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Did you know that a recent survey by Deloitte in 2023 revealed that 65% of businesses have realized that the biggest challenge in global expansion is keeping up with local laws and regulations?Â
That sounds like a headache, right? There’s a solution – UK Employer of Record (EOR).Â
Unlike the traditional routes, an Employer of Record is your business’s local guide in the UK. They’re informed and can handle the legal and HR functions on your behalf. UK EORs are the ones to ensure that your expansion is a well-calculated step forward.
But does this matter and why?
Yes, it matters! In fact, according to Gartner, businesses that use local experts in new markets can reduce their operational risks by up to 40%. That’s simply the difference between problems and solutions for your company.Â
A UK Employer of Record (EOR) is the savvy team handling all the HR functions – hiring, payroll, taxes, and ensuring everything is above board with UK laws. They’re the ones who make sure your business ticks all the right boxes, legally and administratively, without you having to worry about the UK employment laws. However, an EOR is not the same as a UK PEO (Professional Employer Organization). While a UK PEO partners with you and shares the responsibility of your employees, an EOR becomes the official employer on paper.Â
And then there’s the umbrella company too. They are used for independent contractors. Umbrella companies take care of contractors’ administrative requirements, insurance and payments. By contrast, EORs are for your full-time employees in the UK, ensuring that employment contracts as well as worker rights are handled with care.
Horizons is great for businesses that want to hit the ground running. They promise fast and efficient onboarding – we’re talking days, not weeks. This with their expertise in UK employment law makes them a reliable partner for businesses that need things done on time.
Teamed are founded and headquartered in the UK, and therefore have an in-depth knowledge of the hiring market and compliance requirements. For an affordable and compliant UK hiring solution, Teamed is an excellent choice.Â
Target HR is a global recruitment and HR firm with a strong presence in the United Kingdom. Target HR combines an advanced tech platform with tailored client support. As well as EOR, Target also supports companies with recruitment, HR outsourcing, business process outsourcing in the United Kingdom.
Expandys is a full-service international expansion firm, providing a range of global business support alongside traditional EOR solutions. They also support businesses with market analysis, company incorporation, and accounting making them the ideal UK expansion partner.Â
Omnipresent offers wide-reaching services. They handle HR administration and focus on ensuring global teams feel supported. If you want an EOR that prioritizes comprehensive global HR solutions, Omnipresent is a good choice.
EORs stay updated on the latest changes to UK employment laws, so you don’t have to. For instance, they’ll ensure you’re on top of the UK’s National Minimum Wage regulations, which can be updated yearly. And let’s not even get started on the UK’s Working Time Regulations – they’ve got that covered too.
UK EORs also take care of everything payroll, national insurance and payroll tax related. This includes calculating deductions, and taxes and ensuring compliance with HM Revenue & Customs (HMRC). You won’t have to worry about the PAYE (Pay As You Earn) and National Insurance contributions. Your EOR makes sure every penny is accounted for correctly.
UK EORs handle employee benefits as well. They can set up pensions and manage statutory benefits like maternity leave. These services ensure your employees get what they’re entitled to.Â
This helps in keeping your team happy and attracting top talent. And let’s be honest, happy employees mean a thriving business.
These labor laws are crucial if you’re aiming to expand your business to the UK:Â
Every employee in the UK must have a written statement of employment or employment contract from day one. It’s the law. This contract needs to cover the basics like job description, salary, working hours, and holiday entitlement.Â
Employees in the UK are entitled to 5.6 weeks of paid holiday per year. That’s 28 days for the average five-day work week staff – bank holidays can be included in this. And when it comes to sick leave, things can get a bit complex. The Statutory Sick Pay (SSP) system applies in this case.
The UK has specific laws about how long employees can be asked to work. Typically, 48 hours per week is the max, averaged over 17 weeks. But there’s flexibility here; employees can choose to work more if they agree. Just remember, health and safety laws are big in the UK, so no cutting corners.Â
You might think the biggest benefit of a UK Employer of Record service is just handling the functions of HR and legal paperwork. Yes, that’s true. But there’s more to it.
