Employer of Record & PEO in the United Kingdom
Hire & manage teams remotely in UK without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
How NNRoad Employment & PEO Services Work?
NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in the United Kingdom. Registering a legal entity in the United Kingdom as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in the United Kingdom in full accordance with local labor laws in under a week.
Employer of Record in the United Kingdom
Employer of Record (EOR) services are for companies who do not have a legal entity in the United Kingdom, but who want to hire in the United Kingdom. Employment and full liability are outsourced to NNRoad.
➊ You interviews & select the candidates you want to hire in the United Kingdom.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes payroll in the United Kingdom in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in the United Kingdom while NNRoad manages payroll & HR liabilities.
- Acting as Employer of Record for your leased employee
- Hiring of and termination of employees/local labor contracts (contract administration – checking right to work legally in the UK, engagement, extension termination and conversion to permanent hire, confidentiality agreement)
- On-boarding and off-boarding employees following local law practice
- Complete payroll solution and statutory benefit administration
- Employee management – employee handbook, employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management, and contingent workforce management
- Mandatory social insurance (National Insurance Contribution “NIC”) and apprenticeship levy compliance according to the local laws
- Advisory of Social and Labor Insurance Acts updates and compensation & benefit structure
- Local individual income tax reporting, if needed
Payroll & PEO in the United Kingdom
Professional Employment Organization (PEO) services are for companies who have a legal entity in the United Kingdom, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.
➊ You interviews & select the candidates you want to hire in the United Kingdom.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in the United Kingdom while NNRoad manages payroll & HR compliance.
- Registering the necessary company and personnel information for payroll calculation in the payroll software and system
- Raw data collection and cleaning
- Employee data maintenance: we provide access to our HRIS system for employer and employee, so to manage employee report – time, attendance, sickness, holiday requests and employee job tracking
- Local government bureau registration (i.e. Registration of PAYE (payroll setup with HMRC)
- Set up payroll policy, maintenance and update
- Maintain employee record accordingly to the requirements by local government
- Monthly Payroll Processing
- Calculation of gross salary, salary deductions (e.g. NIC, unpaid leaves, etc.), and net salary based on information provided by the Company including irregular payments such as incentive/bonus, commission, allowance, severance, retirement payment, etc.
- Pro-rata calculation for people who join/resign
- Providing a monthly payroll summary to your company
- Payroll disbursement – Issuing payment notice to your company for payroll distribution to employees and employee’s expense claim
- Employee’s enrollment to the company’s social insurance and other benefit plans when they join the company
- Employee un-enrollment to the company’s social insurance and other benefit plans when they leave/exit the company
- Calculation, monthly reporting, payments and penalties (FPS and EPS), payment of taxes and national insurance to meet HMRC deadlines
- Year end adjustment and annual declaration
- Adjustment of taxes owed or to be refunded to the employee based on the cumulative income of the employee for the entire year
- Prepare annual payroll related reconciliation report
- Prepare and filing of national insurance reporting
- Prepare individual income tax reporting, if needed
Advantages of NNRoad's United Kingdom Employment Services
- With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in the United Kingdom.
- Pay as you go
- Dedicated account manager – One point of contact for multiple locations
- Employment & termination processing
- Complete payroll solution and statutory benefit according to local laws
- With EOR/PEO solutions you can hire staff while waiting for the registration of your company in the United Kingdom.
- NNRoad only works with professional locally licensed partners
- GDPR compliant
- NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
- NNRoad provides foreigner VISA application services, if needed
Employment Compliance in the UK
Taxes & Payroll in the United Kingdom
Employee Income Taxes:
Income tax is charged at progressive rates, with higher rates of income tax applying to higher bands of income. In the UK, there is the Personal Allowance (currently is £12,570) that is tax-free.
If you’re a UK resident, you’ll need to pay tax on your overseas income. This includes earnings from employment, pensions, investments and other sources. Overseas income is taxed in the same way as UK income, so you’ll need to fill in a Self-Assessment tax return if you’re:
– a company director
– a partner in a business partnership
– have income from property or land
You may also be liable for UK income tax on foreign assets, even if you don’t receive any income from them.
Tax Rates and Bands
0%: 0 – £12,570
20%: £12,571 – £50,270
40%: £50,271 – £150,000
45%: Over £150,000
Yearly income = £40,000
Taxable income: £40,000 – £12,570 (Personal Allowance) = £27,430
Individual income tax: £27,430 * 20% = £5,486
Yearly individual income tax = £5,486
Employer Costs in the United Kingdom
Employers must pay the National Insurance. The contributions are on the employee’s National Insurance category letter and how much of the employee’s earnings fall within each band.
In the UK, employer contributions towards an employee’s pension are not tax-deductible. This means that employers must pay National Insurance on these contributions. The current rate of National Insurance for employers is 13.8%.
In addition to the employer’s National Insurance contributions, they will also have to pay the employee’s pension contributions. The employee’s pension contributions are tax-deductible, meaning that the employee will receive a tax relief on these contributions. The current rate of pension contribution for employees is 4%.
The table below explains the percentages:
|Category letter||£120 to £170 (£520 to £737 a month)||£170.01 to £967 (£737.01 to £4,189 a month)||Over £967 a week (£4,189 a month)|
The employer also pays a mandatory pension fund and the contribution is 3%.
If the company has a payroll of over 3 million GBP, the company contributes 0.5% for the Apprenticeship Levy.
