Hiring a UK employee from Germany: what German companies need to know

Since Brexit, German nationals need UK immigration permission like anyone else (social security still follows EU to UK coordination rules), but the payroll itself is leaner than German Lohnabrechnung, and you may not need a UK entity at all. Here's the practical version for German founders, HR and Steuerberater.

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The five differences that surprise German employers

• Freedom of movement is gone. Right-to-work checks are not. You must verify every UK hire's right to work (British and Irish citizens show a passport, or an Irish passport card; anyone else, including people with settled or pre-settled status or a visa, usually proves it online with a share code). Hiring a UK resident locally is straightforward; moving a German employee over usually needs a visa, often a sponsored one, unless they already have UK immigration status.
• Total employer cost can be lower than at home at many salaries; compare at yours. The UK employer pays National Insurance of 15% above £5,000/year plus a 3% minimum pension, meaningfully below the roughly 20%+ a German employer adds in Sozialversicherung.
• Payroll reporting is real-time, but simpler. PAYE with RTI replaces the monthly Lohnsteuer-Anmeldung cycle: NI (and, on a full PAYE scheme, income tax) is deducted each payday and reported to HMRC on or before it. No Krankenkasse coordination, no separate church tax.
• No works councils, lighter dismissal law. There's no Betriebsrat equivalent, and no Kündigungsschutzgesetz-style protection from day one, and protection from ordinary unfair dismissal currently needs two years' service, falling to six months for dismissals taking effect on or after 1 January 2027. Contracts and notice still matter; a written statement of terms is required from day one.
• Holiday is generous by law. 5.6 weeks' statutory paid holiday (which can include the UK's public holidays), close to German norms, so your offer letters translate easily.

Your three routes, and the one most German 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), an NI-only scheme in your company's name (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 NI-only route is the one most German 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.

Secondments and social security

For temporary postings from Germany, the UK to EU Trade and Cooperation Agreement's social-security protocol can keep a seconded employee in the German system for up to 2 years, with a certificate of coverage (also called a PDA1) from the German social security authority, which changes what the UK payroll must deduct.

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

Does a German company need a UK company to employ someone in the UK?

Not to run UK payroll. The company can employ the person itself, either through an NI-only scheme registered in the company's own name or by running UK PAYE in its own name. When someone works in the UK for an employer based in the EU and UK National Insurance is due, it is due on both sides, the employee's and the employer's, so the scheme is an NI-only scheme in the employer's name and not a DPNI or DCNI. 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 a German company pay UK employer's National Insurance?

Usually, yes. An employer based in the EU can owe it as well, when the employee works in the UK and UK National Insurance is due. Under the UK and EU Trade and Cooperation Agreement, an employer based outside the UK pays these contributions just as if it were based here. For most employees, UK employer's National Insurance is 15% of pay above £5,000 a year. It is the employer's cost, not the employee's.

How does the employee pay income tax on an NI-only scheme?

This scheme doesn't take your employee's income tax off their pay. They pay their income tax through their own Self Assessment or, if they'd rather, through a tax-only scheme in their name.

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

Someone working in the UK for an employer in the EU usually pays UK National Insurance, unless they have a certificate of coverage (an A1) from that country. GOV.UK describes the certificate as being for someone coming to work temporarily in the UK for up to two years, employed in an EU country by an EU employer who normally works there. If your employee already has one, there's no National Insurance scheme to register and no fee for one.

How soon can a German 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 one hour

The easy part: the UK is only one hour behind. Approvals, queries and calls fit inside the same working day. We reply within one UK business day, and your employee's payslips, RTI filings and pension submissions all run on UK statutory deadlines without you tracking them.

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.