Your first employee outside the UK

The offer is agreed and the only question left looks administrative: how do we pay them? It is not administrative, and the contract you have used for every UK hire has stopped doing the job.

The UK–UAE corridor · Part of Outsourced General Counsel, Dubai

Somebody good has said yes, and they live in Dublin, or Dubai, or Denver. The offer is agreed, the start date is three weeks away, and the only question left looks administrative: how do we pay them?

It is not administrative. The moment a person does their work in another country, that country's employment law starts to apply to them, its tax authority starts to take an interest in what you are doing there, and the contract you have used for every UK hire stops doing the job you think it is doing. None of that makes the hire a bad idea. It makes it a decision with a shape, and the shape is worth seeing before you sign.

Capacity, or a base?

Everything downstream follows from one question: is this person a capability you happen to have found abroad, or the first foothold of a business you intend to run there?

If it is capacity — a senior engineer who will not move, a salesperson covering a time zone, a designer you would hire anywhere — an employer of record is usually the right instrument. The provider already has an entity in the country. They employ the person on paper, run local payroll, make the statutory deductions, and invoice you. You direct the work. Setup is measured in weeks rather than months, and you can stop without unwinding a company.

If it is a base — you intend to sell there, sign customers there, hold a licence there, hire a second and a third person there — the employer of record becomes an expensive way of delaying something you will have to do anyway. A local entity gives you the ability to contract in your own name, to hold the licence, to open a bank account, and to build a payroll rather than rent one.

The mistake is not choosing wrongly. It is choosing by cost per month and discovering eighteen months later that the commercial plan needed a structure the employment arrangement cannot support.

What an employer of record does not do

It employs the person. It does not take on the things you probably care about most.

It rarely assigns intellectual property to you in the way you need. The provider's standard contract typically vests the work product in the provider, who then passes it on — and whether that chain survives a buyer's diligence depends entirely on the wording, which is theirs and not yours. If the person is writing code, designing product, or building anything you intend to own, the assignment terms are the first clause to read and usually the first to renegotiate.

It does not protect your confidential information on your terms, and it does not give you restrictive covenants that mean anything locally. Many jurisdictions will not enforce a non-compete at all, some require it to be paid for, and almost none will enforce the twelve-month radius clause copied out of a UK template.

It does not answer where your business is now considered to be trading. That is a tax question, and it is the one that surprises founders most.

The contract has to be rebuilt, not translated

A UK employment contract is a set of choices made against a UK backdrop: statutory notice, unfair dismissal after two years, holiday accrual, sick pay, a probationary period that means what everyone assumes it means. Change the country and the backdrop changes underneath the same words.

Notice periods and termination rights are usually mandatory and local. In much of Europe, dismissal requires a reason a court will accept and a process you have to follow. In the UAE, the relationship runs on limited-term contracts, gratuity accrues from day one, and the visa that lets the person work is sponsored by the employing entity — so the employment decision and the immigration decision are the same decision.

Holiday, public holidays and working hours are local. Pay frequency and payslip content are local. Data protection obligations attach to where the person and the data are, not to where you incorporated.

And the clauses you rely on commercially — IP assignment, confidentiality, restrictive covenants, garden leave — need to be drafted to be enforceable there. Choosing English law in the contract does not lift the local employment protections; it mostly just adds an argument about which court hears the dispute.

What actually goes wrong

Three patterns recur, and none of them surface on day one.

The first is IP. A contractor or an employer-of-record employee builds a core part of the product, the assignment chain is defective under local law, and it emerges in diligence three years later when the buyer's lawyers ask for the chain of title. The fix at that point costs a retention or a price chip, and sometimes requires the goodwill of someone who left on bad terms.

The second is permanent establishment. A salesperson abroad negotiates and habitually concludes contracts in your name. That can create a taxable presence for your UK company in their country, with filing obligations and a share of profit attributed to it, whether or not you registered anything.

The third is the exit. Somebody has to go, the UK instinct is a short notice period and a settlement agreement, and the local law requires a reason, a process, a works council, or a statutory payment. The cost of getting this wrong is rarely the payment; it is the four months of management attention.

Where a specialist is needed

Two parts of this belong with specialists, and we bring them in as part of the work rather than handing you a list of names.

Tax is one: permanent establishment, payroll withholding, social security co-ordination and any treaty position are for a tax adviser qualified in both jurisdictions, and the answer changes with what the person actually does, not with their job title. Immigration is the other: visas, sponsorship and work authorisation are local, time-bound and unforgiving of assumptions.

Local employment law advice sits alongside both, and for a first hire in an unfamiliar country it is worth buying properly once rather than three times badly.

What Dinmore Bell does with it

We take ownership of the contract position. That means deciding with you between an employer of record and an entity on commercial grounds rather than price alone; reading the provider's agreement properly, particularly the IP and confidentiality chain, and negotiating what needs changing; commissioning and co-ordinating local employment, tax and immigration input so it arrives as one answer rather than three; and building a contract set for that country that you can use again for the second and third hire without starting over.

The register then holds the renewal dates, the notice periods, the visa expiries and the review points, and somebody is paid to act on them rather than report them.

The first hire abroad is where the pattern is set. Done properly once, the next four are quick.