How to hire employees in the United Kingdom: Process, costs & more in 2026

To hire employees in the United Kingdom, you can set up a UK entity, engage contractors, or hire through an Employer of Record (EOR). The United Kingdom is a strong market for companies looking to expand because of its skilled talent pool, mature financial ecosystem, and easy access to global business hubs.

UK law sets a firm baseline for engaging new talent. Writing employment contracts, statutory sick pay, and workplace pension enrollment are a few things you have to get right from day one. These requirements can create a learning curve for employers hiring in the UK for the first time.

One way to simplify UK hiring is to work with an Employer of Record (EOR) like Payoneer Workforce Management, a partner that can employ workers on your behalf and help handle payroll and local compliance while you engage with local talent.

Building a UK team? Payoneer Workforce Management runs PAYE payroll, pensions, and statutory benefits, so your new hires are paid correctly from day one. Talk to our team about hiring in the UK.

How do you hire employees in the United Kingdom?

To engage talent in the United Kingdom, you can choose from any of the three options available in the country: set up a legal entity, hire contractors, or use an EOR. The table compares them.

Route	Setup time	Cost	Compliance sits with
Set up a UK entity	Weeks to months	Highest	You
Hire contractors	Fast	Low, plus IR35 risk	You
Use an EOR	Days	EOR fee	The EOR

1. Set up a legal entity

The company can set up a separate legal entity or a subsidiary company in the UK, which can onboard employees directly. If you set up a subsidiary, you will have to register with HMRC and Companies House, and you may need to apply for a sponsor license to onboard foreign workers. The other alternative is a UK branch office, which is an extension of the foreign company rather than a separate legal identity, so all liabilities rest with the foreign company. This route gives direct control over operations, but it is often time-consuming.

2. Hiring contractors in the United Kingdom

Another way to recruit in the United Kingdom is via independent contractors, commonly known as freelancers or self-employed individuals. They provide services under a service contract that sets out the work, deadline, and remuneration, with no employment contract. Contractors do not have the same rights as employees and are usually more affordable, but contractor misclassification can lead to penalties and fines, and the off-payroll (IR35) rules may apply. So it’s worth understanding the rules and considering support when engaging contractors.

3. Use of an Employer of Record (EOR)

Using an Employer of Record (EOR) service can be a straightforward option. The EOR acts as the legal employer of the local workers in the UK on behalf of your company. It supports compliance with UK employment laws, handles taxes, payroll, and benefits, and helps you keep up with changes in UK regulations.

For instance, Payoneer Workforce Management helps you engage talent in the UK while we help handle local requirements.

What happens if you hire in the United Kingdom without an EOR?

Hiring in the UK without an entity or a compliant partner exposes you to three main risks: getting worker status wrong, mishandling PAYE, and unfair dismissal. Each can lead to back tax, penalties, or a tribunal award. Hiring through an EOR keeps the employment compliant from the start.

Risk	What it can mean	How to reduce it
Misclassification or IR35	HMRC recovers unpaid tax and NI, plus interest and penalties	Employ the worker under PAYE, or use an EOR
PAYE or pension errors	Penalties for late or wrong tax, NI, and auto-enrollment	Run payroll on time, or let an EOR file it
Unfair dismissal	Tribunal awards and legal costs	Follow a fair reason and process, with compliant contracts

Hiring staff in the UK without an entity can also raise corporate tax and permanent establishment questions, which depend on your activities and presence. Outcomes vary, so consult your own tax and legal advisors. Talk to our team about hiring in the UK.

Where can you find employees in the United Kingdom?

Since the UK has an extensive talent pool, employers should choose the right hiring approach to find a candidate who matches the job. Some popular options are:

Popular job boards

You can find prospective employees through UK job boards. Popular ones include Reed, CV Library, Indeed, and Monster.

Work with local recruitment agencies

Recruitment agencies help find candidates for full-time, part-time, or temporary roles. You can register with multiple agencies to increase your chance of finding the right person for the job profile.

EOR support

Companies looking to hire in the United Kingdom may use EOR providers like Payoneer Workforce Management to engage local talent quickly. The EOR becomes the legal employer that can onboard employees on your behalf, handle payroll and taxation, and support compliance.

How do you onboard employees in the United Kingdom?

