Hiring a UK employee from Australia: what Australian companies need to know
For an Australian company, UK payroll feels familiar — PAYE is PAYG's older sibling — but the on-costs, pensions and time-zone logistics work differently. Here's the practical version for Australian founders, finance and people teams.
The five differences that surprise Australian employers
- PAYE will feel like PAYG — with real-time reporting. Tax and National Insurance are deducted each payday and reported to HMRC on or before it (RTI) — the same idea as Single Touch Payroll, so your processes translate well.
- The pension is lighter than super. UK auto-enrolment requires a minimum 3% employer contribution (8% total) on qualifying earnings — well under Australia's 12% superannuation guarantee. The employer NI of 15% above £5,000/year is the bigger on-cost to budget.
- Holiday is more generous. UK statutory paid holiday is 5.6 weeks (which can include public holidays) versus the Australian 4 weeks — price it into the offer.
- No long-service leave, different protections. There's no UK equivalent of long-service leave; instead, employees build statutory rights over time (e.g. full unfair-dismissal protection generally after two years). A written statement of terms is required from day one.
- Social security doesn't transfer. Australia and the UK no longer have a reciprocal social-security agreement, so a UK hire sits fully in the UK system — simpler, in practice: UK payroll, UK NI, done.
No UK entity? You usually don't need one. An Australian Pty Ltd with no UK presence can employ UK staff directly through a DPNI scheme — HMRC's own mechanism for foreign employers. You stay the employer; no UK company required just to run payroll.
Your three routes — and the one most Australian companies miss
However you hire, UK payroll runs one of three ways: your own UK PAYE scheme (needs a UK entity), a DPNI / NI-only scheme (no UK entity needed — you stay the direct employer), or an Employer of Record (a third party employs them for you, at a premium). The DPNI route is the one most Australian companies have never heard of — and it is usually the leanest way to hire one to ten UK staff without incorporating. Compare the three routes side by side, or answer three questions to find yours.
UK payroll quick facts
| Item | The UK position (2026/27) |
|---|---|
| Currency & pay cycle | GBP; monthly is the norm (weekly possible) |
| Income tax & NI | Deducted at source under PAYE; reported to HMRC in real time (RTI) on or before each payday |
| Employer National Insurance | 15% on pay above £5,000/year — the main on-cost to budget |
| Workplace pension | Auto-enrolment: minimum 3% employer / 8% total on qualifying earnings |
| Paid holiday | 5.6 weeks statutory (can include public holidays) |
| Payslips | An itemised payslip is a legal requirement every pay period |
| Paying HMRC | Monthly, by the 22nd (electronic) |
Estimate the all-in cost of a UK hire with our free employer-cost calculator, or see what a UK employee really costs.
Working across nine to eleven hours
The AEST–UK gap is the biggest in our client base, and async-first absorbs it: you send data at your end of day, it's processed in the UK morning, and results are waiting when you wake up. We reply within one UK business day and hold early-morning UK slots — late afternoon in Sydney — when you want a live call.
Hiring in the UK from Australia?
We set up the right scheme — PAYE or DPNI — and run your UK payroll end to end, with support that works across time zones. Replies within one UK business day.
Get a fixed quoteThis guide is general information, not tax, legal or immigration advice, and reflects our understanding of the rules as at June 2026. Your circumstances may differ — please get specific advice before acting.