How to ensure workforce compliance in the UK: A guide for international employers

Expanding your business into the United Kingdom offers many advantages—access to a skilled workforce, a stable legal system, and one of the world’s most developed economies. But with opportunity comes responsibility. For international companies hiring in the UK, ensuring workforce compliance it’s essential.

Whether hiring a remote employee or building an entire team, you must comply with a range of UK employment laws, tax obligations, and HR regulations. Non-compliance can lead to legal penalties, reputational damage, and disruptions to your operations.

This guide provides a clear, practical overview of what it takes to stay compliant when hiring in the UK. It also explains how a British Employer of Record can help companies employ UK-based staff without needing to open a local entity, while remaining fully compliant with all applicable regulations.

Why compliance matters more than ever

In recent years, UK employment compliance has become increasingly complex. The post-Brexit regulatory environment introduced new restrictions on hiring EU nationals. Labour enforcement bodies have also increased their scrutiny of employers, particularly those without a physical presence in the UK.

For international businesses, failing to meet UK employment obligations can result in fines, legal disputes, payroll errors, and the misclassification of workers. On the other hand, getting it right builds trust with employees and ensures your company operates smoothly from day one.

Employment contracts and worker classification

Every employee in the UK must receive a written employment contract or, at minimum, a written statement of particulars outlining key terms and conditions. This document must be provided on or before the first day of employment and must include details such as job title, pay, working hours, holiday entitlement, and notice periods.

It’s also important to distinguish between employees, workers, and contractors, as each classification carries different rights and obligations. Misclassifying a contractor as a worker or employee (or vice versa) can lead to back payments, fines, disputes under the UK’s employment tribunals system, or other risks.

For contractors, IR35 rules (off-payroll working legislation) are critical. These determine whether a contractor should be taxed as an employee and must be assessed on a case-by-case basis. Failure to apply IR35 rules correctly can result in unexpected tax liabilities for the hiring company.

Right to work checks and immigration compliance

Before employing anyone in the UK, businesses are legally required to perform right-to-work checks. This involves verifying the employee has valid documentation, such as a British passport, settled status under the EU Settlement Scheme, or a visa under the UK’s points-based immigration system.

Employers must retain copies of these documents and record the check date. Failure to comply can result in civil penalties of up to £20,000 per illegal worker, reputational damage and potential criminal sanctions.

Since Brexit, hiring EU nationals in the UK requires the same scrutiny as hiring non-EU nationals. Employers must know sponsor licences, visa sponsorship requirements, and the UK’s immigration compliance obligations.

Payroll, PAYE, and National insurance

Once you hire employees in the UK, you must operate the Pay As You Earn (PAYE) system. This requires registering with HMRC (His Majesty’s Revenue & Customs), deducting income tax and National Insurance contributions (NICs) from employee wages, and reporting these deductions through Real Time Information (RTI) submissions.

Employers also pay a portion of NICs on top of gross salaries, which contributes to the UK’s welfare and healthcare system. Any errors in reporting, late submissions, or failure to pay the correct amount can result in penalties.

Even international companies without a UK entity must ensure that UK-based staff’s tax and payroll obligations are met. This often requires local expertise or partnering with a payroll provider or Employer of Record.

Pension auto-enrolment and statutory benefits

All UK employers must offer a workplace pension scheme and automatically enrol eligible employees. This applies to workers aged 22 and above who earn more than £10,000 per year.

Employers are required to contribute at least 3% of qualifying earnings, while employees contribute 5%. Enrolment, opt-out handling, and re-enrolment every three years must be managed by regulations set by The Pensions Regulator.

In addition to pensions, UK employment law mandates several statutory benefits, including:

• Holiday pay: A minimum of 28 days per year (including public holidays) for full-time employees.
• Sick pay: Statutory Sick Pay (SSP) of £109.40 per week for up to 28 weeks.
• Parental leave: Paid and unpaid leave entitlements for maternity, paternity, and adoption.

Failure to meet these obligations can result in fines and undermine employee trust and retention.

HR processes and record-keeping obligations

UK employers must implement standard HR processes, even when managing a small or remote team. This includes issuing payslips, tracking leave entitlements, and maintaining accurate employment records for each employee.

You must also provide access to policies covering grievance procedures, disciplinary processes, and health and safety guidance, particularly if employees are working from home or remote locations.

Health and safety, working time, and GDPR

The UK’s Health and Safety Executive (HSE) oversees employer obligations to protect employee wellbeing. Employers must ensure that staff have a safe working environment—whether in an office or at home—and conduct risk assessments as needed.

Under the Working Time Regulations, employees cannot work more than 48 hours per week on average unless they opt out. They are also entitled to rest breaks, daily and weekly rest periods, and a minimum number of paid holidays.

When it comes to employee data, compliance with the UK General Data Protection Regulation (GDPR) is essential. Employers must implement data privacy policies, collect only necessary information, and secure it in line with GDPR standards.

How British Employer of Record ensures workforce compliance in the UK

For international companies, managing the UK’s employment framework can be overwhelming. That’s why many choose to work with a British Employer of Record (EOR) – a partner that takes on the legal responsibility of employing staff in the UK on your behalf.

A British EOR enables your business to hire UK employees without setting up a local legal entity while fully complying with UK labour, payroll, and tax laws.

The EOR handles:

• Employment contracts aligned with UK legislation
• HMRC registration, PAYE processing, and RTI reporting
• National Insurance and pension contributions
• Statutory benefits including holiday pay and sick leave
• Right to work checks and GDPR compliance
• Ongoing HR support and local employment advice

For example, a Canadian SaaS company was ready to expand into the UK to support its growing European customer base. They wanted to hire sales and customer support staff locally but didn’t have the resources or time to set up a UK legal entity or learn unfamiliar employment laws.

By working with a British Employer of Record (EOR), the company could onboard employees within days. The EOR handled everything from compliant employment contracts and payroll registration to National Insurance contributions, pension enrolment, and right to work checks. This allowed the Canadian company to scale quickly and compliantly, without taking on legal or administrative risk.

Thanks to the EOR, the team grew from two to ten people in under six months, with full confidence that every hire was legally employed and fully supported under UK law.

For businesses expanding into the UK, this model offers a fast, low-risk solution with full compliance built in. It removes administrative burden and ensures your employees are supported by a local team that understands their rights and entitlements.

Ensure workforce compliance

Building a compliant workforce in the UK requires careful planning and a clear understanding of local employment laws. There are multiple layers of legal and operational responsibility, from drafting contracts and conducting right-to-work checks to managing payroll, pensions, and GDPR.

Handling these tasks alone can be costly and risky for companies without a UK presence. Working with a British Employer of Record allows you to hire confidently, meet all regulatory requirements, and focus on growing your business in one of the world’s most dynamic markets.

Want to hire compliantly in the UK without opening a local entity? Get in touch to learn how our Employer of Record services can support your expansion.