I Am Hiring My First Employee

You must register as an employer with HMRC before the first payday — and ideally at least 2 weeks before, because the reference can take that long to arrive. Register at gov.uk/register-employer; you will need your business name and address, your Government Gateway sign-in, and details of the type of business (sole trader, limited company, partnership). Once registered you receive a PAYE reference and an Accounts Office reference. You will use these every time you submit a Full Payment Submission (FPS) and pay HMRC. You also need to register for the Construction Industry Scheme separately if you employ subcontractors in construction.

Employers' Liability (Compulsory Insurance) Act 1969 requires you to hold £5 million minimum cover from the day you take on staff. You must display the certificate at every workplace (or make it accessible electronically — most insurers will email a digital copy you can post on your intranet). The Health and Safety Executive can fine you up to £2,500 for every day you trade uninsured, plus £1,000 for not displaying the certificate. There is a narrow exemption for family-only businesses where every worker is a close family member of a sole-shareholder owner. Most insurers can quote and bind cover within 24 hours.

Section 1 of the Employment Rights Act 1996 requires you to give every employee a written statement of employment particulars <strong>on or before their first day</strong>. The statement must include: name and address of employer and employee, job title and brief description, start date, pay (including overtime, commissions, and any benefits), hours of work, holiday entitlement and pay, sick-pay arrangements, pension arrangements, notice periods, place of work, length of any fixed term, training requirements, and disciplinary and grievance procedures. Acas provides free templates. A staff handbook is not legally required but provides a single place to put the rest of your policies (annual leave, IT use, expenses, etc.).

Before the employee starts work, you must verify their right to work in the UK using one of three Home Office statutory methods: (a) <strong>online check</strong> using a share code (for most non-British and non-Irish nationals — the share code is generated by the worker on gov.uk/view-right-to-work); (b) <strong>identity service provider (IDSP)</strong> using a certified digital identity service for British and Irish citizens; or (c) a <strong>manual document check</strong> for the small remaining categories. Keep a record of the check (the share-code result, IDSP confirmation, or copies of documents) for the duration of employment plus 2 years. Civil penalty for getting it wrong: up to £60,000 per worker for a repeat offence (£45,000 for a first offence). The check protects you only if you actually did it before they started.

Run payroll using HMRC-recognised software (most accounting packages include payroll, or use HMRC's free Basic PAYE Tools for under 9 employees). You file a Full Payment Submission (FPS) on or before each payday reporting pay, tax, and National Insurance. Auto-enrolment pension duties apply from day one of the employment — assess whether the employee is eligible (earning over £10,000 / year and aged 22+ to State Pension age), enrol them within their joining window if eligible, and start contributions. Minimum contributions: 8% of qualifying earnings, with at least 3% from the employer. The Pensions Regulator monitors compliance and issues fines for non-compliance. Use a workplace pension scheme — NEST is the government-backed default and accepts every employer.

Within <strong>5 months</strong> of your duties start date, you must complete a Declaration of Compliance with the Pensions Regulator confirming that you have met your auto-enrolment duties (assessed, enrolled or postponed, set up the scheme, and started contributions). This is a separate online form on the Pensions Regulator website. Re-declare every 3 years. Penalty for missing the declaration: a fixed £400 penalty for the first non-compliance, escalating to daily penalties.