Employer of Record United Kingdom

Infotree Global helps companies to hire in the United Kingdom by providing Employer of Record solutions. For companies willing to recruit staff and manage payroll in the UK without having a subsidiary, Infotree Global is a wise option. Here the employee is legally contracted through our subsidiary by the UK labor law, which is a streamlined way to recruit employees in the UK. With quick employee onboarding, you enter the international market without facing legal complexities. Our in-territory experts provide you with all the required expansion assistance that helps you execute payroll management seamlessly.

Hiring in the United Kingdom

UK labor law includes different acts, charters, and regulations. The wide array of legislation requires a great legal framework for staff, employers, and trade unions. There are specific rules governing the rights and responsibilities. Due to the complexity of employment laws in the UK, drafting accurate employment contracts comes as a mandate. The UK labor laws and rules comprise detailed acts, including The Employment Rights Act 1996 and the Equality Act 2010. Any company that looks forward to establishing its operations in the UK land must be aware of all these rules and regulations.

Due to the abundance and complex aspects associated with the rules and regulations of the United Kingdom’s employment procedures, companies often find it overwhelming to understand and implement all of them. In such cases, the best option is to get these done by the Employer of record United Kingdom. At Infotree Global, we make sure all your responsibilities are covered with proper care by keeping you updated with all the rules and regulations working in the UK so that your company gets the best workforce by hiring the best candidates and flourishing enormously.

Employment Compliance

Companies who are looking forward to expanding their operations in the UK should be aware of the importance of the contracts and compliances in the employment procedure. Here no employer can hire a candidate as their employee if they fail to provide them with a detailed contract depicting the details about the payments and the work. Drafting the contract requires an immense amount of time and knowledge about the rules and regulations imposed on the employment procedures. The Employer of Record services makes sure that the contract is created keeping in mind all the rules and regulations, thereby keeping the process free from any disputes and complications as well.

The UK employer of record makes sure information regarding the following is shared with the employers so that while drafting the contract, no mistakes are made.

Working hours – The working hours allocated for the employees in the UK are 48 hours. This period is distributed over 17 weeks. However, if the employee is over 18 years old, then they can opt to work for more than 48 hours; in that case, it should be mentioned in the contract.

Compensation – The minimum wage in the UK for an employee ranges from £6.83 to £9.50, and any payment less than this will not be considered right. Employers will have to pay a salary within or more than the minimum range. A payslip should also be provided to the employee with their salary, which will have detailed calculations of the deductions made from their earnings along with the salary denominations.

Bonuses – There are no mandatory regulations associated with the bonus payment for employees in the UK; this is entirely dependent on the Employer whether they want to provide a bonus or not. The Employer of Record will make sure the bonus category is detailed in the contract so that no confusion takes place during the employment procedure.

Probation Period – In the UK, the probationary period ranges between one to six months. The standard probation period is for three months, however, for senior roles, it can be six months, and one month for contract workers.

Termination and Severance – The UK Employment Rights Act 1996 specifies rules that should be followed in case of termination of an employee. Under this law, both employer and employee are obliged to provide notice when either of them wants to end the contract of employment. The notice period depends on the duration of continuous employment with a particular employer.

The minimum notice period when an employer ends the contract is One Week if the continuous employment has been for more than one month but less than twelve years and Two Weeks if the continuous employment duration exceeds twelve years. After that, the notice period increases by a week for every year of employment, up to a maximum of twelve weeks. Similarly, an employee who is continuously employed for more than one month is entitled to provide a One-week notice period when decides to end the contract. An employer can provide pay in lieu of notice to end the employment contract immediately.

Sometimes a business can go into financial difficulties and reducing the workforce is an option to save the company. This way of dismissing an employee is termed redundancy. The employer is entitled to provide redundancy pay (though in some circumstances it is not required) if an employee is working continuously for more than 2 years with a particular employer. The redundancy pay is:

• Half a week’s pay for each full year an employee has worked and is below the age of 22
• One week’s pay for each full year when an employee is 22 or older, but under 41
• One and half week’s pay for each full year when an employee is 41 or older

Employee Entitlements

According to the United Kingdom’s National Minimum Wage, the compensation of an employee varies depending on one’s age and other factors. While drafting an employment contract in the UK, it is very crucial that employers keep in mind the statutory benefits and leaves the employees are entitled to enjoy in the UK. Employer of record UK makes sure that these regulations are maintained thoroughly to nullify any disputes happening in the employment procedure. Some of the important statutory benefits and leaves you need to know are:

