First employee checklist (UK)

The sequence that keeps you legal

• Before you offer: work out the true cost with the spreadsheet, check the pay clears National Minimum Wage, and write the job description that becomes the contract.
• When you hire: right-to-work check before day one (keep dated evidence), DBS check where the role qualifies, employers' liability insurance of at least £5 million live from the start date, and HMRC employer registration before the first payday (allow up to 30 working days for the PAYE reference).
• On or before day one: the written statement of employment particulars is a day-one right. Collect the P45 or HMRC starter checklist, bank details and NI number so the first payslip is right.
• First weeks: RTI payroll running with a Full Payment Submission on or before each payday, auto-enrolment pension duties met (3% employer minimum, declaration of compliance within 5 months), a workplace risk assessment done, and the Employment Allowance claimed if eligible.

What the hire really costs

• Employer National Insurance: 15% of earnings above £5,000 a year in 2026/27. On a £28,000 salary that is £3,450.
• Employment Allowance: eligible employers knock up to £10,500 off their employer NI bill, which usually wipes out the NI cost of a first hire entirely. It is claimed through payroll software, not automatic.
• Pension: 3% employer minimum under auto-enrolment. £840 on a £28,000 salary as a cautious full-salary estimate.
• Holiday and absence cover: 5.6 weeks of statutory paid holiday sit inside the salary, but covering the work while they are off is a real cost. The spreadsheet makes it an editable assumption rather than a surprise.

The workbook shows year-one cost, ongoing annual cost, monthly cash cost and the true cost as a percentage of salary, all recalculating as you edit the blue input cells. Rates last checked: 15 July 2026.

What do I legally need before hiring my first employee?

In order: check their right to work in the UK before day one, get employers' liability insurance of at least £5 million from the day they start, register as an employer with HMRC before the first payday, give a written statement of employment particulars on or before day one, run RTI payroll from the first payday and meet auto-enrolment pension duties from their start date. The checklist in this pack sequences all of it.

Do I need a new employee starter form?

Yes, in effect. New starters give you a P45 from their previous job, or complete the HMRC starter checklist if they do not have one, so you can put them on the right tax code from the first payday. Collect bank details, address, National Insurance number and emergency contact at the same time; the checklist includes a step for all of this.

How much does an employee really cost on top of salary?

Add employer National Insurance at 15% on earnings above £5,000 a year (2026/27), a minimum 3% employer pension contribution, cover for holiday and absence, and one-off costs like kit and recruitment. The spreadsheet in this pack turns a salary into the true year-one and ongoing cost, including the Employment Allowance offset of up to £10,500 that wipes out employer NI for many first hires.

When do I have to register as an employer with HMRC?

Before the first payday. You can register up to 2 months before you start paying staff, and it can take up to 30 working days to receive your PAYE reference, so do it as soon as the offer is accepted. You cannot report payroll in real time (RTI) without it.

Is employers' liability insurance compulsory?

Yes, for almost all employers, from the day your first employee starts. You need at least £5 million of cover from an authorised insurer, and you must display the certificate. You can be fined for every day you are uninsured. Some family businesses employing only close relatives are exempt, but do not assume: check first.

Do I need a DBS check for my first employee?

Only where the role qualifies. Standard and enhanced DBS checks are restricted to eligible roles such as working with children or vulnerable adults; you cannot request one for an ordinary office or trade job. A basic DBS check (unspent convictions) can be requested for any role if you have a genuine reason.

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