UK Hiring Post-Brexit: Right to Work, IR35, and Sponsorship
Brexit fundamentally changed hiring in the UK. EU nationals no longer have automatic right to work, the immigration system has been overhauled, and employment law is diverging from the EU framework. For foreign companies hiring in the UK, understanding these changes is essential.
This guide covers the key aspects of UK hiring in 2026 — from right to work checks and IR35 to sponsorship requirements and employment law.
The UK Talent Market in 2026
Key Statistics
- Population: 68.3 million
- Labor force: 34.7 million
- Unemployment rate: 3.8% (ONS, 2026)
- Tech talent: 3.2M+ digital tech workers
- Key hubs: London, Manchester, Edinburgh, Bristol, Cambridge
- Remote work: 44% work hybrid (CIPD, 2026)
Post-Brexit Talent Market
EU workers declining: The share of EU-born workers in the UK has decreased from 7.1% (2019) to 5.8% (2026), creating gaps in some sectors.
Points-based immigration: The UK’s new immigration system prioritizes skills over nationality, making it easier for some non-EU workers but harder for EU workers.
Salary expectations rising: Tight labor markets and cost-of-living pressures have pushed UK salary expectations higher.
Right to Work Checks
What Is a Right to Work Check?
Every UK employer must verify that each employee has the legal right to work in the UK before they start employment. This is a legal requirement — employing someone without the right to work carries severe penalties.
How to Conduct Right to Work Checks
Option 1: Manual check
- Employee provides original documents (passport, visa, biometric card)
- Employer verifies documents in the employee’s presence
- Employer takes copies and records the date of check
Option 2: Home Office online check
- Employee provides a share code (generated via gov.uk)
- Employer verifies status via the online checking service
- No physical documents needed
Option 3: Identity Service Provider (IDSP)
- Use an approved digital identity verification service
- Acceptable for British and Irish citizens with valid passports
- Must be on the government’s approved list
Consequences of Non-Compliance
- Civil penalty: Up to £60,000 per illegal worker
- Criminal prosecution: Knowing employment of illegal workers carries up to 5 years imprisonment
- Sponsor license revocation: If you hold a sponsor license
EU Nationals Post-Brexit
EU nationals who were living in the UK before December 31, 2020, needed to apply to the EU Settlement Scheme (EUSS). Those with settled or pre-settled status have right to work.
EU nationals arriving after January 1, 2021, need a visa — just like non-EU nationals.
The Points-Based Immigration System
Skilled Worker Visa
The main route for hiring foreign workers:
Requirements:
- Job at appropriate skill level: RQF Level 3+ (A-level equivalent)
- English language: B1 level (CEFR) or higher
- Salary threshold: £38,700/year or the “going rate” for the role (whichever is higher)
- Sponsor license: Employer must hold a valid sponsor license
Process:
- Employer obtains sponsor license
- Employer issues Certificate of Sponsorship (CoS)
- Worker applies for visa
- Decision typically within 3 weeks
Cost:
- Sponsor license: £536 (small/charity) or £1,476 (medium/large)
- Certificate of Sponsorship: £239 per worker
- Visa fee: £719–£1,420 (depending on length)
- Immigration Health Surcharge: £1,035/year per worker
Global Talent Visa
For leaders and potential leaders in science, engineering, humanities, medicine, digital technology, and arts:
- No job offer required
- No sponsor required
- Fast-tracked for recognized leaders
- Can lead to settlement after 3 years
Scale-Up Visa
For fast-growing companies sponsoring high-skilled workers:
- Company must be a recognized scale-up
- Worker must meet salary threshold
- More flexible than Skilled Worker visa
Graduate Visa
For international students who’ve completed a degree in the UK:
- 2-year visa (3 years for PhD)
- No sponsor required
- Can work in any role
- Not extendable but can switch to other visa categories
IR35: Off-Payroll Working Rules
What Is IR35?
IR35 is tax legislation designed to combat “disguised employment” — where workers operate as contractors through intermediaries (usually their own limited company) but are effectively employees.
How IR35 Works
For medium and large companies (the “off-payroll working rules”):
- The hirer determines the employment status of each contractor
- If deemed “inside IR35,” the contractor must be paid through payroll (with tax and NICs deducted)
- If deemed “outside IR35,” the contractor can continue to invoice through their company
For small companies:
- The contractor determines their own status
- Less administrative burden
Determining IR35 Status
Key factors:
- Control: Does the hirer control what, how, when, and where the work is done?
- Substitution: Can the contractor send a substitute?
