Hiring Your First Employee: A Step-by-Step Checklist for UK Businesses

Taking the leap from being a solo entrepreneur to hiring your first employee is a huge moment. It's a sign that all your hard work is paying off. It's exciting, a little bit terrifying, and it comes with a whole new list of responsibilities.

Suddenly, you’re not just thinking about your own workload; you're responsible for someone else's livelihood. And with that comes the nagging feeling, that little voice in the back of your head asking, "What did I forget?"

Don't worry, you're not alone. Every small business owner has felt that. This guide is here to be your peace of mind. We've created a comprehensive, step-by-step checklist covering everything you need to do, from the legal must-haves to the little touches that make a big difference. Follow this, and you can give your new team member a confident, professional, and genuinely welcoming start.

Table of Contents

• Step 1: What to Do Before You Advertise the Role

• Step 2: The Legal Essentials You Can't Skip

• Step 3: Getting the Money Side Sorted: Payroll and Pensions

• Step 4: Preparing for Day One and Beyond

• Beyond the Checklist: Being a Great First Boss

Step 1: What to Do Before You Advertise the Role

Before you rush to post a job ad, taking the time to prepare properly will save you a world of headaches later on. This stage is all about being crystal clear on what you need, what you can afford, and what the role really involves.

Write a Clear Job Description

What it is: This is your blueprint for the perfect candidate. It’s not just a list of tasks; it’s your first and most important piece of marketing to attract the right person.

Why it's important: A vague description attracts vague applications, wasting your time. A clear, well-thought-out description helps potential employees understand exactly what you’re looking for and gets them excited about the role. It also forces you to think deeply about what help you actually need.

How to do it:

• Job Title: Keep it simple and standard. Use a title that people actually search for, like "Office Administrator" or "Digital Marketing Assistant," not "Productivity Guru."

• Role Summary: Write a short, engaging paragraph. Where does this role fit into your business? What is its main purpose? For example, for an Office Administrator: "As our Office Administrator, you will be a vital part of the team, responsible for ensuring our daily operations are efficient and our client communications are handled professionally. This role is key to our continued growth."

• Key Responsibilities: Use bullet points. Be specific about the day-to-day tasks. Instead of "Help with social media," try "Creating and scheduling posts for our Instagram and Facebook pages" or "Replying to customer comments and messages."

• Skills and Qualifications: Split this into two lists: Essential (the absolute must-haves, like "Proficient with Microsoft Excel") and Desirable (the nice-to-haves, like "Experience with Xero accounting software"). This helps you screen candidates and shows them what’s a deal-breaker.

• What You Offer: Be upfront. State the salary or a realistic salary range. Mention the working hours, the location (e.g., office-based in Manchester, fully remote, or hybrid), and any perks, even small ones like free coffee or a relaxed dress code. Transparency builds trust from the very start.

Determine a Fair Salary

What it is: Deciding on the right amount to pay your new employee.

Why it's important: Offering too little will attract fewer (or less-experienced) candidates and could lead to them leaving quickly for a better-paid job. Offering too much could strain your finances. You need to find the sweet spot.

How to do it:

• Research: Don't just guess. Use websites like Glassdoor, and Reed, to see what the market rate is for similar roles in your specific area and industry.

• Factor in Experience: A recent graduate will have different salary expectations from someone with a decade of experience. Your job description should help you define the level you're hiring for.

• Know the Law: You must pay at least the National Minimum Wage or, for those 23 and over, the National Living Wage. These rates change every April, so always check the latest figures on the GOV.UK website.

Budget for the True Cost of an Employee

What it is: Calculating all the hidden and additional costs on top of the basic salary.

Why it's important: This is the step that catches most new employers out. If you only budget for the salary, you'll have a nasty shock. Knowing the true cost gives you a realistic financial forecast.

How to do it: Here's a breakdown of the main extra costs to factor in:

• Employer's National Insurance Contributions: You have to pay this tax on your employee's earnings above a certain threshold. It’s a significant extra cost, so use the official government calculator to work out exactly how much it will be for your proposed salary.

• Workplace Pension Contributions: By law, you must set up and contribute to a workplace pension for any eligible employee. Your minimum contribution is 3% of their qualifying earnings. We'll cover this in more detail in Step 3.

• Paid Holiday (Annual Leave): All full-time UK employees are legally entitled to 5.6 weeks' paid holiday per year. That's 28 days (which can include the bank holidays). You need to account for paying them for this time off. If they are part-time, you calculate this on a pro-rata basis.

• Employers' Liability Insurance: This is a legal requirement we’ll cover in the next step. It's an annual cost you need to budget for.

• Equipment and Workspace: Think about the one-off and ongoing costs. This includes a laptop, desk, chair, phone, and any software subscriptions they'll need (like Microsoft 365 or Adobe Creative Suite).

• Recruitment Costs: Will you pay to advertise the job on a premium job board? The costs can range from £100 to several thousand if you use a recruitment agency.

