Employment
Owner Managed Businesses

Robert Turner
June 2026

Hiring your first employee is a milestone moment for any founder. It’s exciting, a little daunting, and often a signal that your business is moving from idea to operation.

But becoming an employer brings legal and practical responsibilities that many early-stage businesses underestimate. From HMRC registration to contracts, pensions, and workplace policies, there’s a lot to get right from day one.

That’s why we’ve created a practical checklist for hiring your first employee in the UK to help you navigate the process with clarity and confidence, and we answer some key questions below.

Download the checklist here

When do you need to register as an employer in the UK?

You must register as an employer with HMRC before your first payday if you plan to pay someone as an employee.

Once registered, you’ll receive a PAYE reference number, allowing you to run payroll, deduct tax and National Insurance, and report to HMRC.

What do you need to set up before hiring an employee?

Before recruiting, you need to put the right foundations in place:

  • Register with HMRC for PAYE and obtain your employer reference
  • Decide the role and employment terms, including:
    • Working hours (full-time, part-time or fixed-term)
    • Salary (ensuring compliance with National Minimum Wage requirements)
    • Job responsibilities
    • Holiday entitlement in line with Working Time Regulations
  • Ensure your workplace is safe and accessible, including for remote employees
  • Obtain Employers’ Liability Insurance, unless an exemption applies
  • Set up a workplace pension scheme if your employee qualifies for automatic enrolment

Putting these elements in place early will help ensure compliance and avoid delays once recruitment begins.

How do you recruit an employee in the UK?

Recruitment should be carried out carefully and in line with your legal obligations:

  • Advertise the role and run a fair recruitment process (complying with the Equality Act 2010)
  • Make a formal offer of employment (conditional or unconditional)
  • Check the individual’s right to work in the UK before they start
  • Carry out any pre-employment checks relevant to the role, such as:
    • References
    • DBS checks (if required)
    • Professional qualifications or licences

These checks are essential to ensure both compliance and suitability for the role.

What documents do you need when hiring an employee?

Employers must ensure proper documentation is in place:

  • A compliant employment contract or written statement of employment particulars covering the required statutory information
  • Staff handbook and key policies (where relevant)
  • Notification to HMRC about your new employee
  • The principal written statement of employment particulars (the contract) must be provided on or before the employee’s first day. The right also applies to workers.

What should you do before the employee’s first day?

There are several key steps to complete before employment begins:

  • Issue the employment contract
  • Obtain a P45 or complete a new starter checklist
  • Consider reasonable adjustments if the employee has a disability
  • Set up systems to manage the probation period
  • Provide a privacy notice explaining how employee personal data will be processed
  • Arrange IT access, equipment and email accounts

This stage is about making sure both legal requirements and practical onboarding are covered.

What needs to happen on day one of employment?

The first day sets the tone and ensures compliance:

  • Conduct a formal induction, including health and safety
  • Set out clear expectations for the role and performance
  • Begin onboarding and introduce key policies and processes

You should also plan regular check-ins aligned with the employee’s probation period.

What are your ongoing responsibilities as an employer?

Once the employee has started, your obligations continue:

  • Enrol eligible employees in a workplace pension scheme (within statutory deadlines)
  • Manage and monitor:
    • Annual leave
    • Sick leave
    • Family leave
  • Meet statutory payment obligations (e.g. sick pay, maternity and paternity pay)
  • Put in place processes for:
    • Performance management
    • Handling disciplinary issues
    • Ending employment, if necessary

Having clear procedures in place helps reduce risk and ensures consistency.

Why is it important to get the setup right from the start?

Becoming an employer is more than simply paying a salary. It involves a structured framework of payroll, pensions, insurance and legal documentation.

Getting the basics right early on helps you:

  • Avoid regulatory issues or penalties
  • Build a compliant and scalable business
  • Create a positive experience for your first hires

Hiring your first employee is an exciting step, but it comes with important responsibilities. Taking a proactive, structured approach ensures your business is set up to grow with confidence.