Onboarding employees in the United Kingdom requires adherence to the tax, legal, and compliance procedures set by the government of the UK. Some important steps:

1. Conduct a right-to-work check: before they start, check the candidate has the legal right to work in the country, using an identity service provider offering Identity Document Validation Technology (IDVT) or checking original documents.
2. Send an offer of employment: issue a formal offer letter and a written contract, making clear which parts are legally binding, with duties, salary, working hours, leave, benefits, and a probation period.
3. Enroll your employee in payroll: submit the employee details to HMRC to set up the new employee before paying them using a Full Payment Submission (FPS).
4. Collect tax documents: ask for the P45 from their previous employer, or use the HMRC starter checklist to determine the right tax code.
5. Set up accounts and devices, introduce the team, explain duties and roles, and schedule an orientation so the new hire can settle in.

What are the key employment laws in the United Kingdom?

Employment in the United Kingdom is governed by various laws that set out workers’ rights, including the minimum wage, paid holidays, written contracts, protection from unfair dismissal, and protection against discrimination. The National Living Wage for workers aged 21 and over is GBP 12.71 per hour from April 2026.

Employment contract

In the United Kingdom, the employment contract should be in written format and set out the employment conditions, rights, duties, and responsibilities. It typically contains the employer and employee names, job description and start date, payment amount and terms, hours and days of work, leave and holiday entitlement, probation period, training, liability, and benefits.

Employee benefits

Benefit	Details
Pension scheme	Employers must auto-enroll eligible employees into a workplace pension, on top of the state pension. The minimum total contribution is 8% of qualifying earnings, 3% from the employer and 5% from the employee (as of 2026).
Statutory Sick Pay (SSP)	GBP 123.25 per week, paid by the employer for up to 28 weeks
Statutory maternity leave	Statutory maternity leave is 52 weeks (26 weeks ordinary and 26 weeks additional). Statutory Maternity Pay is paid for up to 39 weeks: 90% of average weekly earnings for the first 6 weeks, then GBP 194.32 or 90% of average weekly earnings (whichever is lower) for the next 33 weeks
Paid leave	Full-time employees get 28 days, or 5.6 weeks, of paid holiday.
Public holidays	Employees in the UK get 8 public holidays.

Working hours and overtime

Employees in the UK typically have a work week of 40 hours (Monday to Friday) and should not work more than 48 hours weekly on average. They are entitled to a 20-minute break for shifts longer than 6 hours, 11 hours’ rest between shifts, and weekly rest periods. Overtime multipliers in the UK are not statutory; overtime pay is contractual, provided average pay still meets the minimum wage.

Tax obligations

When planning to hire in the United Kingdom, you need to know the income tax system. For England, Wales, and Northern Ireland, the band amounts are below; Scotland sets its own:

Band	Taxable income (GBP)	Tax rate
Personal allowance	0 to 12,570	0%
Basic rate	12,571 to 50,270	20%
Higher rate	50,271 to 125,140	40%
Additional rate	Over 125,140	45%

On top of income tax, employers pay 15% National Insurance on earnings above GBP 5,000, and employees pay 8% between GBP 12,570 and GBP 50,270, then 2% above.

Termination and severance

Termination can occur on resignation, mutual agreement, termination during probation, or dismissal for misconduct, performance concerns, or unauthorized absence. Statutory minimum notice after probation is at least one week for service between one month and two years, one week per year for two to twelve years, and twelve weeks for twelve or more years of service. Statutory redundancy pay is as follows:

Age group	Redundancy pay per year of service
Under 22	0.5 week’s pay
22 to 40	1 week’s pay
41 and over	1.5 weeks’ pay

The weekly pay is typically capped at GBP 751.

How can Payoneer Workforce Management help you hire in the United Kingdom?

If you are planning to onboard employees in the United Kingdom, the process can be supported by an EOR like Payoneer Workforce Management, so you can start engaging employees in the UK without local infrastructure. Offering EOR services in more than 160 countries and supporting 70+ currencies, it helps with compliance, payroll management, employee benefits, onboarding and termination, and taxation.

EOR services start at $249 per employee per month, with agent of record and contractor management priced lower. Payoneer Workforce Management was also named a Global Leader in the G2 Spring 2026 reports. You can also read the Employer of Record, payroll, employment laws, and leave policy guides for the United Kingdom.

Hire in the United Kingdom with Payoneer Workforce Management. Book a demo today to learn more.