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article  /  23rd Jun 2026

Hiring international employees: Is Employer of Record right for your business?

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As businesses continue to expand, many UK SMEs are exploring opportunities to hire talent internationally. Whether you’re looking to access specialist skills, support overseas growth, or build a more diverse workforce, international hiring can offer many advantages.

However, employing people in different countries comes with complex legal, tax, payroll, and compliance requirements. For many businesses, establishing a legal entity in every country where they wish to hire simply isn’t practical.

This is where Employer of Record (EOR) can help. In this article, we’ll explain what an Employer of Record is, how it works, the benefits and potential limitations for SMEs, and when it may be the right solution for businesses looking to hire internationally. We’ll also explore how an Employer of Record compares to setting up a local entity and what to consider when choosing an EOR provider.

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Employer of Record

What is an Employer of Record?

An Employer of Record is a third-party organisation that legally employs workers on behalf of your business in another country.

While your company manages the employee’s day-to-day responsibilities, performance, and objectives, the Employer of Record takes responsibility for the legal employment relationship. This typically includes:

  • Employment contracts
  • Payroll administration
  • Tax deductions and reporting
  • Benefits administration
  • Employment law compliance
  • Right-to-work requirements
  • Local HR support

This allows businesses to hire employees internationally without establishing a local legal entity.

Why are SMEs using Employer of Record services? 

For many SMEs, international hiring presents exciting opportunities, but it can also create significant administrative, legal, and compliance challenges. Navigating unfamiliar employment laws, payroll requirements, and tax obligations across multiple countries can quickly become complex and time-consuming.

An Employer of Record enables businesses to:

  • Access global talent 

    Skills shortages continue to affect many industries across the UK. By expanding your search internationally, you gain access to a much larger talent pool and can recruit specialist skills that may be difficult to find locally.

    An Employer of Record enables you to hire employees in countries where the skills you need may be more readily available, whether that’s technology specialists, multilingual customer support teams, finance professionals, or other niche roles. This can help businesses fill vacancies faster, strengthen their workforce, and remain competitive in a challenging recruitment market.

  • Expand into new markets

    Hiring employees in target markets can provide valuable local knowledge and support business growth. An Employer of Record allows you to test new markets without the commitment and expense of setting up a local subsidiary.

    However, establishing a legal entity in another country can be costly and time-consuming. An Employer of Record allows businesses to hire talent in new regions without setting up a local subsidiary, making international expansion more accessible and less risky. This can be particularly beneficial for SMEs looking to test market demand before making larger investments.

  • Reduce administrative burden

    Managing international payroll, employment contracts, tax obligations, and compliance requirements can be resource-intensive. An Employer of Record handles these responsibilities, allowing your team to focus on business growth.

    By partnering with an Employer of Record, businesses can outsource many of these administrative tasks, freeing up valuable time and resources to focus on strategic priorities, growth initiatives, and employee development.

  • Improve compliance

    Employment legislation differs significantly from one country to another. Requirements relating to contracts, working hours, holiday entitlement, statutory benefits, termination processes, and tax obligations can vary widely.

    Keeping up with these regulations can be challenging, particularly for businesses hiring internationally for the first time.

  • When is an Employer of Record the right choice?

    An Employer of Record can be particularly beneficial if your business:

    • Wants to hire one or more employees overseas
    • Is exploring international expansion opportunities
    • Needs specialist talent unavailable in the UK
    • Wants to minimise compliance risks
    • Does not want to establish overseas legal entities
    • Requires a faster route to hiring internationally

    For many SMEs, an Employer of Record provides a practical way to expand globally without the significant investment associated with opening international offices.

  • How to choose the right Employer of Record

    Not all Employer of Record providers offer the same level of service. When evaluating providers, consider:

    • Countries covered
    • Local compliance expertise
    • Payroll capabilities
    • Employee benefits support
    • HR support services
    • Technology and reporting tools
    • Pricing transparency
    • Customer support availability

    Selecting the right provider can help ensure a smooth experience for both your business and your international employees.

  • Is an Employer of Record Right for your business?

    If you’re looking to hire international employees quickly, compliantly, and without establishing overseas entities, an Employer of Record can provide an effective solution.

    For many SMEs, an Employer of Record removes the complexity of international employment while providing access to global talent and supporting business growth.

    As international hiring becomes increasingly common, businesses that can access the right skills regardless of location may gain a significant competitive advantage.

What are your plans for hiring internationally without the complexity of setting up overseas entities?

Join our webinar with Lano to learn how Employer of Record solutions work, the benefits they can bring to your organisation and the key considerations when hiring internationally.

Register for upcoming webinar

Looking for Support with International Hiring?

Through our partnership with Lano, businesses can access Employer of Record services, global payroll solutions, and international workforce management support across multiple countries.

Whether you’re hiring your first overseas employee, expanding into a new market, or managing a growing international team, the right support can help you scale with confidence while remaining compliant with local regulations.

Your Questions Answered

Everything you need to know about Employer of Record

  • How does an Employer of Record work? Reveal

    When using an Employer of Record, the EOR becomes the employee’s legal employer in their country of residence. The employee works for your business, but the EOR handles payroll, benefits, tax deductions, employment contracts, and compliance with local labour laws.

  • Why would a business use an Employer of Record? Reveal

    Businesses often use an Employer of Record to hire employees internationally without setting up a legal entity overseas. This allows organisations to access global talent, enter new markets, and reduce the administrative burden associated with international employment.

  • Is an Employer of Record legal in the UK? Reveal

    Yes, Employer of Record services are legal and commonly used by businesses operating internationally. Reputable EOR providers ensure employment arrangements comply with local employment legislation, tax regulations, and payroll requirements in the countries where employees are based.

  • What are the benefits of using an Employer of Record? Reveal

    Key benefits include:

    • Faster international hiring
    • Access to global talent pools
    • Reduced compliance risks
    • Simplified payroll administration
    • No need to establish overseas entities
    • Support with local employment laws and regulations

  • What is the difference between an Employer of Record and a Professional Employer Organisation (PEO)? Reveal

    An Employer of Record becomes the legal employer of the worker, whereas a Professional Employer Organisation (PEO) operates under a co-employment model. Businesses typically use an Employer of Record when they do not have a legal entity in the country where they wish to hire.

  • Is an Employer of Record suitable for SMEs? Reveal

    Yes. Many SMEs use Employer of Record services because they provide a cost-effective way to hire internationally without needing in-house expertise in global employment law, payroll, and compliance.

Where to find out more A collection of hand-picked useful resources for Employer of Record from impact HR and beyond

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