Hiring turns you from a business into an employer, and the law has opinions about the second one. Here is the order to do things in.

1. Check the true cost first

Salary is not the cost. Add employer National Insurance at 15% on earnings above £5,000 a year, pension contributions, and insurance. A £25,000 salary really costs about £28,000 before pension and insurance: £25,000 plus £3,000 of employer NI.

2. Register as an employer

Register with HMRC before the first payday and set up PAYE to deduct tax and National Insurance. You can run payroll yourself with software or pay an accountant or bureau to run it. GOV.UK’s “Get ready to employ someone for the first time” walks the whole sequence.

3. Get Employers’ Liability insurance

Legally required, at least £5 million of cover, from an authorised insurer, in place the day your employee starts. The fine for being uninsured is £2,500 for every day you are not properly covered. You can also be fined £1,000 if you do not display the certificate or show it to an inspector when asked.

4. Check the right to work

You must check every new employee can legally work in the UK before they start, using their documents or the online checking service. “They seemed fine” is not a defence.

5. Give them the written statement

Every employee is entitled to a written statement of the main terms of the job from day one: pay, hours, place of work, holiday, notice. It is not optional and it is not the same as a full contract, though most people combine them.

6. Pensions

Your duties start on the employee’s first day. You must enrol staff aged 22 to State Pension age earning at least £10,000 a year into a workplace pension and contribute. In most schemes contributions are worked out on earnings between £6,240 and £50,270, with the employer paying at least 3% and the total, including the employee’s share, at least 8%.

7. Pay and reporting

Pay at least the National Minimum Wage for their age, run payroll on or before every payday, and report to HMRC each time. The Employment Allowance can cut up to £10,500 off your annual employer NI bill, and unlike a one-director company, a business with employees can claim it.

Sources

All pages checked 20 October 2026.

• Get ready to employ someone for the first time: https://www.gov.uk/employing-staff
• Employers’ Liability insurance: https://www.gov.uk/employers-liability-insurance
• Workplace pensions for employers: https://www.gov.uk/workplace-pensions-employers
• What you, your employer and the government pay: https://www.gov.uk/workplace-pensions/what-you-your-employer-and-the-government-pay
• Rates and thresholds for employers 2026 to 2027: https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027
• Employment Allowance: https://www.gov.uk/employment-allowance

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