In today’s globalised economy, it’s increasingly common for UK companies to look beyond domestic borders when searching for the best talent. Whether you’re a startup seeking a niche skillset or a multinational firm scaling across new markets, the ability to hire foreign employees—either to work remotely abroad or relocate to the UK—has become a strategic advantage. However, many employers still find themselves asking a fundamental question: can a UK company legally and practically hire a foreign employee?
The short answer is yes, but how you hire them and where they work makes a significant difference. The approach a UK company takes—whether sponsoring a visa for someone to work in the UK or hiring someone who remains overseas—has major implications for tax, compliance, operations, and costs. Employers need to understand the legal and logistical framework before extending any international job offer. What works in one country may not be permissible in another, and the risk of non-compliance can be substantial.
Navigating this landscape requires not only knowledge of UK employment law but also a clear understanding of international labour regulations. The intricacies can be daunting. Sponsoring foreign workers in the UK involves immigration protocols and right-to-work checks, while hiring someone abroad may expose your company to tax liabilities or permanent establishment risks. Fortunately, UK businesses have multiple legal pathways they can take, and this article explores each one in depth to help you decide what works best for your organisation.
At Eos Global Expansion, we specialise in helping UK companies hire international talent efficiently and compliantly. Whether your goal is to build a distributed global team or relocate key personnel to London, Manchester, or anywhere else in the UK, our expertise ensures you’re not just compliant—you’re competitive. Let’s explore the various options available and what you need to consider at each step.
What Are Your Options for Hiring a Foreign Employee?
When a UK company decides to hire a foreign employee, the first consideration is location: will the employee work inside the UK, or remain based in their home country? The answer determines which rules apply, which authorities are involved, and what kind of infrastructure you’ll need. If you plan to bring them into the UK, immigration laws and sponsorship licences are central. If they’ll stay abroad, you’ll need to address local employment laws, tax exposure, and benefits compliance.
One traditional approach is setting up a legal entity in the employee’s country of residence. This path can offer long-term strategic value if you’re building a regional presence, but it also demands significant investment. The process typically involves registering a business, opening bank accounts, navigating foreign employment regulations, and hiring legal and HR staff to maintain local compliance. For many UK companies—especially small and mid-sized firms—this route is costly, time-consuming, and unnecessarily complex if the goal is to hire just one or two employees.
An increasingly popular alternative is to work with an Employer of Record (EOR). An EOR allows you to hire internationally without setting up a legal entity. It acts as the legal employer on your behalf, handling everything from employment contracts and payroll to benefits and local compliance. This approach dramatically reduces the time and cost to hire while ensuring you’re operating within the laws of the employee’s country. With Eos, you can onboard new international employees in a matter of days—not months—without taking on the regulatory risk yourself.
Some companies also consider hiring foreign workers as independent contractors. On paper, this appears to offer flexibility and lower costs. However, it comes with serious compliance risks, particularly in the UK where IR35 legislation scrutinises contractor relationships. If the individual effectively works as an employee—subject to your direction, working fixed hours, or integrated into your team—HMRC may reclassify the worker, leaving you exposed to back taxes, penalties, and reputational damage. In many countries, misclassification laws are even stricter, with governments cracking down on so-called ‘disguised employment’.
Read more: 5 Common Payroll Myths That Are Hurting Your Global Expansion Efforts
Hiring Foreign Employees to Work in the UK
If your goal is to hire a foreign employee to live and work in the UK, you’ll need to navigate the UK’s immigration system. Post-Brexit, the rules have changed significantly. Free movement no longer applies, meaning even EU nationals now require visas to work in the UK. This has raised the bar for UK companies, but it hasn’t closed the door. With the right licence and preparation, you can still bring in top talent from anywhere in the world.
The most common route is the Skilled Worker visa, which allows UK employers to sponsor non-UK nationals for specific roles. To use this system, your company must first hold a sponsorship licence from the Home Office. This process involves applying online, proving your business is legitimate, and showing that you have appropriate systems in place to monitor sponsored workers. Once approved, you can issue Certificates of Sponsorship (CoS) to candidates and guide them through the visa process.
The Skilled Worker route is points-based and focuses on roles that meet minimum salary thresholds and skill levels. Some sectors—like engineering, healthcare, and tech—are more favourably positioned due to shortages. While the system is functional, it requires careful management. You’ll need to maintain records, report changes in employment, and renew sponsorship details annually. Employers also face penalties if they fail to comply with the rules, including hefty fines or loss of sponsor status.
Beyond the Skilled Worker visa, other options include the Global Talent visa for high achievers in academia, research, and the arts, and the Scale-up visa for fast-growing companies. Each has its own criteria, but all require some degree of planning and documentation. The UK government has made efforts to simplify these schemes, but the system remains complex enough that many companies prefer to work with an immigration advisor or legal partner.
Hiring Foreign Employees to Work Abroad
Hiring a foreign employee who remains based in their home country comes with an entirely different set of considerations. While it avoids UK immigration procedures, it introduces challenges around international employment law, tax obligations, and compliance risk. Many UK companies assume that paying someone as a contractor or via international wire transfer is sufficient. In most cases, it isn’t.
