Hiring your first employee: what you must do
The first hire is a milestone, and it also turns you into an employer in the eyes of HMRC, the Pensions Regulator and employment law, all on the same day. Here is what that actually requires.
Register as an employer
You must register with HMRC as an employer before the first payday, and registration can take time to come through, so do it as soon as the hire is agreed. Registration gives you the PAYE references that all your payroll reporting hangs off.
Run payroll and report in real time
Employers must operate PAYE: calculating tax and National Insurance each pay period, giving employees payslips, and reporting to HMRC on or before every payday under Real Time Information. This is a rhythm, not an annual task, and penalties attach to late submissions. It is also the single most commonly outsourced job for first-time employers, because the software, the rules and the deadlines are simply not worth learning for one person's wages.
Workplace pension duties
Auto-enrolment applies from your very first employee. Eligible staff must be put into a workplace pension scheme, employer contributions paid, and a declaration of compliance made to the Pensions Regulator. Even where an employee opts out, the duties around assessing and communicating with them remain yours.
Pay at least the legal minimum
The National Minimum Wage and National Living Wage rates change every April and depend on age. Getting this wrong is both a debt to the employee and a compliance issue, and deductions or unpaid working time can quietly drag a lawful headline rate below the minimum.
Insurance and paperwork
Employers' liability insurance is a legal requirement from the day someone works for you. Employees are also entitled to a written statement of their main terms from day one, and you must check every employee's right to work in the UK before they start.
This note is general guidance, not advice on your circumstances. If your first hire is close and you want payroll and pensions handled from day one, get in touch.