There comes a moment in every small business when you realise you cannot do it all yourself. The orders are piling up, your inbox never sleeps, and the thought of cloning yourself has crossed your mind more than once. If that sounds familiar, this hiring your first employee UK checklist is for you. Taking on your first team member is one of the most exciting milestones you will hit as a founder.
It is also the step that keeps new business owners awake at night. What does it actually cost? What does the law require? What if you pick the wrong person? This guide answers all of that in plain English. You will find the full legal checklist, a realistic cost breakdown, practical interview tips for people who have never interviewed anyone, and a simple plan for the first 90 days.
Whether you run a shop, a trade, an online store or a consultancy, the process is the same. Let us walk through it together, one checklist item at a time.
In this guide:
- Are you actually ready to hire?
- What your first employee will really cost
- Hiring your first employee UK checklist: the legal essentials
- Writing a job description that attracts the right person
- Where to find candidates without spending a fortune
- How to interview when you have never done it before
- Making the offer and sorting payroll
- Nailing the first 90 days
- Mistakes first time employers make
- Frequently asked questions
Are you actually ready to hire?
Before you write a single job advert, it is worth pausing to check that hiring is the right move right now. Bringing someone on too early can strain your cash flow. Waiting too long can stall your growth and burn you out. The sweet spot is usually obvious once you know what to look for.
This hiring your first employee UK checklist starts before any paperwork, with an honest look at whether the timing is right. You are probably ready if you are regularly turning down work, if admin is eating the hours you should spend winning business, or if customers are waiting longer than they should. Another telltale sign is that you have stopped doing the work that actually grows the business because you are buried in the work that simply keeps it running.
Consider the alternatives first
Hiring an employee is not the only way to get help. A freelancer can cover a busy period without any of the payroll admin. A part time assistant a few days a week might be all you need. And if you are open to training someone from scratch, taking on an apprentice can be a cost effective route with government funding available in many cases.
Be honest with yourself about the workload. If the extra work is temporary or unpredictable, a flexible arrangement will serve you better than a permanent contract. If the demand is steady and growing, it is time to commit to that first hire.
What your first employee will really cost
Salary is only the starting point. When you hire in the UK, the true cost of an employee is typically 15 to 25 percent higher than their gross pay once you add everything up. Let us look at a realistic example so there are no surprises.
Imagine you offer a salary of £28,000 a year. On top of that you will pay employer National Insurance at 15 percent on earnings above £5,000, which works out at roughly £3,450. You will also pay at least 3 percent into their workplace pension on qualifying earnings, around £650 a year. Add employer liability insurance at a few hundred pounds and the annual cost lands near £32,000.
There is good news though. Most small employers can claim the Employment Allowance, worth up to £10,500 a year, which can wipe out your National Insurance bill entirely. That brings the real cost much closer to the headline salary. Just remember that wage rates and thresholds change each April, so always check the current figures on GOV.UK before you set a salary. As a reference point, the National Living Wage for workers aged 21 and over was £12.21 an hour from April 2025.
Hiring your first employee UK checklist: the legal essentials
This is the part that intimidates most new employers, but this hiring your first employee UK checklist turns the paperwork into simple steps. Work through it once and you will wonder what you were worried about. Here is everything UK law requires before your new starter begins.
- Check their right to work. You must verify original documents, such as a passport, or use the Home Office online checking service with a share code. Do this before their first day and keep a dated copy. Getting this wrong can lead to civil penalties of up to £45,000 per illegal worker.
- Register as an employer with HMRC. You need to register for PAYE before your first payday so you can report tax and National Insurance. Registration is free and done online, but it can take several days, so do not leave it to the last minute.
- Provide a written statement. Every employee must receive written employment particulars on or before their first day, covering pay, hours, holiday, notice period and place of work. A proper contract protects you both.
- Take out employer liability insurance. This is a legal requirement with minimum cover of £5 million, and you must be able to show the certificate to your employee.
- Set up a workplace pension. Staff aged 22 to State Pension age who earn over £10,000 a year must be automatically enrolled, with a minimum 3 percent employer contribution. You also need to tell The Pensions Regulator you have done it.
Keep copies of everything in one secure place, digital or paper. Good record keeping from day one saves real headaches later, especially if HMRC ever comes asking questions.
Writing a job description that attracts the right person
A great hire starts with a clear description of the role. Before you advertise, write down exactly what this person will do each week, what success looks like in the first six months, and which skills are essential versus nice to have. This exercise alone prevents most hiring mistakes because it forces you to define the gap you are trying to fill.
When you turn that description into an advert, be specific about the salary range. Adverts with transparent pay attract more and better applicants, and they filter out people whose expectations you cannot meet. Sell the opportunity too. Tell candidates what makes your business a great place to work, whether that is flexible hours, real responsibility from day one, or the chance to grow with a young company.
One caution: watch your language. Words like energetic, recent graduate or young and dynamic can count as age discrimination under UK law. Describe the skills and attitude you need, not the age or background of the person you imagine.
