Professional Employer Organization (PEO) in United Kingdom

What is a PEO?

Put simply, a PEO is a service provider that acts as your human resources (HR) and legal team. This means they take on the administrative responsibilities and functions of an in-house HR team from managing the payroll to ensuring that your business remains compliant with local labor laws. 

PEOs take on these time-consuming tasks so that startups and small businesses don’t have to. Their services also save businesses tons of money since they won’t have to assemble their own HR and legal teams.

With the help of a PEO in the United Kingdom, you can start building an international team of remote talent — and you won’t have to stop in the United Kingdom. PEOs exist in virtually every country, meaning your global hiring will know no bounds and they’ll ensure that your international employees receive on-time payments in the correct currency while keeping you in good standing with local legislation. 

Debating whether PEO services in the United Kingdom would be the right solution for your business? Get in touch with a team member at Skuad to have all your questions answered today!

What are the benefits of using a PEO provider in the United Kingdom?

Partnering with a professional organization in the United Kingdom can become the key to unlocking multiple doors for your small business. Check out the benefits of working with a PEO below:

Hire from the best of the British and global talent pool

If you want your business to succeed, you need to hire the right people. However, the right people may not exist within your city, state, or country. The age of remote work has allowed most businesses to expand their employment radius, which means your talent pool now reaches from ocean to ocean.

While the UK is notably filled with a skilled labor force, recent reports show that roughly 49% of the country’s workforce are currently placed in the wrong job. This means it shouldn’t be hard to find hard-working professionals looking to match their skills with the right opportunity there.

Gain a globally competitive edge as an employer

Opening yourself up globally as an employer isn’t enough. You need the top talent to not only know your name but want to be associated with it. 

The right PEO services in the United Kingdom will make sure that you’re bringing a comprehensive employee benefits package to the table. This will ensure that you attract and retain the most qualified candidates.

Cut out unnecessary costs

Hiring UK employees without the help of a PEO in the United Kingdom will cost you enough money to put you out of business. Even large corporations choose to work with PEOs despite having the capital to expand simply because it’s the cheaper and faster route. 

For instance, without a PEO in the United Kingdom, you would have to hire your own legal and HR teams within the country — which come with hefty retainer fees and salaries. 

Gain in-depth insights into new global markets

The UK has a singular market economy separate from the European Union (EU). However, it’s still neighboring the EU and is close enough to other big-time markets including Asia and the Middle East.

By hiring employees from the UK through a PEO, you can gain unique insights into these markets from said employees. Something like this can help your business grow tremendously.

Bypass setting up a legal entity in the United Kingdom

If you choose not to enlist the help of PEO services in the United Kingdom, your only other option will be to form your own business entity within the country. This is incredibly expensive, not to mention time-consuming — especially as you’ll have to physically be there for the incorporation. 

Aside from putting together a legal team that specializes in UK law, you’d also have to foot the bill for your travel and accommodations. That’s an expenditure that simply goes beyond the cost of doing business in the United Kingdom.

PEOs allow you to bypass this whole affair because most PEOs already own their own legal entities within the countries they serve. This means they can act as your legal entity as well as your employer of record (EOR) in the United Kingdom and more.

Become culturally aware

All countries have their own way of doing business which overlaps with their most prominent cultures. As your partner organization, your PEO will ensure that you’re well informed of these cultural differences so you can create good working relationships with your employees based on respect, consideration, and tolerance.

Of course, the United Kingdom is made up of several countries, including England, Scotland, Wales, and Northern Ireland. Each of these countries has a work culture that depends on strong, mutual bonds with their colleagues. 

Want to learn more about how PEOs will keep you in the know when it comes to work culture abroad and more? Speak with a Skuad team member today!

Remain compliant

Every country has a different set of rules and regulations for what’s expected of employers in regard to their employees. Being found non-compliant with these labor laws can land your business with some serious fines and even business bands.

Compliancy typically covers the statutory benefits employees are entitled to — plus more. Here’s what you need to know:

Payroll

• UK employees are paid in the pound sterling (£).
• Probation periods don’t legally exist.
• Bonuses are not mandatory but encouraged. They’re also taxable.
• Termination in the UK does not require notice, but it does require a valid reason. Severance is also non-existent although they are legally entitled to statutory redundancy pay if they’ve been working for the same employer for two or more years. 
• Typical working hours are up to 40 hours per week, 8 hours per day. Overtime is not mandatory, however, overtime rules should be outlined in employee contracts to avoid issues.

Tax and employer contributions

The United Kingdom income tax rates for employers is slightly confusing as the tax is based on the remaining income after the Personal Allowance has been deducted. It also varies by actual country, for example, the basic rate for Scotland is 20% from £2,163 to £13,188 whereas the basic rate in England, Northern Ireland, and Wales is 20% for up to £37,700.

However, the United Kingdom’s corporate tax rate is still set at 19% as of 2019 and employer contributions must be made to the National Insurance (NI) at 13.8% on employee earnings of £732 and above each month.

Paid leave

• Employees are entitled to a minimum of 5 and a half weeks of paid vacation leave.
• Statutory Sick Pay (SSP) entitles employees to £99.35 per week. The amount of days for sick leave is technically unlimited, although a doctor’s note is needed for illnesses lasting up to 7 days or longer.
• Women are entitled to up to 52 weeks for maternity leave with 39 weeks of the leave being paid.
• Men are entitled to up to two weeks of paternity leave.

Learn more about how Skuad’s PEO services in the United Kingdom can help your business to grow by booking a demo today!

What does it cost to build a team in the United Kingdom?

Setting up a business in the United Kingdom means paying the price of the United Kingdom’s company registration and incorporation fees. In the first year, incorporation will cost you at least £950, but when you factor in engagement costs, opening a corporate bank account, and legal fees, you can end up spending upwards of £16,350 — and that’s not including the cost of your accommodations and the office space you’ll need to purchase for your entity and in-house teams.

PEO pricing is much more agreeable, although PEO service fees will vary among the different providers and packages they offer. With Skuad, you can actually get started for free to see how you like it and cancel at any time you wish.

If you’re looking to begin onboarding and paying international employees immediately, our PEO service packages start at as little as $19. For enterprise-level businesses looking for a PEO and an EOR in the United Kingdom, we’ll work out a custom price for you (just get in touch with our sales team).

When you’re ready to digitally expand your business in the United Kingdom or anywhere else in the world, we’ll be here to help. Book a demo now to see what Skuad’s global PEO solutions can do for you!