How to hire your first employee in the UK: the complete legal checklist

Taking on your first employee is a big step — and it comes with a short list of things the law simply requires you to do. The good news: there are only a handful, they happen in a sensible order, and none of them are as hard as they sound. This guide walks you through all of it in plain English, with the exact law behind each step so you can see it's real.

Are you actually an employer?

Yes — the moment someone works for you under your control, in return for pay, you're their employer in the eyes of the law.

Before anything else, you need to be sure of one thing: is the person you're taking on an employee, a worker, or genuinely self-employed? It matters because each one gets a different set of rights and hands you a different set of duties. Call someone self-employed when the law says they're an employee, and years later you can owe back-tax, holiday pay and a penalty.

Three questions decide it: must they do the work themselves, do you control how and when it's done, and is there a two-way promise of ongoing work? If the answer to those is yes, you almost certainly have an employee.

Register for PAYE with HMRC — before their first payday

You must register as an employer with HMRC before the first time you pay your new employee — and no more than two months in advance.

PAYE (Pay As You Earn) is how you collect Income Tax and National Insurance from your employee's wages and pass it to HMRC. You register online, usually get your employer reference within about five working days, and then run payroll each time you pay them.

This is also where the true cost of employing someone starts to show. On top of the wage you pay employer's National Insurance at 15% on earnings above the £5,000 secondary threshold — though the Employment Allowance of up to £10,500 a year usually wipes that out entirely for your first employee.

verified Rates current as of config v2026.2

What must the employment contract say?

By law you must give a written statement of the main employment terms on or before the employee's first day.

People often think a contract is a nice-to-have you can sort out later. It isn't. The law requires a written statement of particulars — the main terms of the job — and it has to be in the employee's hands on or before day one. At a minimum it must include:

• check_circleThe names of you and the employee, and the start date.
• check_circleThe pay, how often it's paid, and the hours they'll work.
• check_circleHoliday entitlement, sick pay and any notice periods.
• check_circleThe job title or a brief description of the work, and where it's done.

Checking their right to work

You must check every new employee has the legal right to work in the UK before their first day — and keep the evidence.

This one is not optional and there's no small-employer exemption. Before someone starts, you check that they're allowed to work in the UK — either online through the Home Office service, or by looking at original documents and keeping a clear, dated copy. Do the check properly and you have a statutory excuse: your legal defence if it later turns out they didn't have the right to work.

Pension, insurance and paying them right

You'll likely need to enrol them in a workplace pension, you must hold employer's liability insurance, and you must pay at least the National Living Wage.

Workplace pension. If your employee is aged 22 to State Pension age and earns over £10,000 a year, you must automatically enrol them and pay in at least 3% of their qualifying earnings.

Employer's liability insurance. You're legally required to hold at least £5 million of cover from the day your first employee starts. Not having it can cost you £2,500 for every day you're uninsured.

Minimum pay. Anyone aged 21 or over must be paid at least the National Living Wage — £12.71 an hour from 1 April 2026. Paying a penny less is a criminal offence and HMRC names employers who do.

verified Rates current as of config v2026.2 · 1 Jul 2026

The full 13-point checklist

Here's every legal step, in the order you'll actually do them.

• check_circleConfirm employment status — employee, worker or self-employed.
• check_circleRegister as an employer with HMRC for PAYE.
• check_circleSet up payroll — software or a payroll provider.
• check_circleAgree the pay — at or above the National Living Wage.
• check_circleWrite the contract — the written statement of particulars.
• check_circleGive it by day one — on or before their first working day.
• check_circleCheck right to work — before they start, evidence kept.
• check_circleAssess for a pension — auto-enrol if they qualify.
• check_circleBuy employer's liability insurance — at least £5 million.
• check_circleTell HMRC each payday — real-time reporting.
• check_circleProvide payslips — itemised, every time you pay.
• check_circleKeep records — pay, tax and right-to-work evidence.
• check_circleStay current — rates and rules change; keep watching.