Hiring Your First Employee UK: The Employer Checklist
Quick answer
To hire your first employee in the UK you must register as an employer with HMRC before their first payday, check their right to work, take out employers liability insurance of at least GBP 5 million, set up PAYE, and give them a written statement of employment particulars from day one.
Hiring your first employee: the employer duties (2026/27)
| Duty | What it requires |
|---|---|
| Register as an employer | Register with HMRC before the first payday to get a PAYE reference. You cannot register more than 2 months before you start paying people |
| Check right to work | Confirm the person can legally work in the UK before they start, using their documents or a Home Office online check |
| Employers liability insurance | A legal requirement once you have staff: at least GBP 5 million of cover from an authorised insurer. Fines of up to GBP 2,500 a day if you are not properly insured |
| Written statement of particulars | Give a written statement of the main employment terms on or before day one |
| Set up PAYE | Run payroll to deduct Income Tax and National Insurance, and report to HMRC on or before each payday |
| Pay at least minimum wage | National Living Wage is GBP 12.71 an hour for workers aged 21 and over from April 2026 |
| Auto-enrolment | Assess the worker for a workplace pension and enrol them if they qualify |
| Employment Allowance | Eligible employers can cut their employers Class 1 National Insurance bill by up to GBP 10,500 a year |
Step by step
- 1
Check the person is an employee
Confirm you are taking someone on as an employee, not a self-employed contractor. If they are an employee, the duties below apply and you cannot opt out of them.
- 2
Check their right to work in the UK
Before they start, confirm the person can legally work in the UK, either by checking their original documents or using the Home Office online right to work service. Keep a record of the check.
- 3
Register as an employer with HMRC
Register with HMRC before the first payday to get your employer PAYE reference number. You cannot register more than 2 months before you start paying people, so register in good time but not too early.
- 4
Set up PAYE and run payroll
Use HMRC-recognised payroll software to deduct Income Tax and National Insurance, and report pay to HMRC on or before each payday. Check whether you can claim the Employment Allowance against your employers National Insurance.
- 5
Get employers liability insurance
Take out employers liability insurance of at least GBP 5 million from an authorised insurer as soon as you become an employer. Failing to do so can mean a fine of up to GBP 2,500 a day.
- 6
Give a written statement of particulars
Provide a written statement of the main employment terms, including pay, hours, holiday and notice, on or before the employees first day. Pay at least the National Minimum Wage for their age.
- 7
Assess them for a workplace pension
Work out whether the employee must be automatically enrolled into a workplace pension. If they qualify, enrol them and pay the employer contributions on time.
Hiring your first employee turns you into an employer, and that brings a fixed set of legal duties from gov.uk. The checklist above is the sequence; the table is the detail at a glance. None of it is optional, and the aim of this guide is to help you do it properly from the start: be the employer you would have wanted to work for.
The order matters. Check the person can legally work in the UK before anything else, then register as an employer with HMRC before their first payday, set up PAYE so tax and National Insurance are handled correctly, and put employers liability insurance in place from the moment you take someone on. A written statement of the main terms is due on or before day one, and you must pay at least the minimum wage for their age. Eligible employers can also reduce their employers National Insurance bill by up to GBP 10,500 a year through the Employment Allowance.
Payroll and pensions are the two parts most first-time employers underestimate. Our payroll for a small business guide walks through running PAYE properly, the auto-enrolment employer guide covers the workplace pension duties in detail, and workplace pension auto-enrolment explains how the contributions work for the person you are hiring.
Figures are for the 2026/27 tax year and are taken from gov.uk; National Minimum Wage and National Living Wage rates are uprated every April, and other thresholds can change. This is general information, not legal, financial or tax advice.
Frequently asked questions
What do I legally need to do to hire my first employee?
Register as an employer with HMRC before the first payday, check the person has the right to work in the UK, take out employers liability insurance of at least GBP 5 million, set up PAYE to handle tax and National Insurance, and give a written statement of employment particulars from day one. You must also assess them for a workplace pension.
Do I need employers liability insurance to hire someone?
Yes, in almost all cases. Employers liability insurance is a legal requirement as soon as you become an employer. You must have at least GBP 5 million of cover from an authorised insurer, and you can be fined up to GBP 2,500 for every day you are not properly insured.
When do I have to register as an employer with HMRC?
Before your new employee is first paid. You cannot register more than 2 months before you start paying people, so register in good time but not too early. Registering gives you the PAYE reference you need to run payroll.
What is the minimum wage I have to pay my first employee?
From April 2026 the National Living Wage is GBP 12.71 an hour for workers aged 21 and over, GBP 10.85 for ages 18 to 20, and GBP 8.00 for under 18s and apprentices. These rates change every 1 April, so check the current figure before you set pay.
Do I have to give my first employee a workplace pension?
You must assess every member of staff. If they are aged 22 to State Pension age and earn over the earnings trigger, you must automatically enrol them into a qualifying workplace pension and pay employer contributions. Even staff who do not qualify can ask to join.
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General information, not financial advice. Tax rules and figures can change; check the current position on gov.uk before acting.