Are you considering expanding or hiring in the UK? With its thriving economy and diverse talent pool, the UK is an attractive destination for businesses looking to grow. Navigating UK employment regulations, including its unique employment laws, progressive tax system and specific visa requirements for international talent, is critical to success.

Our guide provides a detailed overview of the UK hiring process, covering important topics such as understanding the legal framework, managing hiring costs, securing work permits and managing payroll taxes. We provide strategic insights and tailored solutions that simplify your recruitment efforts, ensuring both efficiency and compliance. With our expertise, you can confidently expand your workforce in the UK.

Three ways to hire in the United Kingdom

When expanding your business to the UK, selecting the right hiring strategy is essential to manage control, compliance, and cost effectively. To assist you in this critical decision, we explore three primary methods: setting up a legal entity, utilising an Employer of Record (EOR), and hiring contractors. Each approach offers distinct advantages and is suited to different business objectives and operational scales.

1. Setting up a legal entity 

Establishing a subsidiary or branch in the UK allows foreign companies to hire and manage staff directly under UK law. This approach offers advantages for companies seeking a long-term presence, providing full operational control and the ability to align closely with corporate strategies and cultural values.

However, setting up a legal entity requires:

• Ongoing management of legal and regulatory obligations, which can be complex and resource-intensive.

• A time-consuming set up process that includes registration with Companies House and compliance with HMRC requirements.

2. Partnering with an Employer of Record (EOR) 

Using an Employer of Record allows your company to employ staff in the UK without establishing a physical office. At WTS Energy, our EOR service provide:

• Handle all compliance, payroll, and benefits, simplifying your HR operations

• Entry into new markets without the need for physical premises 

• Minimize the administrative tasks associated with employment, allowing you to focus more on strategic business activities. 

This is particularly beneficial for companies looking to enter a new market quickly, as it eliminates the need for a physical presence and minimises administrative overheads. 

3. Hiring contractors in the United Kingdom

Hiring contractors or freelancers offers significant flexibility and cost savings, making it suitable for project-based or temporary roles. This approach allows the size of the workforce to be quickly adjusted to meet business needs without the long-term commitment of full-time employment.

However, it does present challenges, including less control over how tasks are completed, which can affect quality and outcomes. There is also an increased risk of legal and compliance issues if contractor arrangements are not carefully managed.

What your company needs for hiring foreign employees in the United Kingdom 

To hire employees in the UK, companies must establish a local presence and meet employer obligations. Most international businesses choose to set up a private limited company (Ltd), while larger enterprises may consider a public limited company (PLC). Setting up a subsidiary involves registering with Companies House and meeting HMRC compliance requirements, which can be a time-consuming process.

Determine Work Permit Requirements 

• UK, Irish citizens and those with indefinite leave to remain in the UK do not need a work permit to work in the UK.

• EU, EEA, and Swiss nationals need a work visa unless they have settled or pre-settled status under the EU Settlement Scheme.

• Non-EU nationals typically require a work visa, such as the Skilled Worker Visa, to be employed in the UK.

Become a Recognized Sponsor 

To become a recognised sponsor in the UK, your business must be legitimate, actively trading and provide supporting documentation. You must have no unspent criminal convictions, unpaid civil penalties or a revoked sponsorship licence in the last 12 months. UK Visas and Immigration (UKVI) will review your application and may carry out a compliance visit to assess your suitability.

Apply for the Right Visa 

Options include Skilled worker visa, Global business mobility visa, High potential individual visa, Global talent visa and so on. Employers must provide a contract meeting National Minimum Wage

Handle Employee Registration and Taxes 

• If employees apply to stay in the UK for more than six months, they will receive a Biometric Residence Permit (BRP). 

• Employers must tell HM Revenue and Customs (HMRC) when you take on a new employee and be registered as an employer.

Ensure Compliance and Onboarding 

• Provide proper induction, training, and workplace policies. 

• Stay compliant with UK labor laws regarding working hours, wages, and benefits

What to know before hiring in the United Kingdom 

Before you start hiring in the UK, it’s important to understand the specific requirements and nuances of the UK employment landscape. This section outlines key considerations such as legislation and essential compliance steps to ensure a smooth hiring process.

Who can work in UK without visa?

Several categories of individuals can work in the UK without obtaining a specific work visa:

• UK and Irish Citizens: Both UK and Irish citizens have the unrestricted right to live and work in the UK. The Common Travel Area (CTA) arrangement allows Irish citizens to move freely between Ireland and the UK without a visa.

