Hiring your
first employee.

What has to be in place before day one?

1. 1

   Check their right to work in the UK

   Every employer must check, for every employee, before employment starts. Done correctly it gives you a statutory excuse against a civil penalty; skipped, it does not matter that you did not know.

2. 2

   Give written terms of employment

   A written statement of particulars is due on or before the first day: job, pay, hours, holiday, notice, place of work. It is a legal requirement, not a formality, and it is also the document that settles arguments later.

3. 3

   Take out employers' liability insurance

   Compulsory from the day your first employee starts, with minimum cover of £5 million, and the certificate has to be accessible to staff. The penalty for not holding it is charged per day.

4. 4

   Register as an employer with HMRC

   Do this before the first payday — the reference arrives by post. The payroll guide covers what happens after that.

5. 5

   Enrol them in a workplace pension

   Assess them from their first day and enrol them if they qualify. You cannot ask someone to opt out, and encouraging it is an offence.

Employee, worker or self-employed?

This is the decision everything else follows from, and it is not yours to declare. Calling someone self-employed does not make them self-employed — the test is what actually happens: who controls the work, whether they can send a substitute, whether there is an obligation to offer and accept work.

Employees get the full set of rights: notice, statutory sick pay, family leave, redundancy. Workers sit in between, with holiday pay and minimum wage but not the rest. Genuinely self-employed contractors invoice you and handle their own tax.

Getting it wrong is expensive in both directions — unpaid PAYE and National Insurance going back years on one side, an employment tribunal claim on the other. If the arrangement is anything other than obvious, this is the point to pay for half an hour of advice.

What does an employee actually cost?

• —The salary, which has to be at least the National Minimum or National Living Wage for their age — the rates change every April, so check the current ones on gov.uk.
• —Employer National Insurance on top of the salary, not out of it.
• —The employer pension contribution for anyone automatically enrolled.
• —Paid holiday: 5.6 weeks a year for a five-day week, including bank holidays if you count them within it.
• —Statutory sick pay, and statutory family leave when it arises.
• —Employers' liability insurance, plus whatever equipment, training and space the job needs.

The first few months

Use a probation period, and actually use it — a review at the end of month one and month three is worth more than a clause nobody looks at. It is far kinder to end something early and clearly than to let it drift.

Keep records from the start: hours, holiday taken, absence, anything discussed about performance. Not because you expect a problem, but because the version of you dealing with one in eighteen months will have no memory of last March.

Qualifying periods for some employment rights are under active reform, so treat any figure you remember about how long someone must be employed before a right applies as needing a check on gov.uk before you rely on it.