The UK boasts a highly skilled and diverse workforce, with expertise across various industries. As a global business hub, it provides access to European markets and beyond, supported by well-developed infrastructure and economic stability.  The multicultural population brings a wide range of perspectives and innovative ideas, enhancing creativity and problem-solving within organizations.

So your decision to hire from the UK is absolutely great. But where you might get stuck is in handling the complexities of international hiring, from navigating legal requirements to managing payroll.

That's where an Employer of Record (EOR) can help you. Let's explore what it is, and how to choose the right one.

What is EOR in Canada?

An Employer of Record (EOR) in the UK is a third-party organization that acts as the official employer for a company's workers in the United Kingdom. The EOR handles all legal and administrative responsibilities related to employment, including payroll, taxes, benefits, and compliance with UK labor laws. This allows companies to hire and manage employees in the UK without setting up their own legal entity in the country.

Your role as the client company of the EOR provider is you select the candidates to hire and decide their compensation. The employees work under your direction and integrate with your team. They are aligned with your goals and culture. You are responsible for paying the EOR for the employees' compensation plus the EOR's service fees.

Companies may not fully appreciate that the EOR assumes many of the legal and financial risks associated with employment. This includes handling issues related to employee terminations, tax filings, and compliance with local regulations. Let's look at various aspects of hiring that the EOR will handle for your business

1. Payroll processing: The EOR manages all aspects of payroll, including salary payments, tax withholdings, and other deductions.
2. Tax compliance: They ensure compliance with UK tax regulations, handling tax registrations, filings, and remittances.
3. Benefits administration: EORs administer employee benefits in accordance with UK laws and regulations.
4. Legal compliance: They ensure adherence to UK employment laws, labor regulations, and other legal requirements.
5. Employment contracts: The EOR prepares and manages compliant employment contracts.
6. HR support: They provide ongoing HR services and support for employee-related matters.
7. Risk mitigation: EORs assume many of the legal and financial responsibilities associated with employment, reducing risks for the client company.

Benefits of EOR in the UK

An Employer of Record (EOR) in the UK can be a game-changer for your company if you're:

1. Testing the UK market: If you're exploring expansion into the UK but aren't ready to fully commit, an EOR allows you to hire local talent quickly without establishing a legal entity. This provides flexibility to test the market with minimal risk and investment.
2. Doing small-scale hiring: For companies looking to hire just a few employees in the UK (typically 5 or fewer), an EOR is often more cost-effective than setting up a local entity. The EOR handles all compliance and administrative tasks, saving you significant time and resources.
3. Hiring for short-term projects: If you need UK-based workers for a specific project or limited time period, an EOR offers the flexibility to hire quickly and compliantly without long-term commitments.
4. Looking at rapid market entry: When speed is crucial, an EOR can dramatically accelerate your ability to hire in the UK. You can often onboard employees in as little as a few weeks, compared to months it might take to establish your own entity.
5. Concerned about compliance: UK employment laws and regulations can be complex. If you lack expertise in local labor laws, tax requirements, and statutory benefits, an EOR ensures full compliance and mitigates legal risks

Companies that can benefit from an EOR typically include startups and small businesses looking to expand into the UK quickly and cost-effectively. International companies testing the UK market before committing to a permanent presence will also benefit from EOR. Even companies that are based in the UK but have limited HR and legal resources to manage UK employment compliance can use EOR.

What's the Cost of EOR in the UK?

When considering the cost of using an Employer of Record (EOR) in the UK, it's important to understand that there isn't a one-size-fits-all pricing model. the number of employees you plan to hire through the EOR service significantly impacts the overall cost. Many providers offer volume-based pricing, meaning the per-employee cost may decrease as you hire more workers. This scalability can be advantageous for companies planning substantial growth in the UK market.

When evaluating EOR providers, it's advisable to look for those offering transparent, all-inclusive pricing structures. Be wary of providers that rely heavily on external partners, as they may pass on processing fees, onboarding charges, or other unexpected costs.

In this context, Thera stands out as a reliable EOR solution for UK operations. They offer a clear, competitive pricing model while maintaining high standards of compliance and service quality. Thera's approach combines the benefits of modern, efficient processes with the assurance of strict adherence to UK employment regulations.

while there are typically setup fees and ongoing monthly service charges, these can vary widely between providers. Some EORs might charge a flat fee per employee, while others may base their fees on a percentage of the employee's salary. Additionally, you should factor in the cost of any security deposits required by the EOR, which are usually refundable but tie up capital during the employment period

Lastly, don't overlook the potential cost savings an EOR can provide. While there are fees associated with the service, using an EOR can actually save you money compared to establishing your own legal entity in the UK.

How payroll processing works when you hire in the UK via an EOR

The EOR acts as the official employer for your UK workers. They handle all the nitty-gritty of payroll, taxes, and compliance with UK laws. As an employer, you don't need to worry about understanding all the UK-specific payroll rules because the EOR manages this for you.