A UK Employer of Record is always laser-focused on compliance. We all know that the UK’s employment laws can be daunting. For instance, did you know that UK employment contracts must detail specific employment terms from day one, or the employer risks fines?Â
Employee benefits in the UK are a key factor that attracts and retains top talent. A UK Employer of Record can provide a competitive edge here. They know the most sought-after benefits. More so, they can manage these benefits easily and add value to your employee experience without adding stress to your day-to-day operations.
Working with an EOR company reduces your exposure to employment-related risks. They ensure that your business adheres to the Employment Rights Act, the Equality Act, and other critical legislation, guarding you against potential disputes and legal challenges.Â
Employing a UK EOR service gives you the flexibility to scale your UK operations up or down without the usual HR constraints. Whether you’re starting with a small team and have plans to expand, or need to adjust your workforce based on market demands, an EOR adapts to your business needs.
We’ve only discussed all the good stuff about using an Employer of Record in the UK. But while they can be of help for your business expansion, an EOR service sure comes with its own set of challenges.
Partnering with a UK Employer of Record isn’t always cheap. They provide many services, sure, but those come with price tags. It’s crucial to weigh the costs against the benefits. Are you getting enough bang for your buck?Â
Sometimes EORs fit perfectly, and other times, well, not so much. Your business is unique, and a standard EOR solution might not cater to every specific need of your operation. To avoid this, look for an EOR that’s willing to understand and adapt to your specific business requirements.
When you partner with a UK Employer of Record, you’re handing over the reins of certain HR functions. This means less direct control over these elements, which can be a bit unsettling. You’re essentially trusting someone else to handle parts of your business. But you need to stay involved, ask questions, and keep communication lines open.
How do you pick the perfect EOR company for your business?Â
Before you start looking, be crystal clear about what you need. Are you a small startup or a well-established company? Different UK Employers of Record might cater to different business sizes or sectors. For instance, if you’re in tech, you might want an EOR with a strong tech client portfolio.
Look for a provider with a solid track record. A quick search on platforms like LinkedIn can give you a sense of their industry standing and experience.
Ensure your chosen EOR has a clean record when it comes to compliance. This is crucial because UK employment laws and tax regulations can be tricky.Â
In today’s world, tech is a must-have. Your UK Employer of Record should offer robust technology solutions for smooth payroll processing and HR management. Also, check if they’re just an email away when you need support or if you’ll be left on hold.
What others are saying can be useful information. Check those reviews and testimonials. Don’t just settle for surface skimming; read between the lines. Are there any red flags or recurring praises? Websites like Trustpilot can be a great place to start.
Discussing money might not be fun, but it’s essential. Make sure there are no hidden fees. A good UK Employer of Record will be upfront about their pricing structure.
This one’s often overlooked but think about it – if they don’t ‘get’ your company culture, how can they represent you effectively in the UK? Choose an EOR that aligns with your company’s ethos and values.
A UK Employer of Record (EOR) differs from a UK Professional Employer Organization (PEO) primarily in terms of employment liability and the scope of services.Â
An EOR legally becomes the employer of record for your employees in the UK, and handles employment contracts, payroll, taxes, and compliance with local labor laws, effectively taking full legal responsibility for your employees. Whereas, a UK PEO co-employs your staff and shares the employment responsibilities with your company. While a PEO provides HR services like payroll and benefits administration, the legal responsibility of the employees remains with your business, not the PEO.Â
A UK Employer of Record (EOR) and an umbrella company both serve as intermediaries for managing employment-related tasks, but they cater to different needs. The key difference is the type of employment they support. A UK EOR becomes the legal employer for your employees and takes over all employer responsibilities, including HR, payroll, taxes, and compliance with local employment laws. This is particularly beneficial for companies that want to expand into the UK without setting up a legal entity there.
On the other hand, an umbrella company is designed for contractors and freelancers. It acts as an employer for these independent professionals on a contractual basis, handling their payroll, taxes, and some employment benefits. However, unlike an EOR, it doesn't engage in the broader scope of HR responsibilities and doesn't cater to traditional employees of a company.
