For many European companies, the United Kingdom has traditionally been seen as one of the easiest markets in which to hire. Compared with much of continental Europe, the UK labour market has long been viewed as flexible, relatively straightforward, and quick to navigate.
In 2026, that perception still holds true to an extent. However, the UK employment landscape is becoming more complex. New employment law reforms, higher employer costs, and stricter immigration rules are materially changing what successful UK hiring looks like.
From our experience supporting European SMEs and mid-sized groups hiring in the UK, one reality consistently emerges: companies rarely struggle because there is no talent available. They struggle because the true cost, structure, and compliance requirements of UK hiring are only discovered once recruitment has already begun. A curious habit, really. Businesses spend months searching for the right candidate and approximately six minutes considering who is actually going to employ them, pay them, insure them, and keep the government satisfied.
From April 2026, several important employment changes are taking effect across the UK. While none of these changes make UK hiring impossible, they do increase the level of preparation required before a business hires its first employee.
The most significant changes include:
Statutory Sick Pay beginning from the first day of sickness rather than the fourth
Removal of the lower earnings threshold for eligibility in certain cases
Greater day-one rights for paternity leave, parental leave, and other family-related entitlements
Increased expectations around compliant contracts, policies, onboarding, and probation processes
For employers, this means that employees may become entitled to certain protections and benefits much earlier than before. As a result, businesses hiring in the UK now need stronger employment documentation, more robust onboarding procedures, and a clearer understanding of the legal obligations attached to each hire.
While the legal changes are important, what matters most for employers is how they affect day-to-day operations and costs.
Statutory Sick Pay from day one increases the cost of short-term absence, particularly for smaller businesses hiring only one or two people in the UK. Family leave rights now apply much earlier in the employment relationship, meaning employers must ensure that contracts and internal policies are compliant from the outset.
Probation periods are also becoming more important. With greater employment rights arising earlier, businesses need to ensure that they assess performance, fit, and long-term suitability properly during the first months of employment.
Employment contracts and handbooks that may have been sufficient in previous years are increasingly no longer adequate. We regularly see European businesses attempt to use translated versions of their domestic contracts for UK hires. In practice, these documents often fail to reflect UK requirements around notice periods, holiday entitlement, probation, confidentiality, restrictive covenants, sickness, family leave, and disciplinary procedures.
One of the most common mistakes we see is businesses budgeting only for salary.
In practice, the cost of employing someone in the UK is significantly higher than the gross salary alone.
In 2026, employers typically need to account for:
Employer National Insurance contributions of approximately 15%
Minimum employer pension contributions of 3%
Payroll setup and administration
Employment contracts and employee handbook preparation
Potential private medical insurance, car allowance, bonus, or other benefits
As a result, a UK employee with a salary of £50,000 may in reality represent a total employer cost of approximately £59,000 to £61,000 per year before any additional benefits are included.
A £70,000 employee may represent a total employer cost closer to £82,000 to £85,000. Human beings have an extraordinary talent for being surprised by arithmetic they could have discovered two months earlier with a calculator and a cup of tea.
For businesses hiring only one or two people initially, these additional costs often materially affect the original business case.
For many European companies, the first instinct is to relocate an existing employee into the UK rather than hire locally.
In 2026, that is often more difficult and expensive than expected.
Since Brexit, EU nationals generally require the right to work in the UK unless they already hold settled or pre-settled status or another visa category. Relocating an employee may therefore require:
A Skilled Worker visa application
Immigration Skills Charge and visa fees
Immigration Health Surcharge costs
Ongoing sponsorship and reporting obligations
For a single relocated employee, total immigration and sponsorship costs can easily exceed £8,000 to £10,000.
Businesses therefore need to decide early whether it is more appropriate to:
Hire local UK talent
Relocate an existing employee
Use an interim commercial representative or consultant
Delay relocation until the UK business has been validated
We frequently see recruitment processes delayed because a business identifies the ideal candidate and only afterwards discovers that it has no UK sponsor licence in place. A splendid strategy, in the same way that buying a plane ticket before checking whether you have a passport is technically a strategy.
One of the most important decisions for companies entering the UK is determining who will legally employ the individual.
For many businesses, the choice is between creating a UK subsidiary or using an Employer of Record.
An Employer of Record is often appropriate where a company:
Wants to hire quickly
Is employing only one to three people initially
Wishes to test the UK market before establishing a local entity
Does not yet want the cost and administrative burden of creating a subsidiary
By contrast, a UK subsidiary is often more appropriate where a company:
Expects to build a larger UK team
Plans a long-term UK presence
Needs direct control over payroll, contracts, and management
Requires local invoicing, warehousing, or broader operational activity
An Employer of Record can allow a company to hire within days or weeks. However, it may become more expensive over time as headcount increases.
A subsidiary provides greater long-term flexibility and control, but also requires company formation, payroll registration, pension setup, accounting, tax compliance, and ongoing administration.
The right solution depends on the company’s long-term ambitions, expected headcount, and the speed at which it wishes to enter the market.
European companies entering the UK often make the same mistakes:
Beginning recruitment before deciding whether to use a subsidiary or Employer of Record
Waiting until the final stages of the process to think about payroll, contracts, or pensions
Assuming that a European employment contract can simply be translated into English
Planning to relocate an employee without first considering sponsorship requirements
These issues rarely prevent a business from hiring in the UK. However, they frequently delay recruitment by several weeks or months and create avoidable cost and frustration.
Successful UK hiring is no longer simply a question of finding the right candidate. It requires a realistic understanding of cost, compliance, immigration, and employment structure before recruitment begins.
The businesses that hire successfully in the UK are generally those that prepare in advance. They understand the likely employer costs, they choose the right employment model early, and they ensure that payroll, contracts, pensions, and immigration arrangements are already in place before making an offer.
By contrast, businesses that leave these questions until the end of the process often discover that the simplest part was finding the candidate. Everything afterwards becomes a slow administrative obstacle course populated by forms, deadlines, and institutions with an almost artistic commitment to moving slowly.
Expandys supports European companies with every aspect of UK hiring, from the first recruitment decision through to operational implementation.
We help clients:
What differentiates our approach is that we combine strategic advice with hands-on implementation, ensuring that companies can move quickly without discovering costly problems later.
Whether you are preparing to recruit your first UK employee or reassessing your current employment structure, a clear and realistic approach is essential in 2026.
We typically begin with a UK Hiring Readiness Assessment, designed to clarify costs, identify legal and immigration risks early, and determine the most appropriate employment model.
Contact us to discuss your UK hiring plans:
📧 uk@expandys.com
🌐 https://www.expandys.com