How do I hire my first employee in the UK (legal checklist)?
By SuLe · Updated 22 June 2026
To hire your first UK employee legally you must run a right-to-work check before they start, register as an employer with HMRC for PAYE, issue a written contract on or before day one, take out employers' liability insurance, and set up pension auto-enrolment. Miss any of these and you risk penalties — several apply from your very first hire.
Key facts
- Right-to-work checks are mandatory before employment starts; civil penalties for illegal working are severe.
- A written statement of core terms is a day-one legal right under the Employment Rights Act 1996.
- Employers' liability insurance of at least £5 million is compulsory from the first employee (1969 Act), with daily fines for going without.
- Pension auto-enrolment duties begin the day the first staff member is employed.
- Pay must meet the National Minimum Wage in money — the National Living Wage for those 21 and over was £12.21/hour for 2025/26; check the current rate on gov.uk.
What is the legal checklist for a first hire?
Hiring turns you into an employer with a set of legal duties that mostly bite from day one. The order matters, because some steps must be done before the person starts.
Run a right-to-work check and keep the evidence. Register with HMRC as an employer so you can operate PAYE and deduct tax and National Insurance. Issue a written contract, arrange employers' liability insurance, and set up a compliant pension scheme. Then assess whether that first employee must be auto-enrolled.
None of this is optional, and the insurance and pension duties in particular surprise founders who assumed rules only apply to bigger teams. They apply to employee number one.
What must I check and register before day one?
Two things must happen before the employee starts work: the right-to-work check and, ideally, PAYE registration. The right-to-work check confirms the person can legally work in the UK, and doing it correctly gives you a statutory excuse against penalties.
Register with HMRC as an employer before the first payday — you can usually do this online, and it lets you run payroll under PAYE. You will deduct income tax and employee National Insurance, and pay employer National Insurance on top.
Employer National Insurance was 15% above a £5,000 secondary threshold for 2025/26, though the Employment Allowance offsets it for most small employers — check the current figures on gov.uk, as these change each April.
What insurance and pension duties apply immediately?
Both apply from your first employee, and both catch founders out. Employers' liability insurance of at least £5 million is compulsory under the Employers' Liability (Compulsory Insurance) Act 1969, and the fine accrues per day you trade without it.
Pension auto-enrolment duties start the day you employ your first member of staff. If that person is aged 22 to State Pension age and earns over the earnings trigger, you must enrol them in a qualifying scheme and contribute — the minimum total is 8% of qualifying earnings with at least 3% from you, on 2025/26 figures. Check the current thresholds on gov.uk.
You must also send a declaration of compliance to The Pensions Regulator, generally within five months of your duties starting.
| Step | When | Why it matters |
|---|---|---|
| Right-to-work check | Before start date | Statutory excuse against illegal-working penalties |
| Register for PAYE with HMRC | Before first payday | Lets you deduct tax and NI legally |
| Written contract | On or before day one | Day-one right under the Employment Rights Act 1996 |
| Employers' liability insurance (£5m+) | Before start date | Compulsory from first employee; daily fines |
| Pension auto-enrolment | From first employment | Enrol eligible staff; declare to the regulator |
Worked example
Tom and Aisha run a climate-tech startup and hire their first employee, a £48,000 operations lead. Before her start date they run an online right-to-work check, register with HMRC for PAYE, and take out £5 million employers' liability cover for a modest annual premium.
They issue a signed contract with 25 days' holiday, a one-month notice period and an IP assignment clause. Because their new hire is 29 and earns well above the trigger, they enrol her in a workplace pension and set up the minimum contributions, then diarise the declaration of compliance deadline with The Pensions Regulator.
Where founders go wrong
Assuming insurance and pensions only apply to bigger teams
— both bite from employee number one, with real penalties.Starting someone before the right-to-work check
— do it before day one, or you lose your statutory defence.Paying below minimum wage by counting perks or equity
— the National Minimum Wage must be paid in money; options do not count.Forgetting the declaration of compliance
— enrolling staff is not enough; you must also tell The Pensions Regulator.
Related questions
Do I need employers' liability insurance for one employee?
Yes. Employers' liability insurance of at least £5 million is compulsory from your very first employee under a 1969 Act, and you can be fined for every day you go without it. It is usually cheap and quick to arrange, so sort it before day one.
Do pension duties apply to a single hire?
They can. Auto-enrolment duties begin the day you employ your first member of staff. If that person is 22 or older, under State Pension age and earns over the earnings trigger, you must enrol them into a qualifying pension and contribute — check the current thresholds on gov.uk. [More: What are a startup's pension auto-enrolment duties?]
What is a right-to-work check?
It is a legal check that your new hire is allowed to work in the UK, done before employment starts. You verify and keep a copy of acceptable documents or use the online service. Skipping it risks severe civil penalties, so build it into every offer process.
Can I hire before the company is incorporated?
It is risky. A company cannot be a party to a contract before it legally exists, and signing on its behalf can make you personally liable under the Companies Act 2006. It is usually cleaner to incorporate first, then hire. [More: Can I hire someone before the company is incorporated?]
Your first hire creates duties across employment law, tax and insurance at once, and a missed step — an insurance gap or a botched right-to-work check — can turn into a fine or a personal liability. A SuLe solicitor can give you a clean first-hire pack and contract. Book a free consultation about your contracts and hire with confidence.
Keep reading: What must a UK employment contract include? · What are a startup's pension auto-enrolment duties? · Can I hire someone before the company is incorporated? · Employee vs contractor — what's the legal difference (and where does IR35 fit)? · Do startups need an employee handbook or staff policies?
Primary sources: GOV.UK — Employment contracts · GOV.UK — Workplace pensions: what employers have to do