- Mutuality of obligation: Is the hirer obliged to offer work, and the contractor obliged to accept it?
Tools: HMRC’s Check Employment Status for Tax (CEST) tool provides guidance, though it’s not legally binding.
Consequences of Getting IR35 Wrong
- Tax liability: Employer pays the tax and NICs that should have been deducted
- Interest and penalties: HMRC can charge interest on unpaid amounts
- Reputational risk: High-profile IR35 cases have damaged company reputations
Best Practices
- Assess each contractor individually — don’t blanket-assess
- Document your determination — keep records of how you reached your decision
- Review regularly — circumstances change; reassess periodically
- Use HMRC’s CEST tool as a starting point
- Seek specialist advice for borderline cases
UK Employment Law
Key Legislation
Employment Rights Act 1996: Core employment rights including unfair dismissal, redundancy, and written statement of employment.
Equality Act 2010: Prohibits discrimination based on protected characteristics.
Working Time Regulations 1998: Maximum 48-hour week (opt-out available), 28 days paid leave, rest breaks.
Key Employment Rights
- Unfair dismissal protection: After 2 years’ service
- Redundancy pay: After 2 years’ service
- Notice periods: Statutory minimum of 1–12 weeks depending on tenure (contracts often specify longer)
- Paid holiday: 28 days (including bank holidays) for full-time workers
- Maternity leave: 52 weeks (39 weeks paid)
- Paternity leave: 2 weeks paid
- Shared parental leave: Up to 50 weeks
- Flexible working: Right to request from day one
National Minimum Wage
| Category | Rate (2026) |
|---|---|
| National Living Wage (21+) | £12.21/hour |
| 18–20 | £10.00/hour |
| Under 18 | £7.55/hour |
| Apprentice | £7.55/hour |
Salary Benchmarks
Annual Salaries (2026, in GBP)
| Role | London | Manchester | Edinburgh | Bristol |
|---|---|---|---|---|
| Software Engineer | £70,000 | £55,000 | £52,000 | £55,000 |
| Senior Engineer | £95,000 | £75,000 | £70,000 | £72,000 |
| Engineering Manager | £120,000 | £95,000 | £90,000 | £92,000 |
| Product Manager | £85,000 | £65,000 | £60,000 | £62,000 |
| Data Scientist | £75,000 | £58,000 | £55,000 | £56,000 |
Note: London salaries are typically 20–30% higher than other UK cities.
Setting Up in the UK
Entity Options
Private Limited Company (Ltd): Most common. Simple to set up, limited liability.
- Registration: 24 hours online via Companies House
- Cost: £12 online, £40 by post
- Requirements: At least 1 director, 1 shareholder, registered office
Branch office: Extension of foreign company.
- Must register with Companies House
- Subject to UK tax on UK profits
EOR: Deel, Remote, Papaya Global, and others operate in the UK.
- Fastest entry option
- Handles IR35, right to work, and payroll compliance
Payroll
- PAYE: Real-time tax and NICs reporting
- Employer NICs: 13.8% on earnings above £9,100/year
- Apprenticeship levy: 0.5% of payroll (for employers with payroll >£3M)
- Auto-enrollment pension: 3% employer minimum contribution
FAQ
Do I need a sponsor license to hire EU nationals?
Yes, if they arrived after January 1, 2021, and don’t have settled/pre-settled status under the EU Settlement Scheme. EU nationals who were in the UK before Brexit may have right to work through EUSS.
How does IR35 affect my hiring decisions?
If you’re a medium or large company, you must assess each contractor’s IR35 status. Contractors deemed “inside IR35” must be paid through payroll. This can significantly increase costs and may affect contractor availability.
What’s the total cost of hiring in the UK?
Add 15–20% to gross salary for employer costs: Employer NICs (13.8%), auto-enrollment pension (3%), and apprenticeship levy (0.5% if applicable). A £70,000 salary employee costs approximately £85,000–£90,000 fully loaded.
How long does it take to get a sponsor license?
Typically 8–12 weeks. You can apply online via gov.uk. Prepare documentation including proof of trading, HR systems, and recruitment processes.
Can I hire remote workers in the UK without a local entity?
Yes, through an EOR. This is the fastest way to start hiring in the UK. For 5+ employees, setting up a Ltd company is usually more cost-effective.
Ready to Transform Your Hiring?
The UK remains one of the world’s top talent markets. With the right understanding of post-Brexit requirements, you can build a successful UK team.
Try EasyHire AI free or Book a demo to see how our platform supports hiring in the UK.