An employer of record in the United Kingdom is a British entity that legally employs somebody on your behalf, issues the contract, runs payroll through the real time reporting system, handles pension auto enrolment and carries the employer obligations. You direct the work; they carry the legal employer duties.
What the EOR takes on
A compliant written statement of employment particulars, payroll with reporting to HMRC on or before each pay day, automatic enrolment assessment and pension contributions, statutory payments for sickness and family leave, holiday entitlement including the treatment for irregular hours, and the right to work check before employment begins. These are the duties that require a UK entity.
What stays with you
Day to day direction of the work, and the commercial decisions about pay and role. Practically you also retain reputational and relationship responsibility: the person regards themselves as working for you regardless of whose name is on the contract, and treating the arrangement as an outsourcing of the relationship is how it goes wrong.
When an entity is the better answer
Volume and permanence. One or two people for a market you are testing suits an EOR comfortably. A growing team, or a need to hold contracts, property or regulatory permissions locally, points to your own entity. The crossover is usually somewhere in the low tens of employees and depends more on permanence than on headcount.
Questions people ask about employer of record united kingdom
Is using an EOR lawful in the UK?
Yes, and the EOR must be a genuine employer meeting the full range of duties. Check what they actually carry rather than assuming.
Does an EOR remove permanent establishment risk?
It reduces one route to it and does not eliminate the question, which depends on what the person actually does. Take tax advice.
Who handles the right to work check?
The EOR as legal employer, before employment begins and by an accepted method. Ask which route they use.