• Individuals with Settled or Pre-Settled Status: Citizens from the European Union (EU), European Economic Area (EEA), and Switzerland who were residing in the UK before December 31, 2020, and have been granted settled or pre-settled status under the EU Settlement Scheme, can continue to live and work in the UK without a visa. 

• Holders of Indefinite Leave to Remain (ILR): Non-UK citizens who have been granted ILR are permitted to live and work in the UK indefinitely without the need for additional visas.

Employment laws and regulations 

• UK employment laws protect the rights of both employers and employees by regulating areas such as dismissal, holidays, pay, and discrimination, ensuring fair and balanced workplace relationships. 

• The average working week is limited to 48 hours over a 17-week period under the ‘working time directive,’ though individuals can opt out to work more, while those under 18 are restricted to a maximum of 8 hours per day or 40 hours per week.

• Employees have strong rights regarding job security, redundancy, and notice periods. 

Types of employment contracts in the United Kingdom

• Permanent Contracts: Permanent Contracts: These offer ongoing employment with no set end date, providing job security and benefits.

• Fixed-Term Contracts: Employment is set for a specific period or project, ending automatically when the term concludes. 

Direct Hiring vs Employer of Record (EOR): Which is Right for you? 

When expanding into the UK, businesses must decide whether to hire employees directly or partner with an Employer of Record (EOR). Each option offers distinct advantages, and the best choice depends on your company’s objectives, resources, and approach to managing compliance and risk.

Which Option is Right for You? 

• Long-term expansion & full control? → Set up a UK entity 

• Fast, compliant hiring with no local entity? → Use an EOR like WTS Energy 

• Need flexibility & project-based work? → Hire UK contractors carefully 

The true cost of hiring an employee in the United Kingdom 

Hiring an employee in the UK involves more than just paying their salary. On average, the total cost of employment can be 50-75% higher than the basic salary . This includes additional costs such as recruitment fees, office rent, national insurance contributions, pension contributions, training, business energy bills and employers’ liability insurance.

In addition to these direct costs, employers are also responsible for providing statutory benefits such as holiday pay, statutory sick pay, maternity or paternity leave and any performance bonuses.

When you’re expanding into the United Kingdom for the first time, recruitment costs may include:

• Advertising job positions 

• Incorporating your business in the United Kingdom

• Traveling to and from the UK to set up your business or conduct interviews 

• Outsourcing background checks to a third-party company 

• Hiring local experts to help you draft contracts and set up payroll 

• Training new employees 

Compliance risks when hiring employees in the United Kingdom

Hiring employees in the UK presents a number of compliance risks that organisations must manage carefully to avoid legal and financial repercussions. Here’s a breakdown of the key risks and tips on how to stay compliant:

Misclassification 

• Employees and contractors are classified differently under UK law, with distinct tax and legal responsibilities.

• Misclassifying contractors as employees can lead to hefty fines and back payments. 

• Factors like income dependency, hiring control, and work schedules determine classification. 

Tip: Work with legal experts to ensure compliance 

Misclassification

• Employees and contractors are classified differently under UK law, with distinct tax and legal responsibilities.e tax and social security contributions accurately. 

• Misclassification can result in liabilities for unpaid taxes, pension contributions, and employment benefits.

• Factors like control over work, independence, and income dependency determine classification.

Tip: Consult legal experts to ensure correct worker classification and avoid compliance risks.

Right to Work and Immigration Requirements

• Employers must check and record valid identity and visa documents for every candidate.

• Right-to-work checks must be conducted before employment begin
• Regular reviews are essential to ensure ongoing compliance with immigration rules.

Tip: Have a dedicated HR team or partner with an EOR for smooth visa processing.

Worker rights and contracts

• Employers are legally required to provide written contracts that clearly outline employment terms.

• Non-compliant contracts can lead to legal challenges and disputes over employment rights.

Tip: Regularly review and update contracts to ensure they reflect current employment laws and best practices.

Streamline your UK hiring with WTS Energy’s headhunting and recruitment services

Building your team in the UK? Navigating employment regulations, compliance requirements, and the recruitment process can be complex. WTS Energy simplifies it for you—helping you find and hire the best talent quickly, efficiently, and in full compliance with UK laws.

• Ensure full compliance with UK hiring regulations

• Access top local and international candidates

• End-to-end recruitment support, from sourcing to onboarding 

• We manage screening, contracts, and paperwork—so you don’t have to

Frequently asked questions

Frequently asked questions