The table below shows how much the employer deducts from employees’ pay.
|Category letter||£120 to £184 (£520 to £797 a month)||£184.01 to £967 (£797.01 to £4,189 a month)||Over £967 a week (£4,189 a month)|
The contribution of employees to the mandatory pension fund is 5%.
Working Hours in the United Kingdom
Working Hours per Week
Like many other European countries, the maximum working hours per week are 48. But the employee can choose to work more by opting out from the standard system.
Employers are not required to compensate employees for working overtime. The average compensation for the total hours of work, however, cannot be less than the National Minimum Wage. Overtime pay rates and how they’re calculated are usually spelled out in the employment contract.
Benefits & Insurance in the United Kingdom
The NHS, a government-funded national healthcare system in the United Kingdom, provides free treatment to UK residents. Employees pay into this fund through obligatory National Insurance contributions. Employers in the United Kingdom are obligated to offer a private pension plan to all employees.
Termination Laws in the United Kingdom
There are four different types of dismissal in the UK: fair dismissal, unfair dismissal, constructive dismissal, and wrongful dismissal.
- Fair dismissals: must have a valid reason for dismissing the employee which includes: capability, conduct, and redundancy
- Unfair dismissals: includes an inaccurate reason for dismissal, unfair reason, failing to give warning about the dismissal, and discrimination
- Constructive dismissal: an employee resigns because an employer breached the employment contract. This could be a single serious event or a series of less serious events
- Wrongful dismissal: An employer breaks the terms of an employee’s contract in the dismissal process, such as dismissing someone without giving them proper notice
About the termination notice, the periods depend on the length of service the employee had with the company:
- 0 – 1 month service: No notice
- 1 month – 2 years service: 1 week notice
- 2 years – 12 years service: +1 week for each year
- 12+ years service: 12 weeks notice
Except in the case of redundancy, severance is rarely necessary in the United Kingdom. Other contributions, however, may be necessary in some cases.
If the employee has been working for the employer for more than two years, he/she will usually be entitled to statutory redundancy pay.
The employee will receive:
- a half-wages week’s for every full year the employee was under the age of 22
- one week’s salary for each complete year the employee was 22 or older but under 41
- one and a half week’s pay for each full year the employees was 41 or older
Public Holidays in the United Kingdom
Public Holidays in the United Kingdom
- New Year’s Day – January 3rd
- Good Friday – April 15th
- Easter Monday – April 18th
- Early may Bank Holiday – May 2nd
- Spring Bank Holiday – June 2nd
- Platinum Jubilee Bank Holiday – June 3rd
- Summer Bank Holiday – August 29th
- Boxing Day – December 26th
- Christmas Day – December 27th
Paid Leave in the United Kingdom
Most 5-day workers are entitled to at least 28 days of paid yearly leave every year. This equates to 5.6 weeks of vacation time. The amount of statutory paid vacation time is limited to 28 days. Employees who work six days a week, for example, are only eligible for 28 days of paid vacation.
Employment Contract in the United Kingdom
An employment contract can be a “written statement of particulars,” which is for employees with contracts that last a month or more. This statement will include the main conditions of employment.
Probation periods are common in the UK and typically last between three and six months. The main feature of the probationary period is that the employee will not normally be entitled to claim unfair dismissal if the employment is terminated as the employee requires two years’ service to bring such a claim.
Types of Leaves in the United Kingdom
Day 0 – 3: No Sick Pay
Day 3 – 28 weeks: Statutory Sick Pay (SSP)
If you’re too sick to work, you can collect £96.35 per week in Statutory Sick Pay (SSP). Your company will cover it for up to 28 weeks.
Maternity leave is a statutory 52-week period. It’s made up of the following components:
- Ordinary Maternity Leave is for the first 26 weeks of pregnancy
- Additional Maternity Leave is available for a total of 26 weeks.
You do not have to take all the 52 weeks, but you must take two weeks off after the birth of the child (or 4 weeks if you work in a factory).
SMP (Statutory Maternity Pay) is paid for up to 39 weeks of maternity leave. The employee will receive:
- 90% of the average weekly earnings (before tax) for the first 6 weeks
- £151.97 or 90% of the average weekly earnings for the next 33 weeks (whichever is lower)
The male employee is eligible for 1 or 2 weeks of paternity leave when the partner is having a baby.
Shared parental leave
Employees can share up to 50 weeks of leave and up to 37 weeks of pay between them. But they need to share the pay and leave in the first year after the child is born or placed with the family.
Immigration Laws in the United Kingdom
To work in the UK, you need a working visa. There are different categories of workers that can get a working visa and each one has different criteria.
Skilled workers visa
A Skilled Worker visa allows you to come to or stay in the UK to do an eligible job with an approved employer.
To be eligible for a Skilled Worker visa, you must meet the following requirements:
- work for a UK employer who has received Home Office approval
- obtain a ‘certificate of sponsorship’ from your company detailing the role you’ve been given in the United Kingdom
- work in one of the jobs on the list of those who are eligible
- be paid a minimum wage, the amount of which varies depending on the type of work you do
You must be able to speak, read, write and understand English. The visa can last for up to 5 years.
Entrepreneurs can apply for a startup visa if they want to set up an innovative business in the UK.
To be eligible to get a startup visa, you must be endorsed by an authorized body that is either:
- a UK higher education institution
- a business organization with a history of supporting UK entrepreneurs
And you must show that your idea is innovative, new, and different from other solutions already in the market.
Global Talent visa
You can apply for a Global Talent visa to work in the UK if you’re a leader or potential leader in one of the following fields:
- academia or research
- arts and culture
- digital technology
You must also be at least 18 years old.