Hiring Your First Employee in the UK: Step by Step

Taking on your first employee is a big step, and the UK legal checklist can look daunting. This guide is for UK employers hiring for the first time in the 2026/27 tax year, and it puts every task in the order you need to do it, from setting the pay to the first payday and beyond.

A smiling woman shaking hands with another person across a table during a job interview — The handshake is the easy part. The paperwork before the first payday is where first-time employers need a plan.

Key takeaways

Pay at least the minimum wage: from 1 April 2026 the National Living Wage for workers aged 21 and over is £12.71 an hour.
Do a right to work check before the person starts, and check every new hire the same way.
Register as an employer with HMRC before the first payday, and arrange employers' liability insurance from day one.
Give a written statement of employment particulars on the first day and set up auto-enrolment for a workplace pension.
Budget for employer National Insurance and pension contributions on top of wages.

The step from sole trader or solo director to employer changes your legal responsibilities overnight. You become responsible for collecting tax for HMRC, providing a safe workplace, enrolling staff in a pension and treating them fairly under employment law. None of it is difficult on its own, but the tasks have to happen in a particular order, and missing one can bring penalties.

This guide walks through the process in the order most first-time employers follow. It is general information, not legal or tax advice. Rates and rules change, so confirm the details on GOV.UK or with an accountant or employment adviser before you act.

Step 1: Decide the role, the hours and the pay

Start with what you actually need. Is this a full-time permanent role, part-time hours, a fixed-term contract or something seasonal? Write a short job description, because you will need the details for the job advert, the written statement and the payroll setup.

Then set the pay. You must pay at least the National Minimum Wage or National Living Wage for the worker's age. These are the rates from 1 April 2026:

Age or category	Hourly rate from 1 April 2026
21 and over (National Living Wage)	£12.71
18 to 20	£10.85
Apprentice rate (under 19, or 19 and over in the first year of the apprenticeship)	£8.00
Under 18	Also increased: check the current rate on GOV.UK

Employers who underpay must pay back arrears and can be fined and publicly named by the government, so check the rate for every worker, especially around birthdays that move someone into a higher band. Remember that deductions for uniforms or equipment can push effective pay below the minimum.

Pro tip

Before you advertise, work out the full cost of the role, not just the salary. Add employer National Insurance (15% on earnings above £5,000 a year), at least 3% employer pension contributions on qualifying earnings, insurance and equipment. If the numbers only work at the salary alone, the role is not yet affordable.

Step 2: Recruit fairly and check the right to work

When you advertise and interview, avoid questions about age, family plans, health or other protected characteristics unless there is a genuine, lawful reason. Focus on skills and experience, and keep brief notes of why you chose the successful candidate.

Right to work checks

Before your new employee starts, you must check they have the right to work in the UK. There are three ways to do it:

A manual document check: you see the original documents in the person's presence, check they are genuine and keep copies.
A Home Office online check: the person gives you a share code, which you use to view their status online.
A digital check through an identity service provider (IDSP): available for British and Irish passports.

A correct check, done before employment starts, gives you a statutory excuse if the person later turns out not to have the right to work. Keep copies for the length of the employment plus 2 years. Since February 2024, the civil penalty for employing someone without the right to work can be up to £45,000 per illegal worker for a first breach and up to £60,000 for repeat breaches.

Common mistake

Only checking people who "seem" foreign. This is discrimination, and it also leaves gaps in your protection. Check every new hire in the same way, including British candidates, before their first day.

DBS checks only where needed

A criminal record check through the Disclosure and Barring Service is only appropriate if the role requires it, for example work with children or vulnerable adults. Do not request one as a routine step for every job.

Step 3: Register as an employer and set up payroll

You must register as an employer with HMRC before the first payday. You can register up to 4 weeks before you pay anyone, and it can take some time for your PAYE reference to arrive, so do not leave it to the last week.

Next, choose how you will run payroll. Payroll in the UK runs through Real Time Information (RTI): you send HMRC a Full Payment Submission on or before each payday. You need payroll software that HMRC recognizes. HMRC Basic PAYE Tools is free for employers with fewer than 10 employees. Paid options include BrightPay, Sage, Xero, IRIS and QuickBooks; compare current plans, as features and prices change. Many small employers hand payroll to their accountant instead.

4 weeks How far ahead of the first payday you can register as an employer with HMRC HMRC / GOV.UK

Step 4: Get employers' liability insurance

Employers' liability insurance is a legal requirement for most employers as soon as you take someone on. It covers claims from employees who are injured or become ill because of their work. You need at least £5 million of cover from an authorized insurer, and you must be able to show your certificate. If you have business insurance already, ask your broker to add it. Some family businesses that employ only close relatives may be exempt; check GOV.UK if this might apply to you.