Maternity leaves – A total of 52 weeks is given off as maternity leave to pregnant employees in the UK. It includes 26 weeks of normal maternity leave and 26 weeks of additional maternity leave. After giving birth to the baby or babies, the employee can take an extra two weeks off before returning to work. Pregnant employees are also entitled to Statutory Maternity Pay for up to 39 weeks which they get

• 90% of your average weekly earnings (before tax) for the first 6 weeks
• £151.97or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks

Sick Leave – Employees need to give their employer proof of illness if they are ill for more than seven days to qualify for Statutory Sick Pay (SSP). Effective April 6, 2023, to April 5, 2024, employees are entitled to get £109.40 per week Statutory Sick Pay (SSP) for up to 28 weeks in case of sever illness. Other than that, modifications can be made to the sick statutory pay by the Employer where they can incorporate more benefits as well.

Vacation – Employees are entitled to get a total of 28 days of paid leave annually as their vacation, which also includes bank holidays, but this varies according to the contract. The bank holidays are not required to be paid leaves, but it depends upon the sole description of an employer to incorporate it in the paid leave section. The standard holidays that are celebrated in the UK are not mandatorily considered paid leaves as employers are not legally entitled to give them off unless they want to.

Paternity Leaves – The UK employment law provides statutory paternity leave and pays when the employee and their partner give birth to a baby or adopt a child. An employee’s employment rights like the right to pay, holidays, and return to a job are protected during paternity leave.

An employee can choose either 1 week or consecutive 2 weeks’ leave. The leave period starts when the baby is born and it must be finished within 56 days of the baby’s birth. In the case of adoption, the duration of leave is the same but the start and end dates are slightly modified. In addition to statutory paternity leave, employees are entitled to statutory paternity pay as well if average weekly earnings are more than £120 and other conditions are met. The statutory pay is either £151.97 a week or 90% of average weekly earnings (whichever is lower).

Employees and their partners may be eligible for Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) in which they can share up to 50 weeks of leave and up to 37 weeks of pay between them. SPL can be used to take leaves in pieces or all in one go. ShPP is the same as Statutory Maternity Pay (SMP) except that during the first 6 weeks SMP is paid at 90% of the employee’s earnings.

Pensions in the UK – Pensions are a great way for an employee to safeguard their financial future after retirement. The UK government provides provisions for workplace pensions which include contributions from both employer and employee. The government adds to workplace pensions in the form of tax relief if an employee pays income tax and also pays into workplace pension schemes. The amount to be contributed depends upon what type of workplace pension scheme the employee is in and whether an employee is automatically enrolled in a pension scheme or is voluntarily joined. In the Automatically Enrolled Pension Scheme, from April 2019, the minimum employer pays is 3% of an employee’s earnings, and an additional 5% is paid by the employee itself. These amounts could be higher and depend on workplace pension schemes.

Health benefits – The health insurance coverage for employees is covered by the National Insurance Contributions (NICs), which will include a contribution made from the employee’s income and also in front of the Employer’s earnings. However, employers can provide additional benefits along with these federal benefits.

Guaranteed Benefits of Employees in the UK – Employers in the UK provide many guaranteed benefits which help in building a healthier working environment. These include pensions, healthcare, paternity/maternity leave and pay, holiday pay, and sick pay. Apart from various guaranteed benefits, there is a wide range of supplementary benefits provided like Life Assurance plans, loans to employees, scholarships for employees’ family members, retirement benefit schemes, etc.

Payroll Tax in the United Kingdom

When it comes to setting up payroll in the UK, having an employment contract comes as a legal requirement in the United Kingdom. It should have all the details of the employee’s responsibilities, compensation, perks, grievance and disciplinary procedures, and even termination requirements if required. An offer letter in the UK should always have the salary and compensation amounts listed in British pounds (£) instead of a foreign currency. The legal needs for an employment deal in the UK are basic and most such contracts are more comprehensive in nature than the law demands. The provision of such an employment contract should be done as per the recommendations of an Employer of Record UK.

Employers are required to deduct Personal Income Tax as well as a National Insurance contribution from business earnings through a system called PAYE (Pay as You Earn). The payroll requirements include sending the year’s final report before the employee’s payday updating all the payroll records, and payroll software, providing the employee a P60, and reporting employee expenses and advantages. Employees can put to work up to 48 hours per week which comes with an opt-out option and they can further work extra hours. Exceptions to these rules can be further employed depending on the employers. In the UK the corporate tax rate is 19% for companies with profits under £50,000 and 25% for companies with profits over £250,000 as of 2024, while individual income tax varies between 20% to 45% depending upon employee gross earnings. Employers contribute around 17.30% towards the Social Contributions and employees contribute around 15%.

