Employer of Record in the United Kingdom


​​published on 9 April 2024 | reading time approx. 3 minutes

What is the concept of Employer of Record?

An EoR is a third-party organisation which is engaged to contract with an individual in one country to provide services to an entity in another country, otherwise known as the “end user”. The EoR often deals with payroll, tax, right to work issues and local employment related requirements. An EoR may be used on a temporary basis for a short-term project however, in most situations, it is used for an indefinite period where the EoR would act as the employer of the individual.

EoR in the United Kingdom

There are many companies in the UK that provide an EoR service. They are normally used to engage an individual to work in the UK where the end user does not have an entity in the country. The end-user would normally outsource the employment, immigration, and tax responsibilities to the EoR whilst still directing and controlling the work of the individual on a day-to-day basis. The EoR would normally be the employer of the individual, however, this is not always straightforward and does not come without legal risk (see below).
In the UK, there is no requirement for any form of licence or permit for a business to operate as an EoR, nor is there any limit on the duration of contracts for the supply of labour; indeed, an indefinite engagement under an EoR arrangement is most common. There are no legal restrictions on “employee leasing” as is often relevant in other jurisdictions.

Legal risks of using an EoR

Using an EoR can be a convenient and effective way to engage with individuals where an organisation is based in another country. However, when considering the model, the following points should be kept in mind:
  • Control: The end-user will be able to exert less control and should consider what protections it may lose by pursuing an EoR arrangement. For example:
    • Intellectual property: An intellectual property assignment agreement between the EoR and the end-user may be needed to assign intellectual property rights to the end-user.
    • Ability to enforce confidentiality and restrictive covenant provisions. If an EoR arrangement is used, no direct employment relationship between the end-user and the employee will exist, and any restrictive covenants in an previous contract of employment between the individual and the end-user may be unenforceable. In addition, the EoR is unlikely to have any legitimate business interests to protect. Consideration should be given to whether a separate side agreement between the end-user and the employee may be appropriate.
  • Tax liabilities: Just because the EoR has contractually assumed responsibility for tax and related issues, the end-user may not be absolved from any potential legal consequences. Specialist tax advice in the relevant country should be obtained.
  • Litigation: Consideration should be given as to who would be the respondent in any claim brought by an employee of the EoR and how much control the end-user will have over the conduct of any litigation.
  • An EoR arrangement may give rise to uncertainty in relation to the lawfulness of a dismissal, given the EoR will usually need to rely on the end-user’s reason for termination.
  • Immigration: It would not be possible for an EoR to sponsor migrant workers in the UK since they are not the organisation that is responsible for the individual’s day to day activities and duties.
  • Tax: Employing through an EoR will not eliminate the possibility of triggering a permanent establishment and this would be a matter of fact in each particular case. The tax authorities will look behind the EoR arrangement, if necessary, such that it may sometimes be better to incorporate a local entity (and hire employees directly) so as to deal with tax liabilities more efficiently. 


In the UK, the EoR model gained particular traction during the COVID-19 pandemic; many employers attempted to formalise what started as a temporary overseas working arrangement from home, which then became more permanent in nature. Since then the use of EoR model has become more widespread with users attracted by the convenience the arrangement can provide. At this stage, the EoR model, and the potential legal issues stemming from it have not yet been fully tested in the Courts, but this is likely to be an area of interesting litigation over the coming years.  ​


Contact Person Picture

Charlotte Bateman

Associate Partner

+44 12 1227 8963

Send inquiry

Deutschland Weltweit Search Menu