Hiring your first employee in the UK: legal requirements for business owners

Who this guide is for

You are about to hire your first employee in the UK, or you recently did and realised the checklist is longer than you expected. You might have searched "first employee legal requirements UK", "what do I need before hiring staff", or "employer obligations UK small business".

This is a practical sequence in plain language, not legal advice. For complex arrangements (visa sponsorship, share schemes, offshore workers, regulated activity), instruct a solicitor and accountant before offer.

First hire is a milestone. Getting baseline compliance right makes hire two through twenty cheaper and calmer.

Overview: before offer to first pay day

Use alongside onboarding compliance checklist for repeatable process as you grow.

Before you offer the job

Register as an employer with HMRC

You need a PAYE scheme before the first payday. Allow lead time: HMRC registration can take several working days. Your accountant can register on your behalf.

You will need:

• Company or business details
• Expected first pay date
• Number of employees (estimate is fine)

How soon must I register PAYE? Before first payday. Start early; do not pay "cash in hand" while waiting.

Employers' liability insurance

For almost all employers, Employers' Liability (EL) insurance is mandatory (minimum £5 million cover). Display the certificate where employees can read it (physical workplace or accessible digital copy for remote staff).

Without EL, you can face fines up to £2,500 per day. Insurers ask about headcount and industry risk when you update policy.

Decide employment status correctly

Not everyone who works for you is an employee. Genuine contractors follow different tax and rights rules. Getting status wrong creates IR35, employment tribunal, and HMRC exposure.

Indicators of employment (simplified):

• You control when and how work is done
• You provide tools and integrate them into team
• They cannot send a substitute freely
• Work is ongoing, not project-limited

If it walks like employment, calling it "freelance" does not help.

Workplace pension planning

Identify a workplace pension scheme provider (NEST is common starter option). Auto-enrolment duties trigger when eligible jobholders meet criteria. Setup before first pay run reduces panic.

Before their first day of work

Right to work check

Complete a right-to-work check before employment begins. Employment begins when work is performed, including paid or unpaid trial shifts if work is done.

Record:

• Document type or share-code outcome
• Date of check
• Name of checker
• Re-check date if time-limited permission

Repeat checks when required. See right to work check software UK guide.

Common first-hire mistake: Trial shift without RTW. Still illegal working risk.

Written contract or written particulars

Issue written statement of particulars on or before day one. Most owners use:

• Statement of particulars (legal minimum)
• Full employment contract (recommended for clarity)

Include:

• Job title and description
• Pay rate and frequency
• Hours and place of work
• Holiday entitlement and accrual method
• Notice periods
• Probation length if used
• Reference to disciplinary and grievance procedure (handbook)

Do not copy US templates with "at-will employment" language.

DBS and sector checks (if applicable)

Roles in care, education, or regulated activity may need DBS. Food businesses need hygiene training plan. Construction may need CSCS. Match checklist to sector table in onboarding guide.

DBS timing rules apply; do not blanket-check all roles without legal basis.

First month essentials

Payroll setup checklist

• Collect bank details securely (not group chat)
• Obtain P45 or complete starter checklist for tax code
• Confirm pay frequency matches contract
• Run payroll on or before pay day
• Provide itemised payslip on or before pay day
• Pay HMRC PAYE/NIC on time
• Register with pension provider if not already done

Your accountant can run payroll; you supply accurate starter data.

Read payroll and HR compliance before first pay run.

Auto-enrolment pension

When eligible jobholders meet age and earnings thresholds:

• Enrol into qualifying scheme
• Pay employer contributions
• Provide required communications
• Process opt-outs within one-month window if applicable
• Re-assess each pay period or per rules

Monitor birthdays and earnings changes crossing thresholds.

Health and safety

Conduct role-appropriate induction:

• Fire exits and assembly point
• Accident reporting process
• Manual handling if physical role
• Lone working policy if applicable
• First aider location

Record training in employee file. Risk assessment for workplace required.

Policies to provide

Give access to (handbook or standalone):

• Health and safety policy
• Disciplinary and grievance procedure
• Equality policy
• Data protection / privacy notice for employee data
• Sick pay policy (statutory minimum plus any contractual enhancement)

Handbook optional but useful evidence of fair process. See employment law basics.

Records to keep from day one

Shared inbox is not an HR system. Access control matters for GDPR.

Working Time and hourly first hires

If first employee is hourly:

• Design rotas respecting rest breaks and weekly limits
• Pay for all working time including setup and close
• Consider 48-hour opt-out if pattern may exceed average (voluntary, signed)
• Track hours for NMW evidence

Guide: Working Time compliance.

Common first-hire mistakes

1. Paying "cash in hand" without PAYE and payslips
2. Trial shifts without RTW (still employment if work is done)
3. Copy-paste contracts from US or wrong jurisdiction templates
4. No holiday tracking until December rush
5. Promising sick pay informally beyond statutory without budgeting
6. Delaying EL insurance until after start date
7. Bank details via WhatsApp (GDPR and fraud risk)
8. Assuming family worker exempt from RTW and NMW

When to add software

First hire can run on accountant + templates + spreadsheet rota. By employee three to ten, owners usually want:

• One employee file per person
• RTW expiry reminders
• Leave tracking
• Rota if hourly
• Onboarding checklist reuse

See Do I need HR software?.

Campsite trial tenants include sample data so you rehearse workflows before first real hire is live on rota.

First employee timeline (example)

Adjust for your sector; regulated roles need longer lead.

Can I employ family?

Yes, but PAYE, RTW, NMW, EL insurance, and H&S still apply. Pay market rate where NMW relevant. Document like any employee to avoid disputes.

Do I need a HR advisor?

Not mandatory for first hire. Useful for:

• Contract drafting review
• Disciplinary templates
• Sponsored worker routes

Day-to-day compliance can run on software plus accountant plus occasional legal review.

How Campsite helps after first hire

Campsite gives UK employers one people operations workspace for:

• Onboarding (RTW, contracts, checklists)
• Employee HR files with document expiry
• Rotas and leave for hourly teams
• Hiring pipeline when hire two arrives
• Employment law monitor for UK changes
• Wagesheet export to accountant payroll

We are not a law firm or payroll bureau. We reduce admin failure modes as you grow.

FAQ

Can I employ family?
Yes, with full employer duties as above.

Do I need a HR advisor?
Optional; recommended for contract review and contentious cases.

How soon must I register PAYE?
Before first payday.

What if first worker is zero-hours?
Same RTW, particulars, payroll, and holiday accrual duties; document accrual method.

Is one employee enough for auto-enrolment?
Assess each worker against thresholds; one eligible jobholder triggers duties.

Can I use Deel or overseas EOR for UK worker?
Complex; UK employment may still arise. Get specialist advice.

What about interns?
May be worker or employee depending on facts; NMW and RTW often apply.

How long keep first employee records?
Tax records often six years; HR longer if dispute possible. Ask accountant.

Next steps

• Complete HR compliance checklist
• Follow Onboarding compliance checklist
• Read How to stay HR compliant
• Start Campsite trial before your first hire goes live on rota