Use this guide if you run a small business and are about to hire your first member of staff. Have the job details, proposed pay and hours, and your business details for HMRC ready.
Step by step
Decide on the job and pay
Write down the role, hours, pay and where the work will be done. Make sure the pay is at least the National Minimum Wage or National Living Wage for the worker's age, checking current rates on GOV.UK. Decide whether the person is an employee or a worker, as this affects their rights.
Check their right to work
You must check that every new employee has the right to work in the UK before they start, using the methods set out on GOV.UK. Keep a copy of the check and the date you did it. Treat all candidates the same to avoid discrimination.
Give a written statement of terms
Employees and workers must receive a written statement of main terms, covering things like pay, hours, holiday and notice, on or before their first day. Acas has free templates. Keep a signed copy.
Register as an employer and set up payroll
Register with HMRC as an employer before the first payday, and use payroll software or a payroll provider to run PAYE. You will report pay to HMRC each time you pay staff and give them payslips. Keep payroll records as HMRC requires.
Set up a workplace pension and insurance
Check your duties under automatic enrolment on The Pensions Regulator's guidance and set up a qualifying workplace pension if needed. Most employers must have employers' liability insurance from an authorised insurer. Keep proof of both.
Cover health, safety and induction
Carry out a basic risk assessment for the work and explain safety rules on day one. Plan a simple induction covering tasks, contacts and policies. Agree how and when you will check in during the first weeks.
Ready-to-use checklist
- Role, pay and hours written down
- Pay checked against minimum wage rates
- Right to work check done and recorded
- Written statement of terms given
- Registered with HMRC as an employer
- Payroll set up
- Workplace pension duties checked
- Employers' liability insurance in place
Practical tips
- Acas offers free, impartial guidance and a helpline for employers who are unsure about employment law.
- Keep a simple personnel file for each employee with their contract, right to work check and emergency contacts, and store it securely.
- Employment law is changing under the Employment Rights Act 2025, so check GOV.UK and Acas for which changes apply and when.
Common problems
Your new starter cannot show right to work documents before their start date.
Do not let them start until the check is complete. Follow the GOV.UK guidance on alternatives, such as the online check or the Employer Checking Service where it applies.
You are not sure if someone should be self-employed rather than an employee.
Use HMRC's employment status check tool on GOV.UK and consider how much control you have over their work. Getting status wrong can lead to tax bills and claims, so take advice if unsure.
You made a mistake on a payroll submission.
Correct it in your next submission or follow HMRC's guidance for fixing errors. Tell the employee if their pay was affected and put it right promptly.
This guide gives general information, not personal legal, financial or medical advice. Rules and prices change, so check the current position with the official service before acting.
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