10 Key Considerations When Taking on Your First Employee

Bringing on your first employee is a milestone for any business. It marks the transition from running a one-person operation to managing a team and introduces a whole new set of responsibilities. From day-to-day management to long-term planning, there are practical, legal, and strategic considerations to navigate. Being well-prepared from the outset can help you build a strong foundation for your growing team and ensure a positive experience for both you and your new staff member.

In this blog, we explore the 10 things you need to bear in mind when taking on your first employee.

1. Carry out legally required pre-employment checks

• Once you have found a suitable candidate for the position you’ve advertised, you must make sure that your prospective employee

  • has the right to work in the UK, and

  • passes any further checks which may be appropriate to their new position, particularly criminal record checks (a DBS check if they’re working with children or vulnerable adults in any capacity, for example).

    
    

2. Provide a written statement of employment particulars

• By law, all employees and workers must be given a written statement of employment particulars on or before their first day of work. This sets out key terms such as pay, working hours, holiday entitlement, and other essential information.

• While the written statement is the legal minimum, it is best practice to issue a full employment contract. A contract provides clarity by outlining rights, responsibilities, and working conditions, and it helps protect both you and your staff if any disputes arise.

  
  

3. Make sure your business is adequately insured

• You are legally required to have Employers’ Liability insurance in place as soon as you employ staff, as set out in the Employers’ Liability (Compulsory Insurance) Act 1969.

• This cover protects your business against claims from employees who may be injured or become ill as a result of their work.

• Failure to have the correct insurance can result in fines of up to £2,500 for every day you are not properly insured.

  
  

4. Register as an employer with HMRC

• You must register with HMRC as an employer before you pay your first employee.

• As an employer, you will be responsible for paying your staff a pre-agreed salary and deducting any PAYE (income tax) and National Insurance Contributions from staff salaries.

  
  

5. Paying your employees

• All paid staff must receive a payslip showing their gross and net pay, income tax and National Insurance deductions, pension contributions, and any other deductions. For employees whose pay varies based on hours worked, the payslip must also show the number of hours worked.

• You must submit payroll information to HMRC each time you pay your staff to comply with Real Time Information (RTI) requirements.

• All pay must meet the National Minimum Wage or National Living Wage, depending on the employee’s age and status.

  
  

6. Health & Safety obligations

• As an employer, you are responsible for providing employees with a safe and secure working environment. You do not need a written Health & Safety policy unless you have five or more employees.  However, you should go through the process of assessing the risks your staff may face at work.

  
  

7. Pension auto-enrolment

• You must auto-enrol eligible staff into a workplace pension scheme.

• Employers are required to contribute at least 3% of the employee’s qualifying earnings, with total minimum contributions of 8%.

• This ensures staff are saving for retirement while you remain compliant with workplace pension law.

  
  

8. Be aware of leave entitlements

• Employees have a range of statutory rights to time off, including:

  • Holiday entitlement – at least 5.6 weeks per year for full-time employees, including bank holidays.

  • Sick pay – Statutory Sick Pay (SSP) applies if an employee meets the eligibility criteria.

  • Family leave – maternity, paternity, adoption, shared parental leave, and other protected absences.

• Understanding these rights helps you plan staffing and remain compliant with employment law.

  
  

9. Involve existing employees

• As your business grows, it can be tempting to assume you know best. However, involving existing employees in decisions and encouraging them to share ideas can improve processes and boost engagement.

• Giving staff autonomy within clear guidelines often leads to innovation and better problem-solving, benefiting both your team and your business.

  
  

10. What happens if things don’t work out?

• Employment law can be complex when ending a working relationship. It is essential to handle dismissals fairly and in line with statutory requirements.

• Employees with more than two years’ continuous service generally have the right to claim unfair dismissal. However, protections around discrimination, whistleblowing, and certain contract breaches apply from day one.

• Employment tribunals often involve disputes over pay, dismissal procedures, or discrimination. Following fair procedures and documenting decisions carefully helps minimise risk.

Conclusion

Hiring your first employee is an exciting step, but it comes with important responsibilities. By understanding your legal obligations, putting clear processes in place, and fostering a positive working environment, you can set both your business and your new team member up for success. Thoughtful preparation at the start not only protects your business but also lays the groundwork for a productive and engaged workforce as your company grows.

If you would like further advice on employment matters, including managing flexible working requests or other HR queries, please contact us at clientservices@robinsongracehr.com.

Frequently Asked Questions:

1. Do I need to hire someone? 

Answer: Hiring your first employee is a significant step. Before proceeding, assess whether the workload justifies the hire. Consider if the tasks can be outsourced or if automation tools can help. If you decide to hire, ensure you understand the legal and financial responsibilities involved.

2. What are the costs associated with hiring an employee?

Answer: Beyond salary, consider additional costs such as National Insurance contributions, pension contributions, and potential recruitment fees. It's essential to budget for these expenses to ensure financial stability for your business.

3. How do I handle employee performance issues?

Answer: Address performance concerns promptly and fairly. Implement a clear performance management process, provide regular feedback, and offer support for improvement. If issues persist, ensure you follow a fair disciplinary procedure in line with employment law to mitigate risks.

Check out other Blogs in our series:

The Essential Guide to Staff Induction: What to Include for Success

8 Recruitment Trends for 2025 

What UK Small Businesses Need to Know to Stay Legally Compliant as They Grow

The content of our blogs is intended for general information and not to replace legal or other professional advice.

Hiring your first employee, Small business employment guide, Pre-employment checks UK, Employment contracts and rights, Employer responsibilities UK, Payroll and PAYE compliance, Workplace Health and Safety obligations, Pension auto-enrolment UK, Employee leave entitlements, Managing first staff member

 10 Key Considerations When Taking on Your First Employee