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Before You Make an Offer
Establish the role clearly before advertising. Write a job description that accurately reflects duties, hours, and the location of work. Decide on the employment type — permanent, fixed-term, or zero-hours — as each carries different statutory rights. Confirm the salary or rate is at or above the current National Living Wage or National Minimum Wage for the worker's age band. Check the current rates on gov.uk before making any offer.
HMRC and Payroll Setup
If you do not already have a PAYE scheme, register as an employer with HMRC before your employee's first payday. This can take up to five working days, so act early.
- Register as an employer on HMRC's Government Gateway
- Set up payroll software compatible with Real Time Information (RTI) reporting
- Obtain your employee's P45 from their previous employer (or complete a starter checklist if they do not have one)
- Deduct and pay Income Tax and National Insurance via PAYE on or before each payday
- Issue payslips on or before payday — a legal requirement
Right to Work and Legal Checks
You have a legal obligation to check that every employee has the right to work in the UK before employment begins. Retain copies of acceptable documents (passport, biometric residence permit, or share code verification) and record the date you checked them. Failure to conduct checks can result in a civil penalty. Check the current list of acceptable documents on gov.uk.
- Complete right-to-work check for every new hire without exception
- Retain a dated copy of the document(s) checked
- Consider a DBS check if the role involves regulated activity, vulnerable adults, or children
Employment Contract and Written Particulars
Employees are entitled to a written statement of employment particulars (often called a contract of employment) from day one of employment. The statement must include pay, hours, holiday entitlement, notice periods, place of work, and job title at minimum. Have a solicitor draft or review your template contract to ensure it complies with current employment law, particularly if you include restrictive covenants or IP assignment clauses.
Auto-Enrolment and Insurance
You must automatically enrol eligible employees into a qualifying workplace pension scheme. Eligibility is based on age and earnings — check the current thresholds on The Pensions Regulator website. You must also take out employers' liability insurance with a minimum cover of £5 million from an authorised insurer before the employee starts. Display the certificate (or a link to it) where employees can access it.
- Identify your auto-enrolment staging date (Pensions Regulator portal)
- Choose a qualifying pension provider and set up contributions
- Write to your new employee within six weeks explaining their auto-enrolment status
- Purchase employers' liability insurance before day one
Frequently asked questions
Can I take on a director as the company's first employee?
A director who receives a salary is treated as an employee for PAYE purposes. However, directors have different employment law rights from regular employees in some respects. Confirm the correct treatment with your accountant and employment solicitor.
What holiday entitlement does my first employee have?
The statutory minimum is 5.6 weeks' paid holiday per year for full-time workers, which can include bank holidays. Part-time and irregular-hours workers have their entitlement calculated differently. Confirm the current rules on gov.uk.
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.