Hiring without an entity in the UK

EOR vs PEO in the UK: Hiring Without Your Own Entity

An employer of record (EOR) employs the individual and administers the associated employment obligations while your company manages their day-to-day work. A US-style professional employer organisation (PEO) generally supports a client that already employs its own staff. Providers use these labels differently in the UK, so establish which entity signs the employment contract, whether you need your own entity and how statutory responsibilities are allocated before choosing a service.

Last reviewed in October 2026 against GOV.UK, HMRC and Acas guidance.

The ways to employ or engage someone in the UK

Model	Do you need a UK company?	Who runs payroll	Usually suits	Watch out for
Your own company	Yes	You, or a payroll provider	A long-term team, contracts with UK customers	Setup work and yearly filings
Employer of record (EOR)	No	The EOR	Hiring local employees: first hires, market entry and small teams	NNRoad handles foreign employee hiring through its separate Hire Foreigner service
PEO / co-employment	Yes	Shared with the PEO	Rare in the UK; more common in the US	Providers using the word for an EOR service
Payroll outsourcing	Yes	The provider, in your company’s name	You have a UK company but no payroll team	You remain the employer, with all its duties
Contractor	No	Nobody: the contractor invoices you	Defined projects done by someone running their own business	Misclassification if the person works like an employee

Why the word “PEO” causes confusion in the UK

UK law does not define a PEO. The labels you will see are commercial ones:

Label	What it usually means in the UK
Employer of record (EOR)	A provider employs the person in the UK for you; you direct the work.
PEO or professional employer organisation	Often the same EOR service. Occasionally HR and payroll support for a company that already employs its own staff.
Employee leasing or staff leasing	Usually EOR. Sometimes a staffing agency supplying workers it recruited itself.
Global employment organisation (GEO)	Another name for an EOR that works across several countries.
Umbrella company	In the market, a company that employs contractors who move between assignments, usually found through recruitment agencies. In HMRC’s PAYE rules since 6 April 2026, the term covers any business that supplies labour under a contract of employment.

Employee or contractor? In the UK the label on the contract does not decide it. Someone who works set hours under your direction, and cannot send a substitute, is likely to be an employee, with PAYE, paid holiday and pension rights. GOV.UK: employment status

When an EOR fits, and when it does not

EOR usually fits when

Look at another route when

Hiring a foreigner instead?

NNRoad’s UK EOR service is for local employees. For foreign employee hiring, use our separate Hire Foreigner in the UK service. The appropriate employment arrangement and eligibility are assessed before a proposal is agreed.

At NNRoad, those hires are handled by a separate service. See Hire Foreigner in the UK.

Who does what under a UK EOR

Task	NNRoad (the EOR)	Your company
Choosing the candidate and the salary		✓
Right-to-work check	✓
Employment contract and written statement of terms	✓	Approves the terms
Day-to-day work, goals and reviews		✓
Monthly payroll, payslips and salary payment	✓	Confirms bonuses and expenses
Income tax and National Insurance to HMRC	✓
Workplace pension enrolment and contributions	✓
Holiday and sick pay records	✓	Approves leave
Equipment, systems access and workplace		✓
Ending the employment	Handles notice, paperwork and final pay	Makes the decision

See the full service and pricing on our UK employer of record page.

Moving from EOR to your own company

Most companies treat EOR as a bridge. Common reasons to move: you start invoicing UK customers, or the team has grown enough to justify your own payroll.

Register your UK company and open a bank account. How to register a limited company in the UK.
Register as an employer with HMRC before the first payday, set up a workplace pension scheme and take out employers’ liability insurance.
Agree a transfer date with the employee and with us.
The employee moves to a contract with your company. Take advice on how their earlier service carries over, because UK law can preserve it.
We run the final EOR payroll and tax reporting.
If you want, we keep running PAYE and pension for your new company. UK payroll outsourcing.

Questions about EOR and PEO in the UK

Is PEO legal in the UK?

The services are legal; UK law simply does not define a PEO. What matters is that the person is properly employed, with PAYE, National Insurance, a pension and a written statement of terms.

Is an EOR the same as employee leasing?

Often, yes. In the UK, providers use employee leasing, staff leasing and PEO for what is usually an EOR service. Ask whether you need your own UK company for the service to work. If you do not, it is an EOR.

Is an EOR the same as an umbrella company?

Not in the way the market uses the words. An umbrella company employs contractors who move between assignments, usually found through recruitment agencies, while an EOR employs a member of your own team in an ongoing role that you manage. For tax, the line is different: HMRC’s rules from 6 April 2026 treat any business that supplies labour under a contract of employment as an umbrella company, and unpaid PAYE can be recovered from the agency that contracts with the end client, or from the end client where there is no agency. GOV.UK

Not sure which model fits your hire?

Tell us who you want to hire and whether you have a UK company. We will recommend a route within 24 hours, even if it is not EOR.