Where to find candidates without spending a fortune
You do not need a recruitment agency budget to find good people. Start with the free options. Indeed lets you post jobs for free, GOV.UK Find a job reaches active jobseekers across the country, and LinkedIn works well for office and professional roles. A post in local community groups or on your own social channels can also work wonders, especially for customer facing roles.
Do not overlook your own network. Tell suppliers, customers and friends that you are hiring. Referred candidates tend to stay longer and settle faster because someone you trust has already vouched for the fit. If you do decide to use an agency later, agree the fee in writing first. Agency fees often run to 15 percent or more of the starting salary, which is a big chunk for a small business.
How to interview when you have never done it before
Interviewing feels awkward the first time, but a little structure removes the guesswork. Prepare the same core questions for every candidate so you can compare answers fairly. Good questions dig into real behaviour: ask them to describe a tricky situation they handled, or how they would approach a typical task in your business.
A simple scorecard helps enormously. List the four or five things that matter most, such as reliability, relevant skill, communication and enthusiasm, and rate each candidate out of five after the interview. For practical roles, add a short work sample, like asking a prospective admin assistant to organise a messy spreadsheet. What people do tells you more than what they say.
Steer clear of questions about age, family plans, health or anything else personal. They are not only irrelevant, they can land you in legal trouble. And always take up references before you make a final decision. A quick call to a former employer often reveals more than the interview did.
Making the offer and sorting payroll
Once you have chosen your candidate, move at a sensible pace. Put the offer in writing with the job title, salary, start date and any conditions, such as satisfactory references. Then issue the full contract or written statement before their start date, as the law requires.
Ask your new starter for their P45 from their previous job, or have them complete a HMRC starter checklist if they do not have one. This gives you the tax code information you need to pay them correctly from day one.
For payroll itself, you have three realistic options. HMRC’s free Basic PAYE Tools handle the essentials for one employee. Paid software like Xero or QuickBooks adds automation as you grow. Or you can outsource to an accountant or payroll bureau, typically £50 to £200 a month. Whichever route you choose, you must send a Full Payment Submission to HMRC on or before each payday and give your employee a payslip every pay period.
Nailing the first 90 days
The hire is only half the job. How you welcome someone shapes whether they stay and thrive. Before day one, have their workspace, logins and equipment ready. Nothing says disorganised like a new starter with no laptop and nothing to do.
Set clear goals for the first month, the second month and the end of probation. In the first 30 days the aim is learning: systems, customers, colleagues. By 60 days they should be working independently on real tasks. By 90 days you review progress together and agree what comes next. Short weekly check ins during this period catch small problems before they become big ones.
When probation ends, take a proper step back and look at the evidence. Has the hire freed up your time? Is the work getting done well? Our guide on how to measure hiring effectiveness walks you through the KPIs that actually matter, from time to productivity to retention, so your second hire is even easier than your first.
Mistakes first time employers make
Most hiring pain comes from a handful of avoidable errors. Watch out for these.
- Hiring in a panic. Desperation hires rarely work out. Start the process before you are drowning, not after.
- Keeping the role vague. If you cannot describe the job clearly, candidates cannot picture themselves doing it, and you cannot judge their performance later.
- Skipping the right to work check. It takes minutes and the penalties for missing it are enormous. No exceptions.
- Relying on a handshake. Verbal agreements lead to disputes. Put everything in writing.
- Getting employment status wrong. Calling someone self employed when they work like an employee can trigger backdated tax bills. When in doubt, use the HMRC employment status checker.
- Forgetting the pension. Auto enrolment duties start on day one, not when you get around to it.
- No probation review. A probation period only works if you actually review it. Diary the date the day they start.
Frequently asked questions
How much does it cost to hire your first employee in the UK?
Beyond the salary, budget roughly 15 to 25 percent extra for employer National Insurance, pension contributions and insurance. The Employment Allowance, worth up to £10,500 a year, can eliminate the National Insurance cost for most small employers.
Do I have to register as an employer before my new starter begins?
You must register with HMRC for PAYE before your first payday. Registration is free and online, but allow several days for your PAYE reference number to arrive.
What should be on the legal checklist for my first hire?
Verify the right to work before day one, provide written employment particulars on or before the start date, hold employer liability insurance of at least £5 million, and set up workplace pension auto enrolment for eligible staff.
Can I hire someone part time or on a temporary contract first?
Yes. Part time and fixed term contracts follow the same legal rules as full time permanent ones, and they are a sensible way to test a role before committing. You can also include a probation period in any contract.
What should I do if the new hire is not working out?
Address it early with honest feedback and clear expectations. Use the probation review to decide fairly, follow a proper process, and take advice from ACAS if you are considering dismissal. Document every conversation along the way.
Final thoughts
Working through a hiring your first employee UK checklist can feel like a mountain when you look at it all at once. Break it into steps and it becomes entirely manageable: decide the role, understand the true cost, work through the legal checklist, hire carefully, and support your new starter through their first 90 days.
Get this right and the payoff is enormous. You buy back your own time, your customers get a better experience, and your business gains the capacity to grow. That first hire is not just an expense on the payroll. It is the moment your business stops being a one person show and starts becoming something bigger.
