So, your business is growing, congratulations! You're about to take a huge leap: hiring your first employee. But where do you even begin?
At The HR Guru, we’ve helped countless UK startups and small businesses navigate the legal and practical steps of becoming an employer. To keep things simple, here’s your essential checklist covering everything from legal obligations to payroll.
1. Employers' Liability Insurance: Don’t skip it
Before you even think about bringing someone on board, you need Employers' Liability (EL) Insurance. This covers compensation if an employee becomes ill or injured because of their work.
🔒 Must be at least £10 million
📜 Must come from an authorised insurer
📌 Must be displayed (or you could be fined up to £1,000)
💸 Not having insurance? That’s £2,500 per day in fines
Exceptions: You might not need this if you’re a sole trader only hiring close family but check your contracts.
2. Register as an Employer with HMRC
You’ll need to register with HMRC before the first payday. It can take up to 15 working days to get your PAYE reference number, so get a move on.
🔗 You can register up to 4 weeks in advance
⛔ But not more than 2 months ahead
📄 No PAYE number yet? You can still run payroll and submit it late
3. Set Up a Workplace Pension Scheme
Auto-enrolment is a legal requirement in the UK for eligible employees:
✅ Aged 22 to state pension age
✅ Earning at least £10,000/year
✅ Working in the UK
You’ll need to:
Want to check your responsibilities? Visit The Pensions Regulator.
4. Check Their Right to Work in the UK
This isn’t a box-ticking exercise. It’s a legal must-do.
✅ For UK or Irish citizens: Check original documents, verify ID & photocopy
✅ For others: Use the Home Office share code tool
📅 Must be completed before they start
🚨 Failure to comply = up to 5 years in jail or £60,000 fine per worker
5. Pay the Right Wage
Every employee must be paid at least the National Minimum Wage (NMW), updated annually in April.
💡 Don’t forget:
6. Put it in Writing
It’s the law: you must give your employee a written statement of employment particulars on or before their start date.
This should include:
📝 It’s not the full employment contract, but it is legally binding. Most businesses combine all the key details into a contract of employment to save repeating work on day one.
Final Thoughts
Becoming an employer might feel like a mountain to climb but it doesn’t have to be. If you take care of these six steps, you’ll be well on your way to building a compliant, supportive, and successful workplace.
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