Infotree Global as your UK Employer of Record helps you understand the various aspects of it like employer contributions comprised of National Insurance, Workplace Pension, Employee taxes, personal allowances up with a basic rate and higher rate, and so on.

Challenges When Expanding into the United Kingdom

Any business expanding into the global market usually looks for a country with a suitable environment to operate and grow. The UK is one such country that is a popular option among global businesses planning an expansion.

However, most businesses miss out on addressing the challenges they may face while expanding their business to the UK market. These challenges can make it difficult for any business to enter and sustain itself in a new market. Therefore, it is necessary to keep track of these.

Extensive compliance procedures – Most of the steps included in the incorporation of a company in the UK are easy and take little time to complete. However, any foreign company looking forward to operating in the UK market must be aware of the public disclosure policy. According to this regulation, foreign businesses must agree to the trading disclosure requirements and are subject to public disclosure via the Registrar of Companies. The process includes fee submission but is extremely lengthy to comply with.

Limited human resources – The United Kingdom is one of the countries primarily known for its highly qualified and skilled workforce. However, there has been little to no scope for the outsourcing of a quality workforce ever since the Brexit vote. However, residents belonging to countries that are not a part of the European Union are treated as an exception in this case.

Taxation system – The complex structure of the UK’s taxation system is an equally challenging factor for any foreign business looking forward to expanding in the country. The system is extremely tricky due to the nation’s legal system which has evolved during some of the most challenging phases. It takes a long time to complete the formalities and fulfill the mandatory tax liabilities, making it even more difficult for new businesses to operate smoothly.

Cultural differences – Another significant challenge while expanding a business to the UK market is the differences and barriers in the culture. Depending on the culture of a particular region, the local workforce may exhibit different cultures, making it difficult for a company to adjust to an entirely new environment. Therefore, cultural differences can become a critical challenge for an expanding business.

General Data Protection Regulation (GDPR) – GDPR is a legal framework that outlines the rules and regulations for collecting and processing personal information belonging to people living in the European Union. Due to this applicability, there is a direct impact on any organization that keeps a record of the European Union citizens. It implies that the EU can access information held by any foreign business, putting it at a major data risk.

Infotree Global as your Employer of Record in the UK helps you with the complex procedure of expanding into the UK market hassle-free. So, if you are planning to expand your business in the UK, get in touch with us for professional assistance!

UK Visas and Work Permits

The eligibility for a UK work visa is mainly determined by various points that you are able to score on the UK points system. These points are awarded for qualifications, expected income, language skills, and sponsorship. Before any individual applies for work permits, he needs to fulfill several basic work permit requirements. The employee should have a confirmed offer of employment from his employer or an Employer of Record UK who will be acting as his sponsor and having a certificate of sponsorship. Besides, he should clarify the points-based assessment that can be found on the category-oriented work permit. The work permit application process is led by the employer who issues a certificate of sponsorship.

There are different categories of work visas –

• Long-Term Work visas (skilled worker visa, Health, and care worker visa, International Sportsperson visa, etc.)
• Short-term work visas (Charity worker visa, creative worker visa, religious worker visa, etc.)
• Investor, business development, and talent visas (Innovator visa, Start-up visa, Entrepreneur visa)
• Other work visas (UK Ancestry visa, Frontier Worker permit, overseas domestic worker visa, etc.)

Taking assistance from Infotree Global’s UK Employer of Record helps you sail through the complex process and ensures you get all the required documents without hassles.

Services Offered by EOR in the UK

The EOR in the UK offers a wide range of services to assist companies in managing their employees. Here is a list of services offered:

Payroll Management – Infotree being an Employer of Record stands responsible for managing all tasks related to payroll processing, such as wage calculation of employees, tax deduction, and pay slips generation. We also ensure that employment contracts and payment terms comply with the labor regulations in the UK.

Compliance Management – We take up the task of managing contractual agreements by drafting and administering employee contracts. Furthermore, we ensure that the contracts stand compliant with the legalities of the country to protect the rights of both the employees and the employers.

Benefits Management – Our services encompass managing employee benefits such as pension plans, health insurance, and other statutory benefits as per United Kingdom laws.

Immigration Support – Matters related to immigration are also taken up by our EOR. We assist foreign candidates in sponsoring work visas and ensure that all the necessary documents comply with UK immigration rules.

Mitigating Employment Risks – Employment has certain risks associated with it, such as termination procedures, disciplinary actions, etc. We help lower the risks associated with such disputes, besides ensuring compliance with the employment rules of the UK.

HR Administration – Infotree excels in handling HR administration tasks while maintaining employee records. Right from onboarding the workforce to offboarding, leave tracking, and handling queries, we can extend all types of HR support.

