Hiring a UK employee from India: what Indian companies need to know

If your Indian company is hiring its first person on the ground in the UK (a sales lead, an account manager, a country head), the good news is you almost certainly don't need to set up a UK company to do it. Here's the practical version for Indian founders, finance and HR teams.

The five differences that surprise Indian employers

• You don't need a UK entity to employ someone in the UK. Through a DPNI scheme, a company based in India with no UK presence can be the direct employer of UK staff, using HMRC's own mechanism for exactly this. No UK subsidiary, branch or place of business required just to run one payslip.
• One PAYE deduction, not TDS plus PF plus ESI plus PT. UK payroll deducts income tax and National Insurance under PAYE, reported to HMRC in real time (RTI) on or before each payday. There's no separate Provident Fund, ESI or Professional Tax layer. The nearest equivalent to PF is the workplace pension, below.
• You're hiring UK-based, right-to-work-eligible people. Every UK hire needs a right-to-work check (British/Irish citizens, settled status, or a visa). This guide is about employing people who already live and can work in the UK. Relocating someone from India needs a sponsored work visa first, which is a separate, longer process.
• A workplace pension is compulsory. Auto-enrolment requires a minimum 3% employer contribution (8% total) on qualifying earnings, broadly the UK's counterpart to EPF, but you contribute as the employer regardless of where you're based.
• Holiday and contracts are statutory, not negotiable. 5.6 weeks' statutory paid holiday, an itemised payslip every pay period, and a written statement of terms from day one. UK notice and unfair-dismissal protections also differ from Indian practice, and full unfair-dismissal rights generally arrive after two years.

Your three routes, and the one most Indian companies miss

However you hire, UK payroll runs one of three ways: your own UK PAYE scheme (needs a UK entity), a direct payment scheme (a DPNI or an NI-only scheme, which are different things and we confirm which applies) (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 DPNI route is the one most Indian 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.

Secondments and social security

If you're posting an existing Indian employee to the UK temporarily (rather than hiring locally), the UK and India have a Double Contributions Convention, signed in February 2026 and in force since 15 July 2026. It means someone moving between the two countries pays social security in one country at a time, and an employee posted temporarily to the other country can keep paying at home rather than starting again. That changes where contributions are due for a posting, alongside the visa requirement for anyone relocating. It's a detail worth getting right before the first payday, and we confirm the position as part of setup.

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.

Working across the time zones

India is 4.5 to 5.5 hours ahead of the UK, so there's a useful overlap most of the working day: your afternoon is the UK morning. The practical fix is simple: you send approvals before the UK opens, we process on UK time, and pay in GBP from a UK bank arrangement so your employee is paid like any local hire. UK payroll runs on UK statutory deadlines, RTI on or before payday and HMRC paid by the 22nd, which we track for you. We reply within one UK business day.

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.