitlements are fully managed and compliant, making it simple for you to support your team while staying legally covered.

4. What is the minimum wage in UK?

As of 2025, the National Minimum Wage in the UK is £12.21 per hour for employees aged 23 and over. Rates are lower for younger employees, depending on their age. With Parakar as your EOR partner, you can be confident that all employees are paid correctly and in full compliance with UK law.

5. How is paid time off (PTO) handled under EOR in UK?

Employees in the UK who work a 5-day week are entitled to 20 days of paid annual leave plus 8 Bank Holidays per year. Employers can choose to offer more than the legal minimum, and leave is pro-rated if an employee starts partway through the leave year.

Bank holidays vary across the UK, with specific public holidays in England & Wales, Scotland, and Northern Ireland. If a bank holiday falls on a weekend, a substitute weekday, usually the following Monday is observed.

For sick leave, employees are eligible for Statutory Sick Pay for up to 28 weeks, starting after four consecutive days off work. As of April 2025, the statutory rate is £118.75 per week. If an absence lasts more than 7 days, a doctor’s “fit note” is required. Employers can also offer additional sick pay on top of the statutory minimum.

Parakar ensures all leave and sick pay entitlements are correctly applied, helping your employees stay happy while keeping your business fully compliant.

6. What are the rules around termination and notice periods in UK?

In the UK, notice periods depend on how long an employee has been with the company. By law, employees are entitled to at least one week’s notice if employed between one month and two years. For employees with 2 to 12 years of service, the minimum notice is one week per year worked, and for those employed 12 years or more, the minimum notice is 12 weeks. Longer notice periods can always be agreed upon in the employment contract.

Employees with more than two years of continuous service have protection against unfair dismissal, and anti-discrimination laws apply regardless of length of service. Severance pay is required in cases of redundancy for employees with at least two years of continuous service.

Employers and employees also have the option to agree on a mutually accepted termination (MTA). These agreements must follow strict legal requirements, may involve a financial settlement, and give the employee reasonable time to reflect or withdraw their consent. Because of these complexities, we always advise consulting with Parakar to ensure the process is fully compliant and handled correctly.

7. Can you hire contractors or freelancers through EOR in UK?

Parakar’s EOR service in the UK primarily covers full-time employees under UK employment law. Hiring contractors or freelancers falls outside the standard EOR scope, as these roles involve different legal, tax, and regulatory requirements.

Each case should be analyzed individually to ensure compliance, and Parakar can provide guidance on the best approach for engaging contractors or freelancers safely and legally.

8. Are there any country-specific compliance requirements for onboarding?

Yes! Onboarding in the UK requires compliance with local employment and tax laws. Through Parakar’s EOR service, we handle all legal and administrative requirements, including employment contracts, payroll registration, tax and National Insurance contributions, and adherence to UK labor regulations.

A specific requirement is that every employee must have a valid right to work in the UK.

With Parakar, your employees are fully compliant from day one, allowing you to focus on managing your team rather than paperwork.

9. How long does onboarding typically take via EOR in UK?

Onboarding with Parakar in the UK is fast and efficient. If the employee has all the required documents, including the right to work and a National Insurance number, the process can typically be completed within one week.

Our EOR service takes care of contracts, payroll setup, and compliance, so your new hire is ready to start quickly and smoothly.

10. Are there limitations on what roles or industries can be hired via EOR in UK?

No, there are generally no limitations on the roles or industries you can hire through Parakar’s EOR in the UK. You can hire across a wide range of positions and sectors without restrictions.

11. Can you support immigration for employees in the UK?

Yes! If a candidate does not yet have the right to work in the UK, Parakar can provide migration support services, helping with work permit for the worker and the family. This ensures your new hires can start legally and smoothly, while keeping your business fully compliant.

Need EOR support in the UK?

Whether you are hiring your first employee in the UK or expanding an existing team, Parakar is here to support you. As your trusted Employer of Record, we take care of employment contracts, payroll, compliance, and everyday HR administration, so you can focus on growing your business.

Contact us to find out how we can help you achieve your hiring goals in the UK.