Setting up your UK workforce: A practical overview of employer responsibilities


Welcome to our comprehensive Doing Business in the UK article series, designed specifically for international businesses and investors looking to establish or expand their operations in the United Kingdom. This series aims to provide you with essential insights and practical guidance on navigating the UK business landscape.

Throughout this series, we will cover the initial setup of your business, understanding business taxes , and the process of registering a UK business. We will also delve into workforce setup, payroll, employment costs and international hiring considerations for businesses employing people in the UK. Finally, we also explore accountancy processes, compliance and management reporting requirement, and discuss the ins and outs of importing goods and services into the UK.

Employing staff in the UK for the first time involves key legal and practical steps. This overview highlights essential considerations—from right-to-work checks and employment contracts to payroll, pensions, and compliance—helping you start on the right track and avoid common pitfalls.
 

Some aspects to consider include:

Employer Responsibilities for Right to Work Checks:

  • Conduct checks before employment to confirm the individual is not disqualified by immigration status.
  • Follow official guidance and codes of practice: ​
    • Preventing Illegal Working: Civil Penalty Scheme
    • Avoiding Unlawful Discrimination while Preventing Illegal Working
  • Establish a statutory excuse by completing checks correctly to avoid civil penalties.
  • Retain liability even when using an Identity Service Provider (IDSP) for digital checks.
  • Check contractors and labour providers to ensure compliance across your supply chain.
  • Keep evidence of checks for all employees and sponsored workers.
  • Understand why checks matter: 
    • Prevent illegal migration and exploitation.
    • Avoid reputational damage and operational disruption.
    • Comply with health, safety, and safeguarding obligations.

In addition to the above, security checks may be required. Consider whether there is a legal requirement to apply for a Disclosure and Barring Service (DBS) check if your business operates in a field that requires one, e.g. working with vulnerable people or security.
 

Hiring a workforce

Employees: Requirement for a formal written statement

In the UK, under the Employment Rights Act 1996, employees must receive a written statement of employment particulars on or before their first day of work. This is the minimum requirement, and many employers will choose to issue a full employment contract. The written statement/employment contract define the rights and responsibilities of employers and employees, ensuring compliance with UK law and reducing disputes.

Contracts set clear expectations and protect both parties. Failure to provide one can lead to legal and operational risks. The key elements of an employment contract include:

  • Job title and role
  • Salary, benefits, and payment details
  • Working hours and overtime 
  • Notice periods and termination terms
  • Holiday and sick pay
  • Confidentiality and restrictive covenants
  • Disciplinary and grievance procedures
 

Your Employer Obligations

  • Provide written particulars: on or before day one
  • Pay at least the National Minimum/Living Wage: our National Minimum Wage Guide covers the essentials
  • Non-Discrimination: Ensure your recruitment process complies with the Equality Act 2010, avoiding discrimination based on age, gender, race, disability, religion, or sexual orientation.   At BDO, we can help organisations transform EDI concepts into actionable plans to embed DEI across your organisation’s activities. 
  • Follow fair dismissal processes – implement clear disciplinary and grievance procedures in place, ensuring employees know how to raise concerns and how they will be addressed. 
  • PAYE (Pay As You Earn) System: Register with HMRC and operate PAYE to deduct tax and National Insurance contributions (NICs)from employees' wages. For more detail refer to our UK payroll article 
  • Pension: You may be required to enrol eligible employees in a workplace pension scheme 
 

Alternative hiring mechanisms

Many businesses operating in the UK for the first time will initially wish to use consultants and agents rather than directly employing their own staff; referred to as Off-Payroll Workers in the UK.

This can be a low impact way to operate but care should be taken that the workers used are genuinely treated as self-employed or operating correctly through their own company under UK employment and tax laws - mistakes in this area can be very costly.

The employing entity is responsible for ensuring that an individual is engaged on the correct basis. In other words, the employer must decide if an individual can be engaged on a self-employed basis, i.e. paid directly without deduction of PAYE and NIC.

Whether an individual is treated as an employee or self-employed is dictated by the nature of the arrangements in place between the individual and the engager. This is often a contentious issue in the UK as new business models in the ‘gig’ economy have evolved. It is vital to take expert advice on contractual arrangements with any workers a business uses so that the business can achieve certainty on what taxes it should pay and what rights the workers can claim. Read more about Off-Payroll Workers.

Professional Employment Organisations (PEOs) can be a tool for managing payroll, benefits, and compliance. The PEO acts as the 'employer of record' and handle HR and payroll compliance. PEOs can be beneficial for short-term hires or during transitions, such as after an M&A transaction. If you opt for a PEO, ensure all compliance obligations are taken care off. Failing to do so could lead to non-compliance with UK tax and accounting requirements, resulting in penalties and damage to your brand.

To avoid these risks, seek professional advice to determine if a PEO model suits your UK operations and understand any broader tax compliance obligations.

Read more about the risks around employees working from international homes.
 

Other employer obligations:

Data Protection

  • GDPR Compliance: Handle personal data in accordance with the General Data Protection Regulation (GDPR). This includes secure storage and limited access to sensitive information.  
  • Effective data protection program: At BDO, we can provide you with all the advice, guidance and support you need to comply with privacy and data protection regulations. We can identify and mitigate the data protection risks that your business is exposed to and you can work with us to develop a well-governed and effective data protection program that is always compliant with the latest data protection legislation.
 

Health and Safety

  • Workplace Safety: Ensure the workplace complies with health and safety regulations. Provide necessary training and equipment to maintain a safe working environment.
  • Safeguarding: Safeguarding is a statutory duty and one of the most significant risks any organisation may face. It should not be considered in isolation. At BDO, we can help your organisation understand the safeguarding risks it is exposed to and provide advice, support and assurance. Our adaptive solutions enhance safeguarding maturity and support statutory compliance.

How can we help?

We understand the complexities, resources and expertise required to hire employees in the UK and internationally. By partnering with us, you can be sure of a consistently exceptional payroll service run by a specialist team on software that is up to date and compliant with all regulations affecting everything from tax to secure personal data exchange.

Get in touch with us for more information or download our Doing business in the UK brochure:

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