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A Step-By-Step Guide To Hiring Your First Employee

Taking on your first member of staff is a major milestone for any business. However, if you’ve never done it before it can be a minefield working out all the different steps you need to follow. 

“It’s really best to get it right from the start rather than let things slide thinking you’ll sort them out later,” says Liz Sebag-Montefiore, director of HR consultancy 10Eighty.

Here’s what you need to do to comply with your new legal responsibilities and reporting obligations.

 

Step 1: Ensure a fair recruitment process

First of all, you must make sure you recruit staff fairly – it’s against the law to discriminate against anyone.

Be very careful about how you word your job ad. For example, you cannot say that you do not cater for staff with a disability, or use phrases like ‘recent graduate’. Insisting on a ‘young, dynamic’ candidate would also rule out older people. It’s best to stick to the actual requirements of the job.

When interviewing someone, steer clear of asking candidates if they have or plan to have children, whether they are married, and about any other “protected characteristics”.

You cannot reject someone just because they have a foreign-sounding name, or refuse to employ a person with a spent criminal conviction to their name.

Beware of unconscious bias, too. “Removing names, gender and any other personal details from job applications should guarantee that your shortlist is fair in this respect,” says Alan Price, HR expert at Peninsula.

Key tips:

  • Seek professional advice so you don’t fall foul of discrimination laws.
  • Maintain records explaining why you chose one candidate over another.
  • Remember that applicants can request to see the interview notes.

 

Step 2: Check their status to work in the UK

You have a legal obligation to check that your proposed new staff member can legally work in the UK.

“Don’t accept excuses, unauthorised documents or copied documents,” Sebag-Montefiore says. “Also, remember to retain copies of all the original documents you check.”

Key tips:

 

Step 3: Draw up a contract of employment

Your chosen candidate will be in your employment as soon as they accept your offer of a job, whether the offer is in writing or not.

“However, bear in mind that they have a right to receive a written contract once they reach one month’s continuous employment, and from 6th April 2020 this will be their right from day one,” says Price.

He adds: “Failing to provide a contract, or providing a contract without all the required information, will leave you open to tribunal claims.”

You can check what to include in a contract here.

“You may choose to offer the employee enhanced entitlements when it comes to their pay or annual leave. Otherwise, they mustn’t receive any less than the statutory minimum,” Price says.

Also, your new employee has some rights that are normally implied (but not spelt out) in their contract. For example, they are entitled to a safe and healthy working environment, and a reasonable degree of privacy. The latter means that any monitoring of their phone calls, email and internet use must be reasonable and overt.

Sebag-Montefiore confirms: “You can’t ask your employees to sign away their rights in an employment contract.”

Key tips:

 

Step 4: Get clued up on PAYE and payroll

You need to register as an employer with HMRC before you start paying your new employee – you can do this up to four weeks before.

“This is the case whether you’re self-employed or running a limited company,” says Zoe Whitman, owner of bookkeeping practice But the Books.

“Once you’re registered, you’ll need to run monthly payroll to calculate your employee’s salary and the correct deductions, pay them, issue a payslip and make a monthly return to HMRC (called a Full Payment Submission) on or before payday. You’ll also need to pay any PAYE and National Insurance deductions to HMRC by their deadline the following month.”

Key tips:

 

Step 5: Set up their workplace pension

Assuming your new employee is aged between 22 and the State Pension age, and that they will earn at least £10,000 a year, you will need to set up and enrol them in a workplace pension scheme.

You will need to pay at least 3% of their “qualifying earnings” into the scheme. Under most schemes, it’s their total earnings between £6,032 and £46,350 a year before tax. The employee will usually pay a minimum of 5%.

“Confirmation of these deductions should be listed on the individual’s pay statement,” says Price.

He adds: “The employee may choose to opt-out, but this isn’t permanent and they will need to be re-enrolled every three years, at which point they will be able to opt-out again if they wish.” 

Key tips:

 


 

Taking on your first employee should be exciting – it means you’re doing well and need help to grow your business. Just ensure that you understand and comply with all the legal bits, and seek expert advice if in doubt.

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Iwona Tokc-Wilde

Iwona Tokc-Wilde is a business journalist.

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