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. Employer NI of 15% above £5,000/year is the bigger on-cost where it's due: through an EOR, or where you have a UK entity, branch or place of business. On a DPNI for an employer with no UK presence it usually isn't 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.
• Holiday is more generous. UK statutory paid holiday is 5.6 weeks (which can include public holidays) versus the Australian 4 weeks, so 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. protection from ordinary unfair dismissal currently needs two years' service, falling to six months for dismissals taking effect on or after 1 January 2027). 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 someone you hire in the UK is in the UK system from day one: UK payroll, UK NI. An Australian employee you send over temporarily is different. Where they aren't ordinarily resident in the UK, normally work outside the UK for you, and you have a place of business outside the UK, UK NI usually isn't due for their first 52 weeks here.

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 (an employer abroad can register one without a UK entity), a direct payment scheme (no UK entity needed, because you stay the direct employer), or an Employer of Record (a third party employs them for you, at a premium). The direct payment route, usually a DPNI for Australian employers, 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 four quick questions to find yours.

UK payroll quick facts

Estimate the all-in cost of a UK hire with our free employer-cost calculator, or see what a UK employee really costs.

Common questions

Can an Australian company employ someone in the UK without a UK entity?

In most cases, yes. An Australian Pty Ltd with no UK presence can employ UK staff directly, usually through a DPNI scheme in the employee's name, or by registering for UK PAYE itself. The employee sets up a DPNI and pays both their income tax and their employee National Insurance to HMRC under one PAYE reference. HMRC's DPNI guidance includes employees of an overseas employer that has no UK address it pays wages from. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts.

Does an Australian company pay UK employer's National Insurance?

Usually not, if it has no UK presence. HMRC list the UK's social security agreements that include employer obligations as those with the EU, the EEA EFTA states, Switzerland, the Isle of Man and Gibraltar. Australia is not on that list, and it is not on GOV.UK's list of the countries the UK has reciprocal social security agreements with. For an employer that is not resident or present and has no place of business in the UK, HMRC's guidance is that it does not have to pay employer's National Insurance, but the employee's National Insurance must still be paid. One exception: if your UK employee actually works for a UK business, such as a UK client you supply them to, that business may have to run PAYE and pay employer's National Insurance itself. For most employees, UK employer's National Insurance is 15% of pay above £5,000 a year.

Can an Australian company run UK payroll in its own name instead?

Yes, that's the other route. A company with no UK presence doesn't have to run UK PAYE, but it can choose to run it in its own name. Then the company takes the employee's income tax off their pay through its own payroll, and our fees are the company's cost, not the employee's. The employee's National Insurance still has to be paid: the company can pay it through its payroll if it's willing to and HMRC agree, and if not, the employee pays it directly.

What if we send an existing employee from Australia to the UK?

Australia is not on GOV.UK's list of the countries the UK has reciprocal social security agreements with, so the UK's own rules decide whether UK National Insurance is due. Under those rules, where the employee is not ordinarily resident or ordinarily employed in the UK, usually works outside the UK for you, and is here for a temporary period, neither the employee nor you pay UK National Insurance until they have been in the UK for a continuous period of 52 weeks. After that, UK National Insurance is due in the normal way. Income tax is a separate question. Someone ordinarily resident in the UK whom you hire locally doesn't meet those conditions, so the 52-week exemption doesn't apply to them.

How soon can an Australian company pay its UK employee?

We'd allow four to eight weeks for HMRC to set the scheme up, and that's our own estimate, not a figure from HMRC. Nothing goes to HMRC until the engagement is signed and our identity checks are done, so our four to eight weeks starts then, not today. The scheme should be registered before the first payday. If pay starts before the scheme is in place, payroll still runs every payday and is reported to HMRC late once the scheme exists.

Working across nine to eleven hours

The AEST to UK gap is the widest time-zone gap of any country on this site, and the way we work 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 if you want a live call, ask and we will fix a time.

This 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, so please get specific advice before acting.