Hiring your first employee for a small UK business

Katerina Galkina · EN · 07/10/2026

Define the role and complete budget

First decide whether you need an employee or a genuinely independent contractor service. Calling someone freelance does not establish status. The official first-employer plan ↗ begins with this check.

Describe duties, hours, workplace, supervision and skills. Budget beyond wages: employer National Insurance, pension contributions, paid holiday, possible statutory payments, payroll, training and equipment. Check the minimum rate for the worker’s age and category on the start date.

Set up employer responsibilities

Establish HMRC registration requirements and arrange PAYE, payroll software or a service beforehand. Assign responsibility for calculations and timely submissions. Check workplace-pension duties ↗: these can arise with the first employee rather than only after expansion.

Employers’ Liability insurance ↗ generally requires at least £5 million cover from an authorised insurer; the official page explains exceptions. Ordinary public liability is not a substitute. Prepare a safe workplace and secure staff-data handling.

Recruit and complete checks

Write a clear advert and use consistent assessment criteria. GOV.UK’s recruitment sequence ↗ includes right-to-work checks before employment starts. Do not rely only on a candidate’s account or an old status screenshot.

For relevant roles, establish the correct DBS level. Check qualifications, references and permissible screening conditions without discriminatory requirements. Distinguish outstanding conditions from terms already agreed in the offer.

Documents and onboarding

Agree salary, hours, holiday, probation, notice, sick pay and workplace. The principal written statement ↗ is due on day one; wider particulars have a separate deadline. It does not automatically replace every contractual term.

Obtain a P45 or starter checklist and arrange HMRC notification no later than the first payday. Plan induction, access, safety, schedules, time records and a contact for questions. Keep a payroll and pension calendar. Some employment rules and checks differ in Northern Ireland, so use the appropriate jurisdiction’s guidance.