Step 2: The Legal Essentials You Can't Skip

Okay, deep breath. The legal side of things can feel intimidating, but it's all perfectly manageable if you take it one step at a time. Getting these things right from the very beginning protects both you and your new employee, and it's the foundation of being a good, responsible employer.

Check Their Right to Work in the UK

What it is: A mandatory check to verify that your chosen candidate is legally allowed to do the job you’re offering.

Why it's important: This is a non-negotiable legal duty. If you hire someone who does not have the right to work in the UK, you could face a fine of up to £20,000. It's a serious business.

How to do it:

• You must do this check before their first day of employment.

• For UK and Irish citizens, you need to see their original passport or other acceptable documents. You must check the document in the presence of the holder (either in person or via live video link), make a clear copy, and record the date of the check.

• For non-UK/Irish citizens with a modern visa or settlement status, you’ll likely need to use the Home Office's online checking service, using a 'share code' they provide you.

• You can find the full, up-to-date list of acceptable documents and the process on the GOV.UK "Right to Work Checks" page.

Provide an Employment Contract

What it is: The legal agreement that sets out the terms and conditions of the job.

Why it's important: This document prevents future misunderstandings and disputes. It makes sure you and your employee are on the same page about everything from pay to notice periods. While you legally only have to provide a "written statement of particulars" by day one, a full contract is far better as it protects your business more thoroughly.

How to do it:

• A full contract should include all the legal basics (pay, hours, holiday, etc.) but can also include clauses that protect your business, such as confidentiality, use of company property, and social media policies.

• You can find basic templates on the ACAS website. However, for your first hire, it is highly recommended to invest a small amount in having a solicitor or an HR consultant draft or review your contract. It's a one-off cost that can save you thousands in the long run.

• Get it signed by both you and the employee before they start.

Get Employers' Liability Insurance

What it is: An insurance policy that covers you if an employee gets injured or becomes ill as a result of the work they do for you.

Why it's important: As soon as you hire your first employee (even a temporary or part-time one), you are legally required to have this insurance. It must cover you for at least £5 million. The Health and Safety Executive (HSE) can fine you £2,500 for every day you don't have it.

How to do it:

• Contact an insurance broker or search for "business insurance" on a comparison site.

• You'll need your company details and your new PAYE reference number (which we'll get to in the next step).

• Once you have your policy, you must display the certificate where your employee can see it, or make it available to them digitally.

Step 3: Getting the Money Side Sorted: Payroll and Pensions

Getting your employee paid correctly and on time is one of your most important jobs as an employer. This means getting registered with HMRC and understanding the system called PAYE (Pay As You Earn), which is how you pay your employee’s tax and National Insurance directly to the government.

Register as an Employer with HMRC

What it is: Officially telling HMRC that you are now an employer and will be making salary payments.

Why it's important: You cannot legally pay an employee without being registered. The registration process gives you the reference numbers you need to run payroll and pay HMRC.

How to do it:The online registration process on GOV.UK is the easiest way. To make it a smooth process, have the following information to hand before you start:

• Your business's Unique Taxpayer Reference (UTR).

• Your business name, registered address, and phone number.

• The type of business you run (e.g., sole trader, limited company).

• Your employee's full name, date of birth, and National Insurance number.

• The date of their first payday.

Do this at least two weeks before their first payday as it can take up to 5 working days to get your Employer PAYE reference and Accounts Office reference, which you'll need.

Set Up a System to Run Payroll

What it is: The process of calculating your employee's pay, deductions (like tax, NI, student loans) and paying them, while reporting all the information to HMRC.

Why it's important: HMRC requires information to be submitted on or before each payday. Getting it wrong can lead to penalties and a very unhappy employee.

How to do it: You have two main options:

• DIY with Payroll Software: This is the most common route for small businesses. Software from providers like Xero, FreeAgent, or QuickBooks has payroll features built-in. It connects directly to HMRC, calculates everything for you, and generates payslips. It’s cost-effective and gives you full control.

• Outsource to an Accountant or Payroll Bureau: If the thought of doing it yourself fills you with dread, you can pay a professional to do it for you. You simply tell them the employee's salary and hours, and they handle all the calculations and submissions. It costs more, but it offers complete peace of mind.

Set Up a Workplace Pension

What it is: A legal duty known as 'auto-enrolment', where you have to set up and contribute to a pension scheme for eligible staff.

Why it's important: It's the law. The Pensions Regulator is serious about compliance and can issue fines starting at £400 and increasing daily. It’s designed to help everyone save for retirement.

How to do it: This can feel complex, but it's a step-by-step process:

1. Choose a Pension Scheme: You must have a scheme in place before your employee’s first day. Government-backed schemes like NEST are very popular with small businesses as they are low-cost and designed for auto-enrolment. Other providers like The People’s Pension or Smart Pension are also common choices.

2. Assess Your Employee: On their start date, you need to check if they are eligible. Generally, anyone aged 22 to State Pension age who earns over £10,000 a year must be enrolled.