Benefits of Engaging an Employer of Record in the UK

As businesses are becoming more specialized, globalization is significant. With the world developing new rules, laws are also evolving consistently. There is a constant update in rules and regulations which is adding to the complexities. Especially if you are a new company, trying your luck in the overseas market, these challenges are intimidating. By taking the employer of record UK services, you get several benefits associated with overseas hiring. To simplify your expansion process let Infotree Global assist you in dealing with all the complexities. Whether hiring employees distributing payroll or taking care of expenses, we help you at every step. Partner with us and start your global business without worries.

Market Access – Relying on the professional expertise of an Employer of Record is the best way to enter an unknown market quickly. By using Employer of Record services, an international organization can avail the expertise of UK employees to work for its company. Besides quick access to the UK market, the EOR also enables the client to ease off worries related to payroll and HR.

In-Country Laws – It is hard to ignore the importance of regulations and compliance in a foreign country. If you are operating a business in the UK you need to be well aware of the payroll and taxation rules. With UK Employer of Record services, a company can hire a foreign individual or local employees and deal with the complexities of the country’s rules. Be it income tax, social security contribution, expense management, withholding charges, or business tax, an EOR company takes care of it all with total compliance.

Diverse Solutions – No matter whether you already have a company in an international location or you are going to establish one, an employer of record can help you significantly. The EOR Company can hire staff on your behalf without having the need to set up a branch in the UK. If your company is already operating, using EOR for managing payroll tasks can be a great idea as it can present an effective solution to tax and accounting responsibilities in the country.

Why Infotree Global Solutions?

As your UK Employer of Record, Infotree Global takes responsibility for adhering to the laws and regulations of the United Kingdom. We take tax, HR, and social security burdens away from you and ensure to get your employee onboard with ease and in less time. We allow you to utilize the potential of our network offices to actively work on your company’s behalf and take care of all the legal considerations and compliances. You simply enjoy peace of mind learning that our staff of in-territory experts will be there for you throughout your expansion plan in the UK. We help you expand into emerging markets, and provide a dedicated workforce for your business in a compliant way.

So, if you wish to reduce the cost of a traditional setup and reduce the hassles of processing and managing the back office, contact us to learn about our Employer of Record services in the UK!

Frequently Asked Questions:

How does an employer of record work in the UK?

The Employer of Record (EOR) in the UK acts as the legal employer for employees. They are responsible for handling all employment-related tasks such as payroll, taxes, and compliance with local labor laws. This allows companies to establish a strong foothold in the UK by hiring UK employees without setting up a legal entity in the country. Additionally, the EOR manages all employment contracts and statutory requirements like National Insurance contributions and income tax deductions.

How to choose an EOR in the UK?

Choosing an EOR in the UK depends on specific business goals and budget. It is important to consider factors such as the EOR’s expertise and experience in the UK market to establish a solid foundation for future growth in the country. Selecting an EOR that can manage the specific needs of the business and handle industry-specific compliance issues is essential.

How can an EOR help me comply with UK employment laws?

An expert EOR will analyze business requirements and align them with the compliance requirements in the UK. They handle the legalities of employment contracts and ensure that employee rights are protected. The EOR stays updated on changes in employment legislation, such as the Employment Rights Act 1996 and the National Minimum Wage Act 1998, to provide better service.

What are the options for hiring a worker in the UK?

In the UK, workers can be hired as employees or independent contractors. Employees work under the direction of the employer and are entitled to benefits like paid leave and protection against unfair dismissal. Independent contractors work independently and manage their own tax affairs, but they are not entitled to the same benefits as employees.

How long does it take to set up a company in the UK?

There are multiple ways to set up a company in the UK, and the process can take anywhere from a few days to several weeks or months, depending on the complexity and business niche. Partnering with an EOR allows businesses to hire employees without going through the lengthy process of business registration, saving time, energy, and money.

Can I employ individuals as independent contractors in the UK?

Yes, individuals can be employed as independent contractors in the UK. Proper classification is essential to avoid misclassification issues. Under IR35 regulations, any misclassification can result in penalties under UK tax laws.

What does HR compliance mean in the UK, and why is it important?

HR compliance in the UK involves adhering to relevant employment laws such as the Employment Rights Act 1996, the National Minimum Wage Act 1998, and the Equality Act 2010. Compliance is important to avoid legal liabilities and maintain a positive working environment. An EOR can manage HR compliance, reducing the risk of non-compliance and keeping business operations running smoothly in the UK.

Can an employer of record run payroll in the UK?

Yes, an EOR can manage payroll in the UK. They handle all aspects of payroll processing, including National Insurance contributions, taxes, and pension schemes. A professional EOR ensures employees are paid correctly and on time.