I Am Hiring My First Employee

You must register as an employer with HMRC before your first employee starts. This gives you a PAYE reference number that you will need for running payroll. You can register online through GOV.UK. Do this at least 2 weeks before your new employee's start date.

You are legally required to have employers' liability insurance with a minimum cover of £5 million. You must display the certificate in your workplace (or make it accessible electronically). Not having this insurance can result in a fine of up to £2,500 per day.

You must give every employee a written statement of employment on or before their first day. This must include job title, pay rate, working hours, holiday entitlement, notice period, pension scheme details, and other key terms. A comprehensive staff handbook, while not legally required, is highly recommended.

Before your employee starts, you must check they have the right to work in the UK. This involves checking original identity documents or using the Home Office online checking service. Keep a copy of the documents. Failure to conduct proper checks can result in a civil penalty of up to £60,000 per worker.

You need to run payroll either yourself using HMRC-recognised software or through a payroll provider. You also have auto-enrolment pension duties from day one — you must assess your employee, enrol them if eligible, and start making contributions. The minimum total contribution is 8% (at least 3% from you as the employer).