TL;DR
This hiring in United Kingdom FAQ explains how a foreign company can employ its first UK worker without necessarily forming a subsidiary. The business still needs a lawful employment structure, right-to-work checks, PAYE payroll, pension assessment, and compliant employment terms. We recommend comparing direct employment, a UK entity, an Employer of Record (EOR), and genuine contracting based on control, hiring plans, internal capacity, risk, and total cost.
Table of Contents
- Can a foreign company hire one employee in the United Kingdom?
- Direct employment, EOR, or contractor: which route fits the first hire?
- What does a UK employee cost beyond salary?
- What must be completed before the employee starts?
- How do PAYE payroll and workplace pensions work for one employee?
- Which UK leave, sickness, and working-time rights must the offer support?
- Why UK probation and termination are not at-will employment
- UK hiring questions about contractors, visas, and overseas candidates
- FAQ
- Launch your first UK hire with the right structure
Can a foreign company hire one employee in the United Kingdom?
Yes. A foreign business may be able to hire in the UK without forming a local subsidiary, but it still needs an appropriate legal, payroll, tax, pension, and immigration structure.
Four roles are often confused:
- Legal employer: The party responsible for the employment relationship.
- Corporate entity: A registered company, such as a UK subsidiary.
- Payroll processor: Software or a provider that calculates pay and deductions.
- EOR: A third party that generally becomes the contractual employer and runs local payroll.
Payroll software alone does not establish a compliant employment structure. The business must decide whether to employ directly, establish an entity, use an EOR, or engage a genuinely independent contractor.
A UK employee may also create corporate-tax questions, particularly if they negotiate contracts or exercise significant commercial authority. We recommend taking local tax advice before finalising the role.
What remains the employer's responsibility?
Responsibility must be assigned for:
- Employment terms and policies
- Right-to-work verification
- PAYE payroll and reporting
- Workplace pension assessment
- Leave and sickness administration
- Payslips and recordkeeping
- Disciplinary and termination processes
An EOR or payroll platform can administer many of these tasks. It cannot make an unsuitable structure lawful or remove the risks created by a poor management decision.
Does the answer differ in Northern Ireland?
PAYE applies across the UK, but some employment-law rules and procedures differ between Great Britain and Northern Ireland.
We recommend confirming where the employee will ordinarily work before selecting a contract or policy set. Remote work does not remove location-specific obligations.
Direct employment, EOR, or contractor: which route fits the first hire?
The right route depends on hiring speed, expected tenure, control, internal resources, and future headcount.
| Route | Legal employer | Main advantage | Main consideration |
|---|---|---|---|
| Direct overseas employment | Foreign company | Direct control without a new entity | Local registration and compliance work |
| UK entity employment | UK subsidiary | Suitable for an established local operation | Setup and ongoing administration |
| EOR employment | EOR | Faster local employment setup | Recurring provider fees |
| Contractor | Contractor’s business | Flexible commercial engagement | Misclassification risk |
Contracting is appropriate only where the working relationship is genuinely independent. Our guide to EORs versus contractors and misclassification risk explains why a contract label cannot override employee-like working conditions.
For a longer-term team, compare EOR charges with entity and administration costs through an EOR versus own-entity break-even analysis.
Route-selection guidance for founders
An EOR can suit an urgent first hire when the company lacks local employment infrastructure. Direct employment may work when the overseas business can meet UK registration and compliance requirements. An entity often becomes more practical as the local operation grows.
We recommend assessing the whole arrangement rather than choosing the route with the shortest setup form.
What an EOR does—and what the client company still controls
An EOR generally signs the employment contract, operates payroll, manages required deductions, and administers core employment obligations. Our guide to what an Employer of Record does separates legal employment from daily management.
The client still assigns work, sets priorities, manages performance, and controls system access. It also remains responsible for giving lawful, safe, and non-discriminatory instructions.
What does a UK employee cost beyond salary?
Budgeting should include:
- Gross salary
- Employer National Insurance
- Employer pension contributions
- Payroll and administration
- Insurance
- Equipment and remote-work costs
- Benefits
- Temporary cover where needed
- EOR fees, if applicable
Paid annual leave is normally part of a salaried employee’s gross pay. Adding ordinary holiday pay again may double-count the cash cost, although leave still affects capacity.
Tax rates and thresholds change. We recommend dating every cost model and checking it again before payroll begins.
Worked cost framework
Start with gross salary, then add each statutory, operational, and provider cost as a separate line. Pension costs depend on the scheme’s definition of pensionable earnings, while EOR and administration charges should come from current quotes.
Our international employer cost calculator helps teams model these components without hiding them inside a generic salary multiplier.
Why the statutory minimum may not produce a competitive offer
Candidates may compare holiday, pension contributions, flexible working, healthcare, sick pay, and family benefits.
We recommend agreeing on the intended package before issuing an offer. Adding benefits later can affect budgets, policies, contracts, and payroll configuration.
What must be completed before the employee starts?
Before the offer, choose the employment route, confirm the role and location, check work-authorisation requirements, and model the cost.
Before the start date:
- Complete the right-to-work process.
- Sign the employment terms.
- Collect payroll and pension information.
