Hiring your first employee is one of the biggest operational steps you will take as a UK business owner. The decision itself is usually clear by the time you get here — the workload is there, the need is real. What catches most first-time employers off guard is not the recruitment side, but the compliance side: the HMRC registrations, legal contracts, and pension duties that must be in place before your new employee walks through the door. Business Growth Engine has put together this step-by-step guide so you can move through the process in the right order — without missing the obligations that carry real penalties.
This guide covers the full sequence - from the decisions to make before you advertise, through to what needs to happen in the first week. It is written for founders doing this themselves, without an HR team or a recruitment agency.
This is not legal advice
This article covers the standard legal obligations for UK employers hiring their first employee. If your situation involves specific industry licensing, sponsored worker visas, or complex contractual arrangements, take qualified HR or legal advice before proceeding.
Before You Advertise: The Decisions to Make First
The most common mistake at this stage is rushing to post a job advert before the role is properly defined. Spend time on these questions first — they will make every subsequent step cleaner.
Is this a permanent role or a fixed-term contract? The employment obligations are the same, but knowing this upfront shapes your contract.
What hours are you offering — full-time, part-time, or flexible? Be specific. Vague offers attract mismatched candidates.
What is the salary range? Research comparable roles before you advertise — not after someone has already applied.
Where will the work happen — your premises, remote, or hybrid? This affects your contract terms and employer liability obligations.
Are you ready to run payroll? You will need a payroll process in place from the first payment.
On salary: use job boards like Indeed and Reed to search for comparable roles in your sector and region before you set a figure. The salary you advertise will either attract or immediately filter out the candidates you want.
Writing a Job Description That Attracts the Right Candidates
A job description does two jobs at once: it tells good candidates why they should apply, and it tells the wrong ones why they should not. Keep it short, specific, and front-loaded - candidates read job ads quickly.
Avoid the two most common errors: descriptions that are too vague ("must be a team player, passionate about growth") and those that are too long. Cover the essentials only.
Job title - use a title candidates will actually search for, not an internal one
Location and working arrangement - remote, on-site, hybrid, plus any required travel
Salary or salary range - listings without salary attract significantly fewer applicants
Core responsibilities - 5 to 8 bullet points covering the actual day-to-day work
Essential requirements - what they must have to be considered
Desirable requirements - what would make them stand out, clearly labelled as desirable
What you offer - hours, benefits, any flexibility worth mentioning
Separate 'essential' from 'desirable'
Some research suggests that certain candidates - particularly women - may be less likely to apply if they feel they do not meet every listed requirement, though the effect is nuanced and context-dependent. Labelling requirements clearly as essential or desirable widens your applicant pool without lowering your bar.
Where to Advertise a Job for Free or Low Cost in the UK
You do not need a recruiter for your first hire. Most small businesses find their first employee through free job boards, LinkedIn, and word of mouth — and for roles that do not require highly specialist skills, this works well.
Indeed - one of the UK's largest and most widely used job boards. Free to post; paid promotion is optional.
LinkedIn - particularly useful for professional or management roles. A free post reaches your network and their connections.
Find a Job (gov.uk) - the government's free job posting service. Mandatory if you want Jobcentre Plus to refer candidates.
Reed and Totaljobs - both have free posting options with paid upgrades for higher-volume needs.
Facebook Jobs and local community groups - effective for local, part-time, or trade roles.
Your own network - post on your personal LinkedIn, tell existing clients and suppliers. Word of mouth remains one of the most reliable sources of first hires for small businesses.
Start with one or two channels. Managing applications from six different platforms adds admin overhead with little added benefit for a single role.
The Right to Work Check: What You Must Do for Every New Employee
This is a legal requirement, not a formality. Every UK employer must check that every employee has the legal right to work in the UK before they start work. Failing to do this - or doing it incorrectly - can result in a civil penalty of up to £45,000 per illegal worker for a first breach, rising to £60,000 for repeat breaches.
The check is straightforward for most first hires. For British and Irish citizens, you check and copy an acceptable document - typically a passport or a birth certificate plus a National Insurance number document. For non-UK nationals, the process varies depending on their immigration status.
Right to Work Check: The Three Steps
Obtain
Ask the employee to provide an original acceptable document or combination of documents. The Home Office publishes a full list of acceptable documents - check the current list at gov.uk before conducting your check.
Check
Check the document is genuine, belongs to the person presenting it, and that they are allowed to do the type of work you are offering. Check expiry dates and any work restriction conditions.
Copy and retain
Make a clear copy of the document, note the date you conducted the check, and retain it securely for the duration of employment and for two years after employment ends.
Online checks for non-UK nationals
For employees who have a Biometric Residence Permit, eVisa, or other digital immigration status, you must use the Home Office online right to work checking service - a physical document check alone is not sufficient and will not give you a statutory excuse.
Registering as an Employer With HMRC: The Step Most First-Time Employers Miss
Before you pay your first employee, you must register as an employer with HMRC. This gives you the ability to run PAYE — Pay As You Earn — the system through which you deduct income tax and National Insurance contributions from your employee's pay and report them to HMRC. For a fuller walkthrough of how PAYE works in practice, see the BGE guide to PAYE for small employers.
