Comparison · Three routes to employing here

EOR, DPNI or subsidiary: how to employ someone in the UK

You have found the person. Your company is not in the UK. There are three ways to employ them legally, they cost very different amounts, and the right one is usually obvious once you answer four questions.

The three routes, in one line each

Employer of Record. A UK company employs the person on your behalf and invoices you. Fast, simple, and the most expensive per head by a wide margin.

Direct payment scheme. HMRC registers a scheme in the employee's name and they account for tax and National Insurance directly. No UK entity required. Cheap to run, slower to set up, and the liability sits with the employee.

UK subsidiary. You incorporate, register as an employer and run a normal PAYE scheme. Most control, most admin, and it brings filing obligations that have nothing to do with payroll.

Question one: do you already have a UK entity

If you do, the answer is almost always a normal PAYE scheme through it, and the rest of this is academic. The exceptions are narrow and usually involve an employee whose duties sit entirely with the overseas parent.

Question two: how many people, and for how long

One person, indefinitely, is the classic direct-scheme case. Several people, or a plan to build a team, starts to argue for a subsidiary, because the admin per head falls and the structure stops being a workaround.

One person for six months, with no intention of staying, is the case where an Employer of Record earns its fee. You are paying for speed and for not having to unwind anything afterwards.

Question three: when do they start

This is the question that decides more cases than cost does. An Employer of Record can have somebody employed in days. A direct payment scheme realistically takes four to eight weeks to build with HMRC. A subsidiary takes longer still once you add incorporation, a bank account and registration.

If the start date is next month and nothing has begun, your options have already narrowed whatever the spreadsheet says.

Question four: who should carry the risk

On an EOR, the provider carries the employment relationship. On a subsidiary, you do. On a direct scheme, the employee carries the tax liability, and that is a genuine consideration rather than a technicality. It needs saying out loud at offer stage.

The cost point people get wrong

Comparing an Employer of Record fee against a payroll bureau fee is not a like-for-like comparison. An EOR fee usually includes the employer National Insurance and the pension inside one number. On a direct scheme or your own PAYE, those are separate costs that you still owe.

Compare total cost of employment, not invoice against invoice. That is the only version of this sum that means anything.

A rough shape

Short assignment, urgent start, one person: Employer of Record. One long-term hire, no UK entity, time to plan: direct payment scheme. Two or more hires, or a UK presence you want anyway: subsidiary.

Most cases land on one of those three sentences. The ones that do not are usually decided by the start date.

What none of the three change

Whichever route you pick, the UK employment rights come with the person. Statutory holiday of 5.6 weeks, statutory sick pay, the notice periods, the right to an itemised payslip and auto-enrolment into a pension all apply because the work is being done in the UK. They are not a feature of one route that you can avoid by choosing another.

The routes differ in who administers those obligations and who is liable when they are missed. They do not differ in whether the obligations exist. That is worth saying plainly, because the commonest reason an overseas employer picks the wrong route is a belief that one of them makes UK employment law optional.

Budget for the full cost of employment on any route: gross pay, employer National Insurance where it applies, the pension contribution and the holiday. Then compare the three on what they charge to run it, which is a much smaller number and a much easier decision.

If you want it narrowed down

The route finder asks the same questions and gives you the answer without a conversation. If your situation is genuinely awkward, and some are, tell us what it is and we will say which route fits, including when the answer is that you do not need us.