Two women sitting at a table talking beside a large window overlooking city buildings — Walk your new starter through the written statement, the handbook and the pension on day one.

Step 5: Prepare the paperwork for day one

Your new employee has a legal right to a written statement of employment particulars from their first day. It sets out the main terms: job title, start date, pay, hours, holiday, place of work, notice, probation and other core details. Many employers combine it with a contract of employment.

This is also the moment to set out your basic policies, even if they are short. At minimum, have clear disciplinary and grievance procedures that follow the Acas Code of Practice, a sickness absence process and a holiday booking process. Remember that Statutory Sick Pay is payable from the first day of sickness from 6 April 2026. Once you have 5 or more employees, you also need a written health and safety policy.

Health and safety basics

Even with one employee, you must assess the risks in your workplace and take reasonable steps to control them. Write down what could cause harm, who could be harmed and what you do about it. Display the health and safety law poster or give your employee the equivalent leaflet.

Step 6: Set up the workplace pension

Under auto-enrolment, you must put eligible workers into a workplace pension scheme. Eligible workers are those aged 22 to State Pension age who earn over £10,000 a year. Others can ask to join, and in some cases you must contribute for them too.

The minimum total contribution is 8% of qualifying earnings, and you as the employer must pay at least 3% of that.
Your duties start on the day your first employee starts work.
You must complete a declaration of compliance with The Pensions Regulator within 5 months of that duties start date.
Employees can opt out, but you must not encourage or pressure them to do so.
Every 3 years you must re-enroll staff who have opted out.

The band of qualifying earnings is set each year, so check The Pensions Regulator's website for the current figures.

Worked example

For example, imagine Priya runs a small bakery and hires Tom, aged 24, for 30 hours a week at £13 an hour, which is above the £12.71 National Living Wage. His annual pay is about £20,280, so he is over the £10,000 auto-enrolment trigger and must be enrolled. Priya registers with HMRC three weeks before his start date, checks his passport in person and keeps a copy, adds employers' liability cover to her policy, gives him a written statement on day one and chooses a pension provider. Her payroll software calculates employer National Insurance at 15% on his earnings above £5,000, and she may be able to offset that through the Employment Allowance. These figures are illustrative; Priya's accountant checks the exact numbers.

Step 7: Run your first payday and keep records

On or before each payday, your payroll software sends a Full Payment Submission to HMRC showing what you paid and what you deducted. Give your employee a payslip every time. Then pay what you owe HMRC for PAYE and National Insurance by the 22nd of the next tax month if you pay electronically, or the 19th if you pay by post. Small employers expecting to pay less than £1,500 a month can pay quarterly.

Two more points to note:

Employment Allowance: most employers can reduce their employer National Insurance bill by up to £10,500 a year. You claim it through your payroll software. A company whose only employee paid above the secondary threshold is a director cannot claim.
Records: keep payroll records for 3 years and right to work copies for the employment plus 2 years.

First UK employee checklist

Define the role, hours and pay, at or above the minimum wage for the worker's age
Recruit fairly and keep short notes on your decision
Complete a right to work check before day one and keep copies
Request a DBS check only if the role requires one
Register as an employer with HMRC (up to 4 weeks before the first payday)
Choose HMRC-recognized payroll software or an accountant
Arrange employers' liability insurance with at least £5 million of cover
Prepare the written statement of employment particulars for day one
Write a health and safety risk assessment
Set up a workplace pension and diarize the declaration of compliance
Claim the Employment Allowance through payroll if eligible

Frequently asked questions

Do I need to register with HMRC if I pay my employee below the tax threshold?

Often yes. You generally need to register as an employer if anyone you pay earns above the lower earnings limit, receives expenses or benefits, or has another job or a pension. Check the current conditions on GOV.UK, because the answer depends on the person's circumstances.

Can I hire someone as self-employed instead?

Only if the working relationship really is self-employment. Employment status depends on how the work is done in practice, such as who controls it and whether the person can send a substitute, not on what the contract says. Getting it wrong can mean back taxes and employment rights claims.

How long is the probation period?

There is no set legal length; many employers use three to six months. From 1 January 2027 the qualifying period for unfair dismissal is scheduled to fall from two years to six months, so run probation reviews properly and keep notes.

What if my first employee is my spouse or a family member?

Family members are treated like any other employee for minimum wage, payroll and pension purposes in most cases. Employers' liability insurance rules have a limited exemption for close family, so check GOV.UK.

The bottom line

Hiring your first employee in the UK comes down to a fixed sequence: set lawful pay, check the right to work, register with HMRC, insure, give the written statement, enroll in a pension and run payroll on time. Do the tasks in that order and nothing will catch you out on the first payday.

If you want support, a good accountant can handle registration and payroll, and Acas and GOV.UK cover most employment questions for free. Spend the time upfront and your first hire will be the start of a team, not the start of a headache.