You can register online through gov.uk. HMRC states that you should register before your new employee's first payday, and that it can take up to 15 working days to receive your PAYE reference numbers after registering. Do not leave this until the week your employee starts.
Register as an employer at gov.uk/register-employer - you will need your Government Gateway login or will create one during registration
Receive your Employer PAYE reference and Accounts Office reference from HMRC
Set up payroll software - HMRC provides a list of recognised free and paid payroll software options
Collect your employee's P45 from their previous employer (if they have one) or ask them to complete a starter checklist
Run your first payroll submission through Real Time Information (RTI) reporting on or before the first payday
Sole traders need to register too
If you operate as a sole trader, you register as an employer separately from your self-assessment registration. These are two different things with two different reference numbers. Do not assume your existing HMRC registration covers employer duties.
The Employment Contract: What Must Be in Place Before Day One
Under the Employment Rights Act 1996, every employee is entitled to a written statement of employment particulars - what most people call an employment contract - from their first day of employment. This is not optional. The statement must cover a specific list of terms.
Employer and employee names and addresses
Start date and, if different, the date continuous employment began
Job title and brief description of the role
Place of work
Salary or wage rate and pay intervals (weekly, monthly)
Hours of work, including any variable hours arrangements
Holiday entitlement - the statutory minimum is 5.6 weeks per year for full-time workers*
Sick pay entitlement and procedure
Notice period required from both parties
Pension arrangements
Probationary period, if applicable - its length and conditions
* since April 2024, the Working Time (Amendment) Regulations 2023 introduced a new 12.07%-of-hours-worked accrual method for irregular-hours and part-year workers.
You can use a template employment contract as a starting point — ACAS (the Advisory, Conciliation and Arbitration Service) publishes free guidance and template terms. For straightforward hires, a well-drafted template adapted to your role is sufficient. If the role involves intellectual property, restrictive covenants, or unusual working arrangements, take legal advice before issuing the contract. The BGE guide to employment contracts for small businesses covers how to adapt a template correctly and what to watch for. Business Growth Engine's editorial stance is that most first-time employers over-complicate this step — a clean, accurate template is the right starting point for most standard hires.
Pension Auto-Enrolment: Your Obligations From the First Day
Pension auto-enrolment is one of the most misunderstood first-employer obligations. Many small business owners assume it only applies to larger companies, or that there is a grace period before it kicks in. There is not.
From the day you take on your first employee, The Pensions Regulator considers you an employer with auto-enrolment duties. Whether you need to enrol that employee into a pension scheme immediately depends on their age and earnings - but you must assess your workforce from day one.
Who must be automatically enrolled?
An employee aged between 22 and the State Pension age who earns above the earnings trigger — currently £10,000 per year (2026/27 tax year; verify the current figure at thepensionsregulator.gov.uk) - must be automatically enrolled into a qualifying workplace pension scheme. Employees outside this band have the right to opt in but do not need to be automatically enrolled.
Register with The Pensions Regulator - they will contact you after you register as an employer with HMRC, but you can also register directly at thepensionsregulator.gov.uk
Choose a qualifying pension scheme - NEST (National Employment Savings Trust) is the government-backed scheme designed for small employers and is free to use
Assess your employee on their start date to determine whether they must be automatically enrolled
Enrol eligible employees and begin making employer contributions from their first eligible pay period
Write to your employee within six weeks of their start date to confirm their enrolment status and their right to opt out
Complete your Declaration of Compliance - a legal requirement, submitted to The Pensions Regulator within five months of your duties start date
The minimum employer contribution is currently 3% of qualifying earnings. Your employee contributes a minimum of 5% (including tax relief). Both figures are set by legislation and apply from the first contribution.
The First Week: What Your New Employee Needs to Get Started Properly
By the time your employee starts, the legal steps above should already be complete. The first week is about making sure they can actually do the job - and that you have the practical foundations in place to manage someone properly.
First week checklist
Employment contract issued and signed before or on day one
Right to work check completed and documents copied and retained
Employee's bank details, National Insurance number, and P45 or starter checklist collected
Payroll set up with first pay date confirmed and communicated
Pension enrolment confirmed or assessment documented
Access to systems, tools, and premises provided
Health and safety induction completed - even for office-based roles, you have legal duties as an employer
Working hours, holiday booking process, and absence reporting procedure explained clearly
Emergency contact details obtained
A short written induction plan - even just a one-page document covering the first week - signals professionalism and reduces the back-and-forth that slows down new starters. It also means you are not reinventing the process the next time you hire.
Illustrative example - based on a common UK founder scenario, not a specific documented case
A sole trader running a small cleaning business in the Midlands decided to take on their first employee after winning a commercial contract they could not service alone. They had been self-employed for four years and assumed their existing HMRC registration covered employer duties. It did not. After posting the role on Indeed and making an offer, they registered as an employer with HMRC, set up NEST for pension auto-enrolment, issued a written contract using an ACAS template, and completed the right to work check on day one. The entire compliance process took around three hours spread across a week - the biggest time cost was setting up payroll software for the first time.
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