Employing someone for the first time: the UK checklist (2026/27)

What do you need to do before they start?

Most of the legal work happens before day one. Do these in this order, because some of them take time to arrive (the PAYE letter comes by post) and one of them protects you only if it is done before the person begins work (the right to work check).

• Decide the pay and hours, and check the hourly rate is at least the minimum wage for the person's age once unpaid breaks and any uniform costs are taken into account⁶.
• Check the person's right to work using the Home Office's online service with a share code, or by checking original documents in their presence and keeping a dated copy¹. Do it for every new hire, not just those you think might need a visa.
• Take out employers' liability insurance with at least £5 million of cover. You can be fined £2,500 for every day you are not properly insured. Close family members of an unincorporated business can be exempt².
• Register as an employer with HMRC, online in most cases. You will get an employer PAYE reference and an Accounts Office reference by letter³.
• Choose payroll software. HMRC's free Basic PAYE Tools covers businesses with fewer than 10 employees⁷.
• Choose a workplace pension scheme that accepts auto-enrolment, such as NEST, so it is ready before the first payroll⁵.
• Check whether you need to pay the ICO data protection fee (£52 a year for most micro businesses). Processing personal data only for staff administration can be exempt; the ICO's self-assessment tells you⁸.

What must they receive on day one?

On or before the first day of work you must give the employee a written statement of employment particulars: the employer's and worker's names, job title, start date, pay and how often it is paid, hours and days, holiday, place of work, how long the job is expected to last, any probation period, other benefits and obligatory training⁴. Sick pay, other paid leave and notice can be in the same document or in a separate one they can easily access.

You should also collect the information payroll needs: their P45 from a previous job, or a completed HMRC starter checklist if they do not have one, plus bank details, National Insurance number, date of birth and address⁷. Give them privacy information explaining what you do with their personal data under UK GDPR.

A second set of particulars, covering pensions, collective agreements, other training and disciplinary and grievance procedures, can follow within 2 months⁴. The written statement guide explains each item.

What happens on the first payday?

Run payroll in your software: it works out income tax from the tax code, employee and employer National Insurance and pension contributions. Give the employee a payslip and send HMRC a Full Payment Submission (FPS) on or before the day you pay them⁷.

Pay HMRC what you owe by the 22nd of the next tax month if you pay electronically. If your average monthly bill is under £1,500 you can ask to pay quarterly. If your first employee is not a company director, claim Employment Allowance on your first Employer Payment Summary: it takes up to £10,500 a year off your employer NI bill⁹.

Worked example: a first employee on the National Living Wage

A café owner hires one full-time assistant aged 24 at £12.71 an hour for 37.5 hours a week. That is £24,784.50 a year.

Item	Per year
Gross pay	£24,784.50
Employer NI (15% above £5,000)	£2,967.67
Employer pension (3% of £6,240 to £50,270 band)	£556.33
Total before Employment Allowance	£28,308.50
Total if Employment Allowance applies	£25,340.83

England, Wales and Northern Ireland employer NI; employer NI is the same in Scotland. Excludes employers' liability insurance, equipment and recruitment costs. The employer cost calculator models any salary.

Because the owner is a sole trader, not a one-director company, Employment Allowance applies and the employer NI bill is nil. The real extra cost is the pay, the pension and the insurance premium.

What has to happen in the first five months?

• Within 6 weeks of their start date, enrol them into the pension if they are aged 22 to State Pension age and earn over £10,000 a year, and write to them about it⁵.
• Within 2 months, give the rest of the written particulars if they were not in the day-one statement⁴.
• Within 5 months of your duties start date, complete the declaration of compliance with The Pensions Regulator, even if no one had to be enrolled⁵.
• Keep payroll records for 3 years after the end of the tax year they relate to, and right to work evidence for the whole employment plus 2 years.
• From 1 January 2027 most employees can claim unfair dismissal after 6 months' service instead of 2 years, so hold your probation reviews on time and write them down.

Which mistakes catch first-time employers?

• Letting someone start before the right to work check, which loses your statutory excuse against a penalty.
• Waiting for the first payday to register with HMRC, then filing the first FPS late.
• Handing over the written statement weeks after the start date instead of on day one.
• Assuming a one-director company can claim Employment Allowance: it cannot if the director is the only employee paid above £5,000⁹.
• Paying an hourly worker below the minimum wage once unpaid training time or uniform deductions are counted.