3. Enrol Them and Communicate: You'll enrol them in your chosen scheme and then you must write to them within 6 weeks, using a specific template letter, to explain what you've done. Your pension provider will have templates for this.

4. Understand Opting Out: Your employee has the right to opt out of the pension scheme within one month of being enrolled. They must do this themselves directly with the pension provider, not with you. If they do, you must stop contributions and refund any money they’ve already paid in. You are not allowed to encourage or persuade an employee to opt out.

5. Make Contributions: Each payday, you'll deduct their contribution from their pay, add your employer contribution, and pay the total amount over to the pension provider. Your payroll software can handle these calculations.

Step 4: Preparing for Day One and Beyond

You've handled the budget, the legal paperwork, and the payroll. Now for the really human part! How you welcome your first employee sets the tone for their entire experience with your company. A great start makes them feel valued, helps them settle in quickly, and shows them they made the right choice in joining you.

Set Up Their Workspace and Equipment

What it is: Getting everything they need to do their job ready before they arrive.

Why it's important: There's nothing more demotivating than showing up on day one and feeling like an afterthought. Having everything ready shows you're organised, you value them, and you’re excited for them to start.

How to do it:

• The Physical Space: If they're in the office, make sure their desk is clean, clear, and ready. Have their chair, monitor, keyboard, and mouse set up and working. A small welcome pack with a branded notebook, a nice pen, and a welcome card is a brilliant touch.

• The Technology: Have their laptop set up and all basic software installed. Create their company email address and have all their logins for essential systems written down for them.

• Access: Don't forget the simple things! Do they need a key to the office? A code for the alarm? Have it ready.

Plan Their First Day and Week

What it is: A simple, structured plan so they aren't left wondering what to do.

Why it's important: The first week can be overwhelming. A plan removes anxiety and helps them ease into the role and the company culture. It shows you've thought about their experience.

How to do it: Your plan could look something like this:

• Day One:

  • Be there to greet them with a smile.

  • Give them a tour. Show them where the kettle is, the toilets, the fire exits.

  • Sit down with a coffee and run through the practical admin – get their bank details, P45, and have them sign the contract if they haven't already.

  • Take them out for lunch. It's a small investment that makes a huge difference.

  • Spend the afternoon getting them logged into their systems and giving them a gentle introduction to their first small task.

• First Week:

  • Schedule short sessions to train them on your key processes.

  • Introduce them to any key clients or suppliers they might be talking to.

  • Explain the company's story and its goals. Help them see the big picture they're now part of.

  • Have daily, informal check-ins. A simple "How's it all going?" can make all the difference.

Think About Health & Safety

What it is: Your legal duty as an employer to protect the health, safety, and welfare of your employee.

Why it's important: It prevents accidents and ill health, but it's also a serious legal requirement. A safe employee is a happy and productive one.

How to do it:

• Do a Risk Assessment: This just means taking a sensible look around your workplace to identify things that could cause harm, and deciding what steps to take to prevent it. For a typical small office, you'd look at things like trip hazards (cables, boxes), fire safety (clear exits, working smoke alarms), and electrical safety (checking equipment is in good condition). The HSE website has simple templates to guide you.

• Provide Information and Training: You need to tell your employee about the risks and how you're protecting them. This includes showing them the first aid kit, fire exits, and explaining emergency procedures.

• Display the Health and Safety Law Poster: You are legally required to display the official HSE-approved law poster in a visible place, or provide each worker with the equivalent leaflet.

• Consider a Policy: If you have five or more employees, you must have a written health and safety policy. It's good practice to create a simple one even with your first employee, as it shows you take safety seriously.

Beyond the Checklist: Being a Great First Boss

Going through this checklist is a huge achievement. You’ve officially become an employer. But your role has now changed in a fundamental way. You're no longer just the owner; you're now a manager, and that's a new skill in itself. Being a good boss is what will make your first hire a long-term success.

The most important thing you can do is communicate. In the beginning, it can feel strange to have someone else in your space. Make time for regular, informal chats. Ask them how they're finding things, what's working well, and what they're struggling with. Be approachable and make it clear that no question is a stupid question. This builds the trust they need to feel comfortable and do their best work.

Remember to delegate properly. You hired this person because you need help. It can be hard to let go of tasks you've always done yourself, but you have to trust them. Give them clear instructions, explain the desired outcome, and then give them the space to get on with it. It’s okay if they do things slightly differently to you – what matters is the result.

Finally, think about creating a professional environment from day one. You’ve moved from being a one-person-band to a team, and it's important that this feels like a positive step up for everyone. Simple, professional touches make all the difference. Things like having their desk and equipment ready, planning their first week, and making sure they feel truly welcomed. Handing them their own, official staff ID card on their first morning is a perfect example of this. It’s a small, physical gesture that reinforces that they are now a key part of your professional team.

Getting these human elements right is just as important as the legal paperwork. It’s what turns a job into a great place to work.

Ready to give your new team member that professional welcome? Learn more about creating professional staff ID cards for your new team.