Imagine your ideal candidate is in London, not Los Angeles. Suddenly, the world feels both smaller and a lot more complicated. How do you bring that UK-based talent onto your U.S. team, without tripping over red tape or slowing down your growth? If you’re an HR leader, People Ops manager, or founder wrestling with these questions, you’re in the right place.
At Borderless AI, we know opportunities shouldn’t be limited by geography. Our mission is to empower global teams and unlock economic opportunity for people everywhere by making international hiring seamless, compliant, and fast. This guide breaks down everything you need to know about hiring a UK employee as a U.S. company, from why the UK should be on your global roadmap, to choosing the right hiring model, to avoiding compliance headaches. Let’s get started.
Why the UK Belongs on Your Global Expansion Radar
If you’re looking to tap into a skilled, English-speaking talent pool, the UK checks all the boxes:
Deep Talent Bench: The UK boasts a highly educated workforce, with technical expertise and soft skills that match global standards.
Time Zone Advantage: Overlap between U.S. and European hours makes real-time collaboration easier, no more 3 a.m. meetings.
Cultural Compatibility: Business norms, communication styles, and professional expectations are remarkably similar to those in the U.S., reducing friction as you scale.
Gateway to Europe: Despite Brexit, the UK remains a strategic springboard to the broader European market.
For ambitious teams, hiring in the UK isn’t just about filling roles, it’s about building a more resilient, competitive company.
Can a U.S. Company Legally Hire Employees in the UK?
Absolutely, but it’s not as simple as extending a U.S. offer letter. UK employment law applies to anyone working in the UK, regardless of where their employer is based. That means U.S. companies must comply with UK rules on contracts, payroll, benefits, and taxes.
Here’s what you need to know:
UK employment law takes precedence for anyone working in the UK.
Statutory benefits (such as paid holidays and pensions) are non-negotiable.
Payroll and tax obligations run through HMRC (the UK’s tax authority), not the IRS.
If you’re hiring a UK employee as a U.S. company, your compliance checklist just got a little longer, but it’s manageable with the right plan.
How to Choose the Right Hiring Method for Your UK Team
When it comes to hiring a UK employee as a U.S. company, you have three main options. The best fit depends on your goals, scale, and appetite for complexity. Here’s a decision framework to help you weigh your options:
1. Set Up a UK Legal Entity
Best for: Companies planning long-term or large-scale UK operations.
What it involves: Registering a business with Companies House, handling all payroll and compliance in-house, and becoming the direct UK employer.
Pros: Full control, strong local presence.
Cons: Significant setup time (typically 4-6 weeks), ongoing admin, and higher costs. Learn more about entity setup costs.
Pro Tip: Only go this route if you expect to build a sizable UK team or need a physical UK footprint.
2. Partner with an Employer of Record (EOR)
Best for: Fast, compliant hiring without the need for a local entity.
What it involves: An EOR becomes the legal employer, handling contracts, payroll, taxes, and statutory benefits. You manage the employee’s day-to-day work.
Pros: Hire in days, not weeks; no legal entity required; compliance and payroll handled for you.
Cons: Slightly higher per-employee cost, less direct control over employment administration.
Watch Out: Quality varies between EOR providers. Choose one with deep UK expertise and transparent pricing.
3. Engage an Independent Contractor
Best for: Short-term, project-based work—use with caution.
What it involves: The individual is self-employed, invoices you for services, and manages their own taxes and benefits.
Pros: Maximum flexibility, minimal setup.
Cons: High compliance risk if misclassified. The UK’s IR35 rules are strict, if HMRC deems your contractor is really an employee, you could face penalties and back taxes. Read more about contractor misclassification.
Decision Framework Recap:
Scaling fast, want to minimize risk? EOR is your friend.
Building a big, permanent UK base? Invest in an entity.
Need a freelancer for a short project? Contractor—but get expert advice.
Legal and Compliance Essentials for Hiring a UK Employee as a U.S. Company
Getting compliance right is non-negotiable. Here’s what you’ll need to cover:
Written Employment Contracts
UK law requires a written statement of employment particulars, ideally, a robust employment contract, within two months of the start date. It must include:
Job title and duties
Start date and work location
Working hours and pay
Pension arrangements
Holiday entitlement
Grievance and disciplinary procedures
PAYE and National Insurance
PAYE (Pay As You Earn): You must deduct income tax and National Insurance from employee salaries and remit them to HMRC.
