Hidden costs of an Employer of Record: what to check before you sign

Start with what the fee covers

The major Employer of Record platforms publish starting prices of $399 to $699 per employee per month, about £297 to £519 at HMRC's October 2026 rate, with $599 (about £445) the most common (each platform's own pricing page, read 22 October 2026). A starting price is the lowest fee, and a quote can be higher. Our guide to Employer of Record cost per employee sets that fee beside the cost of your own UK payroll.

That fee pays the provider to be the employer. It does not include the salary, and depending on the contract it may not include any of the eight items below.

Eight things to check in any Employer of Record contract

1. A deposit. Some providers hold a deposit against the salary and the liabilities they take on as employer. Ask how much it is, whether it is refundable, and how and when it comes back when the arrangement ends.
2. Currency conversion. If the fee is priced in one currency and you fund the payroll in another, a conversion margin can sit on top of the exchange rate. Ask which rate is used and whether anything is added to it.
3. Setup or onboarding fees. A one-off charge for each new employee, separate from the monthly fee. Ask whether there is one and whether it applies again if you add people later.
4. Offboarding and exit fees. A charge when an employee leaves, and the notice you have to give the provider itself. Ask for both, and for what happens to any deposit at the end.
5. Taking the employee onto your own payroll. Some contracts charge a fee if you move the employee to your own payroll or employ them directly. Ask whether there is one and how it is worked out.
6. Minimum terms and price rises. An annual commitment, a minimum number of months, or a yearly increase. Ask how long you are committed for and how the fee can change.
7. Benefits and extras. Health cover, equipment or other benefits arranged through the provider may carry a margin over what the provider itself pays. The same goes for bonuses, expenses and extra pay runs outside the normal cycle. Ask for the provider's cost and its charge side by side.
8. Employer's National Insurance and the pension. For most employees, UK employer's National Insurance is 15% of whatever they earn above £5,000 a year. On a £30,000 salary that is £3,750 a year. An employer must also enrol and contribute to a workplace pension for staff who qualify. Ask whether both are inside the quote or charged on top.

What your own UK payroll costs instead

If you are content to be the employer, you can run UK payroll without a UK company. A DPNI costs £157 a month. An NI-only scheme costs £157 a month for one employee, and £150 a month plus £7 per payslip for two or more. Setup is £750, or £500 if you go ahead within two weeks of your quote, and no VAT is added. A UK PAYE scheme in the company's own name starts at £225 a month plus £8 per payslip, and setting it up costs £350.

An Employer of Record becomes the legal employer and takes on the employer's duties; we run the payroll while you stay the employer, so the fees pay for different things. Our work on the workplace pension is included in the monthly fee, and we never charge extra for it. When the scheme is in the employee's own name, the employee is our client and pays our fees.

Employer's National Insurance works differently on your own payroll. HMRC's rule is that an employer owes UK employer's National Insurance if it is resident, present or has a place of business in Great Britain. An employer based in the EU can owe it as well, when the employee works in the UK and UK National Insurance is due. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts.

Extra charges don't make an EOR the wrong choice

If you need someone employed within days, are testing a market, or would rather not be the employer at all, an Employer of Record can still be the right buy once every charge is on the table. The point of the checklist is to compare the real price, not to rule anything out. Our guide to when an EOR is the right answer goes through those cases.

Employer of Record costs: common questions

What are the hidden costs of an Employer of Record?

Depending on the provider: a deposit, currency conversion margins, setup and exit fees, a fee for moving the employee to your own payroll, minimum terms, margins on benefits, and employer's National Insurance and pension contributions on top of the fee. Not every provider charges all of these.

Does an Employer of Record fee include employer's National Insurance?

Ask, because it may not. For most employees, UK employer's National Insurance is 15% of whatever they earn above £5,000 a year.

Is there a fee for moving an employee off an Employer of Record?

Some contracts include one. Read the notice and exit terms before you sign, and ask whether moving the employee to your own payroll carries a charge.

What does running your own UK payroll cost instead?

A DPNI costs £157 a month. An NI-only scheme costs £157 a month for one employee, and £150 a month plus £7 per payslip for two or more. A UK PAYE scheme in the company's own name starts at £225 a month plus £8 per payslip, and setting it up costs £350. No VAT is added. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts.

Read next

• Employer of Record cost vs your own payroll, with an interactive comparison.
• Employer of Record alternative in the UK, when you need one and when you don't.
• When an Employer of Record is the right answer, the cases where it fits.
• Switch from an EOR to your own UK payroll, how the move works.
• Pay a UK employee from abroad, the routes in plain terms.
• Employer of Record UK for US companies, cost and the direct route.
• Employer of Record UK: the complete guide, every EOR guide in one place.