How to hire your first employee in the UK

Register as an employer, then run payroll

HMRC requires an employer PAYE scheme before you pay wages. Choose a payday, a payroll software or agent, and file RTI on time. Read how PAYE works for the monthly rhythm.

National Minimum Wage / National Living Wage applies even to family members if they are employees. Unpaid ‘trial weeks’ are tightly constrained. Holiday pay accrues from day one.

Pensions, insurance and Right to Work

Auto-enrolment duties can start from the first eligible jobholder. Employers’ liability insurance is a legal requirement when you employ staff. Right to Work checks need to be done before employment starts, with a record you can show.

A written statement of particulars is required. A proper contract is cheaper than a dispute. Sick pay, family leave and working time rules apply to tiny firms as well as large ones.

• Right to Work check and copy on file.
• PAYE scheme live before payday one.
• Pension staging / duties assessed, not postponed indefinitely.
• Employers’ liability insurance certificate displayed or available.

Sole traders can employ people

You do not need a limited company to have staff. The sole trader is the employer. That also means the employment liabilities sit on you personally. Some owners incorporate at the same time as the first hire for that reason — see sole trader or limited company.

Solaratax can register the PAYE scheme and run the first six months of payroll while you settle the role. Get in touch a couple of weeks before the start date, not the night before payday.

Questions we are asked

Can my first hire be a contractor instead?

Only if they are genuinely self-employed. Mislabeling an employee as a contractor stores up PAYE, pensions and holiday claims. Status has to match the facts.

Do I need a workplace pension for one part-time person?

Possibly, if they meet the age and earnings tests. There is no ‘tiny firm’ exemption from auto-enrolment once you employ eligible jobholders.

What is an Employer Reference Number?

People usually mean the PAYE reference. You will also see an Accounts Office reference for paying HMRC. Keep both on the payroll file.