Employer National Insurance: 15.05% on earnings above £175/week.
Statutory Benefits
UK employees are entitled to:
28 days paid annual leave (including public holidays)
Statutory Sick Pay (SSP): £109.40/week (2023 rate) for up to 28 weeks
Pension auto-enrolment: Minimum 3% employer, 5% employee contribution for those aged 22+ earning over £10,000/year
Maternity/paternity leave: Up to 52 weeks maternity, 1-2 weeks paternity, and shared parental leave options
IR35 and Contractor Classification
If you engage independent contractors, you must assess their status under IR35 rules. If HMRC deems them “inside IR35” (i.e., working like an employee), you’re responsible for PAYE and National Insurance.
Anti-Discrimination Laws
The Equality Act 2010 protects against discrimination based on age, disability, gender reassignment, marital status, pregnancy/maternity, race, religion or belief, sex, and sexual orientation. These protections apply from recruitment to termination.
Payroll, Taxes, and Currency: What U.S. Companies Need to Know
Getting payroll wrong is a top fear for HR leaders—and for good reason. Here’s how to keep things smooth:
Monthly pay is standard in the UK; late or incorrect payments risk legal trouble.
PAYE reporting must be done in real time to HMRC each pay cycle.
Currency exchange: You’ll need to pay salaries in GBP. Exchange rate fluctuations can hit your budget—some companies use fixed-rate services to stabilize costs.
Payroll solutions: Options include local payroll providers, global payroll platforms, or an EOR that bundles payroll and compliance. More on payroll providers here.
Quick Win: Use technology to automate calculations and filings, reducing manual errors and time spent reconciling pay.
Step-by-Step: Onboarding a UK Employee as a U.S. Company
Ready to bring that UK hire on board? Here’s your action plan:
1. Verify Right to Work
Before day one, check your employee’s right to work using original documents:
UK passport
Valid visa or work permit
Biometric residence permit
EU Settlement Scheme status (for EU nationals)
2. Register for Payroll
Register as an employer with HMRC.
Get your Employer PAYE Reference.
Set up payroll software for real-time reporting.
3. Prepare a Compliant Employment Contract
Include all required terms under UK law.
Most contracts feature a 3-6 month probation period with shorter notice.
4. Set Up Statutory Benefits
Enroll in a workplace pension.
Calculate pro-rated holiday entitlement.
Document sick pay and parental leave procedures.
Pro Tip: If you’re partnering with an EOR, most of these steps are handled for you—freeing up your team to focus on onboarding and integration.
How Technology and Automation Simplify UK Hiring
Let’s be real—manual compliance checks, contract templates, and payroll calculations are a drain on People Ops teams. Modern platforms, like Borderless AI, change the game by:
Automating contract generation—always up-to-date with UK rules.
Monitoring compliance as laws evolve, flagging risks before they become issues.
Streamlining payroll with built-in tax and benefit deductions, real-time HMRC reporting, and currency exchange management.
Centralizing documentation so nothing slips through the cracks.
By leveraging intelligent automation, you can scale globally with confidence—no need for a legal crash course or endless admin.
Frequently Asked Questions About Hiring a UK Employee as a U.S. Company
Can a UK employee work remotely for a U.S. company while living in the UK?
Yes. But you must comply with all UK employment laws, tax rules, and statutory benefits—regardless of where your HQ is.
What tax obligations do U.S. companies have when hiring UK employees?
You’ll need to register with HMRC, operate PAYE for tax withholding, pay employer National Insurance (currently 15.05% above £175/week), and meet all UK tax regulations.
How does Brexit affect hiring UK employees as a U.S. company?
Brexit mainly impacts the hiring of EU nationals in the UK. For UK citizens, the process is largely unchanged—but you must check work authorization and follow UK GDPR for data.
What statutory benefits must U.S. companies provide to UK employees?
At minimum: 28 days paid holiday (including bank holidays), statutory sick pay, pension contributions, maternity/paternity leave, and compliance with working time regulations.
Ready to Build Your Borderless Team?
Hiring a UK employee as a U.S. company can feel daunting, but with the right strategy and tools, it’s entirely achievable. Whether you’re scaling fast with an EOR, establishing a local entity, or exploring contractors, the opportunities for global growth are enormous—and Borderless AI is here to guide you every step of the way.
Talent is everywhere. Opportunity should be, too. Let’s build the future of work without borders—together.
