Employing Staff for the First Time in the UK
Last updated: May 2025 · 7 min read
Hiring your first employee is a major milestone — and comes with a set of legal obligations. Here is a checklist of everything you must do before and after their start date.
Before hiring
- Check the right to work — You must verify every employee can legally work in the UK before their start date. Failure carries fines of up to £60,000 per illegal worker (2024 rates). Use the GOV.UK right to work check.
- Register as an employer with HMRC — Do this before the first payday. You will receive a PAYE reference number. Takes up to 5 working days.
- Set up payroll software— You must report PAYE to HMRC in real time (RTI). Use HMRC's free Basic PAYE Tools or commercial software (Xero, Sage, QuickBooks).
- Write an employment contract — Must be given on or before the first working day. Must include pay, hours, holiday entitlement, notice period, and job title.
- Get Employers Liability Insurance — Legally required if you employ anyone. Minimum cover: £5 million. Fines up to £2,500/day for non-compliance.
Pay and working hours
| Age group | National Living/Minimum Wage (Apr 2024) |
|---|---|
| 21 and over | £11.44/hour (National Living Wage) |
| 18–20 | £8.60/hour |
| Under 18 | £6.40/hour |
| Apprentice | £6.40/hour |
- Maximum 48 working hours per week (Working Time Regulations) — employees can opt out in writing
- Minimum 5.6 weeks (28 days) paid holiday per year for full-time employees
- 11 hours rest between shifts; at least 1 day off per week
Auto-enrolment pension
If an employee is aged 22–66 and earns over £10,000/year, you must automatically enrol them in a workplace pension within 6 weeks of their start date.
- Minimum employer contribution: 3% of qualifying earnings
- Total minimum: 8% (employer 3% + employee 5%)
- Register with The Pensions Regulator within 5 months of your duties start date
- Use providers such as NEST (free for employers), Peoples Pension, or Smart Pension
Statutory entitlements you must provide
- Statutory Sick Pay (SSP) — £116.75/week (2024/25) for up to 28 weeks
- Statutory Maternity Pay (SMP) — 90% of average earnings for 6 weeks, then £184.03/week for 33 weeks
- Statutory Paternity Pay (SPP) — £184.03/week for up to 2 weeks
- Statutory Redundancy Pay — Based on age, length of service, and weekly pay (capped at £643/week in 2024)
Costs summary
| Item | Cost |
|---|---|
| PAYE registration | Free |
| Employers Liability Insurance | £60–300/year typically |
| Payroll software (basic) | Free (HMRC Basic PAYE Tools) |
| Employer NI contribution | 13.8% above £9,100/year |
| Employer pension (minimum) | 3% of qualifying earnings |
→ Calculate the true cost of hiring with our Staff Cost Calculator