Each country has its own employment regulations that govern how workers must be hired, compensated, and protected. These laws can include mandatory benefits, local tax deductions, statutory holidays, and notice periods. Ignoring them may lead to lawsuits, fines, or having your company blacklisted by authorities. Moreover, if the foreign employee is working exclusively for your company, from a home office in their country, there’s a risk that local tax authorities may deem your business to have a “permanent establishment” there. This could subject you to corporate taxes and reporting obligations.
Compliance doesn’t just concern the host country—it also affects your operations in the UK. For example, if your HR team manages payroll in-house, are you prepared to handle international tax withholdings, pension contributions, and country-specific contracts? Do your employment agreements account for foreign jurisdiction laws and dispute resolution mechanisms? The more countries you expand into, the more complex and resource-heavy this becomes.
Partnering with an EOR solves these challenges by acting as the legal employer in the employee’s country. This removes your exposure to legal risk and ensures the employee receives proper benefits and protections under local law. At the same time, you retain full control over day-to-day responsibilities, performance management, and team integration. It’s the most effective way to go global without sacrificing compliance or speed.
Compliance Risks to Be Aware Of
Hiring across borders is not without its risks, and compliance should be a central concern in your decision-making process. Whether you’re hiring someone into the UK or expanding your team overseas, failing to adhere to the relevant laws can result in costly setbacks. The most common issues we see involve misclassification, tax noncompliance, and immigration violations.
One of the biggest risks for UK companies is misclassifying foreign employees as independent contractors. While this may seem like a quick solution, many countries take a strict view on employment relationships. If a contractor is effectively working under your control—taking instruction, using your tools, or working regular hours—they may legally qualify as an employee. This can trigger penalties, backdated tax liabilities, and reputational damage for your company.
Another critical risk is noncompliance with local tax and social security laws. Some UK companies mistakenly believe that they can simply pay a foreign employee in GBP via international transfer. But without proper registration in the employee’s country, you’re likely violating employment regulations. Local authorities may come after the employee—or you—for unpaid taxes and benefits contributions. In some jurisdictions, workers can even sue for employment rights or damages if their arrangements are deemed unlawful.
UK employers also need to remain vigilant around data protection laws. The UK’s version of GDPR requires you to safeguard employee data, even when that data is processed overseas. If you hire in countries with weak or conflicting data protection laws, you may need to implement additional safeguards, such as Standard Contractual Clauses (SCCs), to stay compliant.
Read more: The Role of HR in Ensuring Statutory Compliance: How Employer of Record Services Can Help
How Eos Helps UK Companies Hire Foreign Employees
At Eos Global Expansion, we are experts in helping UK businesses hire talent in over 100 countries—without the legal, financial, or operational headaches.We offer flexible solutions tailored to your growth goals. As your Employer of Record, we manage employment contracts, payroll, taxes, and benefits in the employee’s country, while you focus on driving your business forward.
Whether you’re expanding into Southeast Asia, Europe, or Latin America, our local expertise ensures you remain fully compliant and legally protected at every step. With Eos, you can build a global team without building a global infrastructure.
Our clients trust us not just to execute, but to advise. We help you assess the best route to hire each foreign employee, taking into account your business model, timeline, and risk appetite. From initial consultation to onboarding and ongoing HR support, Eos acts as an extension of your team—making international hiring feel as seamless as domestic growth.
Let Eos Global Expansion simplify your journey. Check our full-range of EOR services here or book a free consultation now.
FAQs: Hiring Foreign Employees as a UK Company
Can a UK company hire a foreign employee who lives overseas?
Yes, a UK company can legally hire a foreign employee who remains based in their home country. However, doing so requires compliance with local employment laws, tax regulations, and statutory benefits. Simply transferring funds to a foreign bank account or treating someone as a contractor may result in serious legal and financial consequences. To ensure full compliance and avoid exposure to permanent establishment risk, many UK businesses work with an Employer of Record (EOR), which handles local employment on their behalf.
Do UK companies need a visa to hire foreign employees into the UK?
Not the company itself, but the employee will need a valid visa—typically under the Skilled Worker route. For that to happen, the UK company must be a licensed sponsor authorised by the Home Office. Sponsorship requires meeting specific criteria and assuming responsibility for monitoring and reporting on the sponsored worker’s employment. This is a well-established process, but it can be time-consuming without the right support.
Is it legal to hire someone as a contractor instead of an employee?
It depends on the nature of the working relationship and the country in question. In the UK, IR35 legislation governs off-payroll working rules, and misclassifying someone as a contractor when they function like an employee can lead to tax liabilities and penalties. Other countries have similar rules, and many take a strict approach to worker classification. It’s crucial to evaluate the risk before deciding on a contractor relationship, especially for long-term or full-time roles.
What are the risks of hiring foreign employees without a legal entity?
Hiring without a legal entity can expose your company to tax liabilities, compliance violations, and even reputational damage. Local authorities may view your operations as creating a taxable presence or “permanent establishment,” which brings corporate tax and reporting obligations. Without the right structure in place—such as an EOR—you may also violate local employment laws by failing to provide statutory benefits or protections.
How long does it take to hire a foreign employee through Eos?
In many cases, we can onboard your employee in as little as one to two weeks, depending on the country and complexity of the arrangement. Our streamlined process covers employment contracts, tax registration, payroll setup, and benefits provisioning—so you can move quickly without sacrificing compliance or control.
Photo by fauxels