- Arrange equipment, insurance, security, and access.
- Assign responsibility for ongoing compliance.
Right-to-work verification
Use the government-approved process that matches the candidate’s immigration status. Keep dated evidence of the check, the documents or online status reviewed, the identity match, and any required follow-up date.
Nationality or a passport copy alone may not establish permission to work.
Contract and written particulars
Terms should cover the parties, start date, role, pay, hours, location, holiday, sickness, pension, benefits, probation, notice, and any mandatory training.
A short offer letter may record the main commercial terms, but it may not provide all required employment particulars.
How do PAYE payroll and workplace pensions work for one employee?
The employer must establish the hiring route, arrange PAYE, collect starter information, assess pension duties, calculate deductions, report payroll, issue an itemised payslip, and retain records.
A foreign employer may have UK payroll obligations even without a UK subsidiary. Legal employment, PAYE registration, and payroll processing are related but separate.
First-payday PAYE checklist
Before payroll closes, confirm:
- Starter and tax information
- Bank details
- Pay frequency
- Pension status
- Authorised deductions
- Payroll reporting deadlines
After payday, reconcile payments to the employee, HMRC, the pension provider, and any benefits providers.
Pension auto-enrolment for the first worker
Assess the employee under the current eligibility and earnings rules. Do not assume every worker receives identical treatment.
The employer may also need to manage enrolment communications, opt-out requests, refunds, re-enrolment, contributions, and compliance records.
Which UK leave, sickness, and working-time rights must the offer support?
UK employees may have statutory rights covering paid holiday, sickness, family leave, rest periods, and working time. Bank holidays can be included within contractual holiday entitlement or offered in addition, depending on the terms.
Rates and eligibility rules can change. We recommend checking the rules that apply when each absence occurs.
Holiday calculations for common work patterns
Holiday entitlement should reflect the employee’s working pattern, start date, and the employer’s holiday year. Part-time, irregular-hours, and part-year arrangements may require different calculations.
Carry-over may also apply in circumstances such as sickness or family leave.
Sick pay and family leave administration
Separate the right to take leave, eligibility for statutory pay, and any enhanced company pay.
A practical process should cover notice, evidence, payroll coding, manager approval, benefit continuation, and return-to-work records.
Why UK probation and termination are not at-will employment
UK employment is not at will. Employers should not use US-style wording that assumes employment can end immediately without notice, reason, or process.
Probation is contractual. It may set review points or different notice terms, but it does not remove protections relating to discrimination, whistleblowing, wages, protected leave, or automatically unfair reasons.
A safer probation process
Set clear objectives, review dates, available support, decision authority, and notice terms. If performance falls short, document the concerns and give the employee an opportunity to respond.
A probation clause can support performance management. It does not create a risk-free dismissal period.
Before ending employment
Confirm the reason, required process, notice, accrued holiday, final pay, property return, and system-access arrangements.
We also recommend checking for protected characteristics, health issues, family leave, whistleblowing, trade-union activity, or protected complaints before acting.
UK hiring questions about contractors, visas, and overseas candidates
These issues can change the appropriate hiring route or delay the planned start date.
Does a contractor agreement make the person self-employed?
No. The actual relationship matters. Review control, personal service, substitution, integration, equipment, financial risk, exclusivity, and the individual’s ability to operate independently.
Can an American get a job in the UK?
Yes, provided the person has or obtains immigration permission covering the role. US citizenship alone does not grant UK work authorisation.
Can someone move to the UK without a job?
Some immigration routes may not require a job offer. Sponsored work routes generally depend on an eligible role, an approved sponsor, and the candidate meeting the applicable requirements.
What jobs are in demand in the United Kingdom?
Demand varies by occupation, industry, and location. A hard-to-fill role is not automatically eligible for sponsorship, so confirm the current occupation, salary, sponsor, and immigration requirements.
Final first-UK-hire checklist
Choose the hiring route, verify work authorisation, sign the employment terms, arrange PAYE, assess pension duties, configure leave, prepare payroll reporting, and assign recordkeeping responsibilities.
Our guide to EOR onboarding timelines for a first international employee can help teams plan identity checks, contract approval, payroll cutoffs, and pension setup.
Launch your first UK hire with the right structure
Use Shor to compare employment routes, model employer costs, and coordinate compliant international payroll before sending the offer.
FAQ
Do we need a UK company to hire one UK employee?
Not necessarily. Direct overseas employment or an EOR may be available, but either route still requires compliant employment terms, payroll, pension assessment, and right-to-work checks.
Is an EOR the fastest way to hire in the UK?
It can reduce setup work, but timing still depends on documentation, immigration status, contract approval, and payroll deadlines.
How much does a UK employee cost above salary?
Include employer taxes and pension contributions, payroll, insurance, equipment, benefits, and any EOR fee. Use current rates and provider quotes.
Can a UK employee be dismissed during probation?
Yes, but probation does not allow at-will termination. The employer must follow the contract, meet notice and final-pay obligations, and consider applicable legal protections.
Can an EOR sponsor a UK work visa?
Possibly. Sponsorship depends on the provider’s licence and policy, the role, the candidate, and current immigration requirements. Confirm this before promising a start date.