Here's a breakdown of how payroll processing works:

1. Salary agreement: You decide on the employee's salary and communicate this to the EOR.
2. Working hours and leave: You track the employee's work hours and time off, sharing this information with the EOR.

After these two steps, EOR handles everything related to payroll that helps you stay compliant in the UK:

1. Calculates the employee's pay, including any overtime or bonuses.
2. Handles all required tax deductions, like income tax and National Insurance contributions.
3. Creates and distributes payslips to employees.
4. Pays the employees in British pounds (GBP) directly to their UK bank accounts.
5. Provides you with regular reports on payroll costs and deductions.

And finally, according to the contract you transfer the total amount for salaries and EOR fees to the provider.

How to Choose an EOR in the UK

An Employer of Record (EOR) is going to be handling some of the most critical aspects of your UK operations, from onboarding your new hires to managing payroll and benefits. So you have to make sure that you're partnering with the right platform. You want to find a partner that not only checks the compliance boxes but also aligns with your company's unique needs, budget, and goals.

How do you separate the top-tier EORs from the rest? It's all about knowing what to look for and asking the questions that matter most. To help you navigate this process, we've put together a list of strategic questions to ask when evaluating EOR providers in the UK:

Legal Entity and Compliance

What specific licenses and registrations do they hold to operate as an EOR in the UK? Understanding the legal credentials of the EOR ensures they are fully authorized to operate within the UK and comply with local regulations.

How do they ensure compliance with UK employment standards, tax laws, and labor regulations? It's crucial to know how the EOR stays updated with UK-specific laws and ensures compliance across all aspects of employment, from payroll to benefits administration.

Partnership Structure

Do they have their own entity in the UK, or do they rely on third-party partnerships? Knowing whether the EOR operates through its own entity or third-party partners can affect the consistency and quality of service. Direct operations often mean better control and accountability.

If they work with third-party partners, how do they ensure consistent quality of service and compliance across all partners? If third parties are involved, it's important to understand how the EOR manages these relationships and maintains high standards.

Employee Onboarding and Experience

What specific steps are included in their onboarding process, and how do they ensure a smooth transition for new hires? A clear and efficient onboarding process is essential for a positive employee experience. Ask about the steps involved and how they support new hires during the transition.

What communication channels and support do they offer to employees throughout their employment lifecycle? Ongoing support and clear communication are vital for employee satisfaction. Ensure the EOR provides robust support mechanisms.

How do they measure and track employee satisfaction, and what processes do they have in place to address any concerns or issues that arise? Understanding how the EOR monitors and addresses employee satisfaction can give you insights into their commitment to maintaining a positive work environment.

Technology and Data Security

What specific certifications and audits do they undergo to ensure the security and privacy of sensitive data (e.g., ISO 27001, SOC 2)? Data security is paramount. Ensure the EOR has the necessary certifications and undergoes regular audits to protect sensitive information.

How do they handle data storage, backup, and recovery to ensure business continuity in case of unexpected events? Reliable data management practices are crucial for maintaining business operations. Ask about their protocols for data storage, backup, and recovery.

Can their technology platforms integrate with your company's existing HR and payroll systems, and how seamless is the integration process? Seamless integration with your existing systems can streamline operations. Ensure their technology is compatible and easy to integrate.

Are their technology systems user-friendly and accessible for both your company and your employees? User-friendly systems enhance the experience for both your HR team and employees. Evaluate the ease of use and accessibility of their platforms.

Scalability and Flexibility

What is the largest number of employees they have onboarded for a single client in the UK, and how did they manage the process? Understanding their capacity to handle large-scale onboarding can give you confidence in their ability to support your growth.

Do they offer flexible solutions and customization options to meet your specific needs? Flexibility in services and the ability to customize solutions to fit your unique requirements are important for a tailored experience.

How quickly can they adapt to changes in your hiring needs, such as sudden increases or decreases in headcount? The ability to quickly scale up or down based on your hiring needs ensures that the EOR can support your business as it evolves.

By asking these strategic questions, you can better evaluate potential EOR providers and choose the one that best aligns with your business goals and operational needs in the UK.

Discovered Top Talent in the UK?

Have you found the perfect candidate in the UK, or are you just beginning your search? Either way, Thera's Employer of Record (EOR) service can help you bring UK talent into your company seamlessly. Our comprehensive solution ensures full compliance with UK employment laws, regulations, and tax requirements while offering:

1. Flexible payment options: Instant payouts to keep your UK team happy
2. User-friendly experience: This simplifies what could otherwise be a complex process of managing payments across different currencies and tax systems.
3. Cost-effective solution: Prices start at just $199 per employee per mont

We are the most contractor-friendly payroll platform around. We know that any deduction in a contractor’s pay seriously affects their morale. To ensure contractors get the best foreign exchange rates possible, we work with 3 foreign exchange providers to ensure contractors always get the best possible rates.

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With Thera, you can confidently expand your team into the UK without the usual headaches of international hiring. Let us handle the complexities while you focus on growing your business with top UK talent. Schedule a demo with Thera's team to see the platform in action and ask any questions you may have.

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