How to Hire Remote Employees In 

The United Kingdom

The Basics

Pound Sterling (GBP)
Employer Taxes
Payroll Frequency
Official Language

Employment in 

The United Kingdom

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Time savings: Hiring through a subsidiary or EOR can take months of onerous paperwork and legal wrangling. This is only multiplied if you want to hire in multiple countries.
Reduced overhead: You can save tens of thousands of dollars in onboarding costs by hiring through a company like Panther. You also have fewer responsibilities to provide benefits, further reducing overhead.
Greater flexibility: Contractors can be brought on as-needed. If they are not a good fit, you can choose not to renew them without incurring significant additional termination costs.
Reduced legal risk: Contractors generally don't have the host of legal protections that typically cover full-time employees.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: While it's important to understand local contractor law, for most firms, misclassification risk is minimal.
Lack of Control: For a worker to be classified as a contractor, they should be allowed to work independently on their assigned tasks. Hiring full-time employees offers a wider range of management options.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.

Set up a subsidiary in 

The United Kingdom

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in The UK can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in The UK, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for The UK.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in The UK is not the same as paying workers in your own country. Employees have to be paid using The UK's employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

The United Kingdom

 Specific Information

Working Hours

Full-time employment is 8 daily hours and 48 weekly hours, maximum. 


Employers can ask for workers consent, in writing, to opt out of the 48 hours weekly limit.

For an employee to work overtime it must be stated and agreed upon in the employment contract.

Employers do not have to pay any overtime unless it is outlined in the contract.

Payroll Tax


National Insurance contributions (NIC) are based on a category letter


  • A - Most employees (other than those in other category letters below)
  • B - Married women/widows entitled to pay reduced NIC
  • C - Employees of Stat pension age
  • J  - Employees who can defer NIC due to it being deducted from another job
  • H - An apprentice under the age of 25 years old
  • M - Employees under the age of 21 years old
  • Z  - Employees under the age of 21 years old, who can defer NIC due to it being deducted from another job


  • Up to 12,570 - 0%
  • Over 150,000 -45%

Minimum Wage

The national minimum wage in the United Kingdom is dependent on the age of the employee: Age 23 and over: 8.9 GBP Age 21-22: 8.36 GBP. Age 18 – 20: 6.56 GBP. Under 18: 4.62 GBP. Apprentices - 4.30 GBP


Pay Cycle

Salary should be paid monthly between the 25th – 30th of the month.  

13th Salary

There is no 13th salary.


Paid Time Off (PTO)

PTO is calculated by :

Employers must give a minimum of 28 days paid leave per year. The Public holidays can be incorporated as part of the 28-day leave entitlement; however, it is common practice for employers to give more than 28 days.

If employees were unable to take all of their entitled holiday leave for reasons related to Covid-19, they are allowed to carry it over to the next two years.

Public Holidays

There are 8 public holidays in England, Wales and Scotland, and 10 in Northern Ireland.

Sick Days

Sick leave pay varies based on the :

Workers currently employed can receive £95.85 per week Statutory Sick Pay (SSP) for up to 28 weeks if they are too ill to work. For an employee to qualify they must be sick for four or more days in a row.

Employees must receive the statutory minimum but may be entitled to more depending on the company’s sick pay scheme.

Employees must give their employer a doctor’s note if they have taken sick leave for more than 7 days in a row. This includes non-working days, such as weekends and bank holidays.

Maternity Leave

Statutory maternity leave is 52 weeks and is comprised of:

Ordinary Maternity Leave – first 26 weeks
Additional Maternity Leave – last 26 weeks

Mothers are required to take off at least 2 weeks’ leave after the baby is born (or 4 weeks for factory workers) out of the entitled 52 weeks.

Unless the child is born early, the earliest that leave can be taken is 11 weeks before the expected week of childbirth.

Statutory Maternity Pay (SMP) is paid by the employer for up to 39 weeks with the employee receiving:

90% of their average weekly earnings (before tax) for the first 6 weeks £148.68 or 90% of their average weekly earnings (whichever is lower) for the next 33 weeks

Paternity Leave

Employees can choose to take either 1 week or 2 consecutive weeks’ leave. The allotted time off is the same regardless of the number of children (for example twins). Leave can’t start before the birth.

The statutory weekly rate of Paternity Pay is £148.68, or 90% of the average weekly earnings (whichever is lower).

Any money paid is done so in the same way as wages are paid, for example monthly or weekly. Tax and National Insurance will be deducted.

Parental Leave

Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) is given to eligible employees who are having a baby or adopting.

Leave must be used in the first year the child is born
Up to 50 weeks of leave is shareable with up to 37 weeks of pay between the couple.
Leave can be taken in blocks, all at once, together as a couple, or separate

Other Leave

Jury Service Leave: Employers to provide their full-time regularly employed employees, job-protected, unpaid leave for their duty as jurors or as a witness in a case, or acting as a plaintiff or defendant in the courts.

Public Duties Leave: Employees are entitled to a reasonable unpaid amount of time off to perform public duties, for example, if they are:

  • a magistrate (also known as a justice of the peace)
  • a school governor
  • a member of any statutory tribunal
  • a member of the managing or governing body of an educational establishment

Marriage Leave

The law does not provide employees with a statutory right to time off because they are moving house, getting married or going on honeymoon.

Bereavement Leave

In the UK in the event of the death of an immediate family member, an employee is entitled to bereavement leave of up to three days.


Termination Process

Dismissal can be deemed fair or unfair depending on reasoning and conduct.  

The termination process varies according to the employment agreement and collective agreement in place and is based on the type of contract and reason for termination.

Notice Period

Notice must given based on what is stated in the employment contract or the statutory minimum, whichever is longer.

The statutory redundancy notice periods are:

  • at least one week’s notice if employed between one month and 2 years
  • one week’s notice for each year if employed between 2 and 12 years

Dismissal without notice can be utilized in cases of gross misconduct.

Employees on Fixed-term contracts which are ended ahead of the expiry date need to be given the statutory notice period.

Employers can pay in lieu of notice.

Severance Pay

Severance is only required in cases of Redundancy. Payment is statutory if an employee has been under contract for at least 2 years:

Half a week’s pay for each full year for employees under the age of 22

One week’s pay for each full year for employees between the ages of 22 to 41 years of age

One and half weeks’ pay for each full year for employees over the age of 41

Length of service is capped at 20 years

Weekly pay is capped at £525

Probation Period

There is no mandatory requirement but it is common to utilize a trial period of 3 to 6 months.