To employ someone in the UK for the first time you must register as an employer with HMRC up to four weeks before their first payday, set up PAYE through Real Time Information, take out employers’ liability insurance, run a right-to-work check, issue a written statement of particulars on day one, and enrol the employee in a workplace pension if they qualify.

This guide covers each step in order, plus the first-payday checklist and the major rule changes that landed in April 2026.

Pre-hire

Three things before posting the role:

Job description

Write a clear job description covering role, key responsibilities, required skills, and reporting line. It guides recruitment, sets expectations on day one, and underpins fair dismissal procedures if needed later.

Salary benchmarking

Decide salary using market data. ONS earnings data, Glassdoor, and LinkedIn salary tools help benchmark. Note minimum-wage floors: National Living Wage (age 21+) and National Minimum Wage (under 21 and apprentices) set the legal minimum.

Recruitment fairness

Recruitment is covered by the Equality Act 2010. Avoid criteria that discriminate directly or indirectly on protected characteristics (age, sex, race, religion, disability, sexual orientation, gender reassignment, marriage and civil partnership, pregnancy and maternity).

Right to work checks

You must check every new employee’s right to work in the UK before they start. The check gives you a “statutory excuse” against an illegal-working civil penalty if it later turns out the employee did not have the right to work.

Three options:

  • Online check for most overseas nationals — using a share code from the employee
  • IDVT (digital identity check) for British and Irish citizens — using a certified Identity Service Provider
  • Manual check of original documents — for citizens whose IDVT eligibility is limited

Keep dated copies of the right-to-work evidence for the duration of employment plus two years.

Register as an employer with HMRC

You can register as an employer up to four weeks before your first payday. Register online via the HMRC Employer Registration service. HMRC issues:

  • Employer PAYE reference (in the format 123/AB12345)
  • Accounts Office reference (in the format 123PA00012345)

Both are needed for payroll software setup and for paying PAYE to HMRC.

You must run payroll under Real Time Information (RTI), submitting Full Payment Submissions (FPS) on or before each payday. Employer Payment Summaries (EPS) are submitted monthly to claim Employment Allowance, recover statutory pay, and report any other adjustments.

For a fuller view of employer NI cost and how to reduce it, see our employer’s NI guide.

Employers’ liability insurance

Compulsory under the Employers’ Liability (Compulsory Insurance) Act 1969 if you employ even one person. Minimum cover is £5 million; most policies offer £10 million as standard.

Display the policy certificate at the workplace (electronic display is allowed). Failure to hold employers’ liability insurance is a criminal offence with significant fines per day of non-compliance.

The written statement of particulars

Under the Employment Rights Act 1996 (as amended in 2020), every new employee and worker is entitled to a written statement of particulars on day one of employment. Required content:

  • Names of employer and employee
  • Job title or brief description
  • Start date
  • Place of work
  • Pay (amount and frequency)
  • Working hours and any variability
  • Holiday entitlement
  • Notice required from each side
  • Length of any probationary period
  • Sick pay arrangements
  • Pension arrangements
  • Other benefits
  • Mandatory training
  • Disciplinary and grievance procedures (or location of these)

The day-one rule is a 2020 reform. Previously the statement had to be issued within two months. Now it must be in place on day one for both employees and “workers”.

Many employers issue a fuller employment contract that meets the section 1 statement requirement plus additional contractual terms (restrictive covenants, intellectual property, confidentiality).

Pension auto-enrolment

Under the Pensions Act 2008, every UK employer must enrol eligible employees in a qualifying workplace pension scheme. Employer minimum contribution is 3% of qualifying earnings; total minimum is 8% (employer + employee + tax relief) for 2026/27.

Eligible workers are those aged 22 to State Pension age earning above the £10,000 trigger. Enrolment is automatic; the employee can opt out within one month of being enrolled.

Choose a pension provider before your first payday. NEST is the government-backed default; alternatives include The People’s Pension, Smart Pension, Aviva, and Royal London. For a comparison, see workplace pension providers UK compared.

Payroll software

Three options for running payroll:

  • HMRC Basic PAYE Tools — free, suitable for up to nine employees, basic functionality only
  • Cloud accounting software — Xero, QuickBooks, FreeAgent, Sage all include payroll modules, often bundled with bookkeeping. Prices typically £5–£15 per month for the payroll component on a small headcount
  • Specialist payroll — BrightPay, Moneysoft, KashFlow Payroll. Usually best value once you exceed five employees or need advanced features

Whichever route, the software must support RTI submissions to HMRC and auto-enrolment file generation for your pension provider.

First-payday checklist

For payday number one:

  • Set the employee up in payroll — name, NI number, tax code (from P45 from previous employer or the starter checklist)
  • Run the FPS to HMRC on or before payday
  • Pay the employee the correct net amount (typically by BACS three working days before payday)
  • Pay PAYE to HMRC by the 22nd of the following month (electronic) or 19th (postal). Employment Allowance offsets reduce or eliminate this for many small employers
  • Submit pension contributions to your auto-enrolment provider in line with the scheme’s payment schedule
  • SSP from day one — from 6 April 2026, statutory sick pay is payable from the first day of sickness with no waiting period and no Lower Earnings Limit threshold. Set up your SSP procedure from day one

Key takeaways

  • Register as an employer with HMRC up to four weeks before first payday
  • Get employers’ liability insurance — compulsory minimum £5 million
  • Run right-to-work checks before the employee starts
  • Issue the written statement of particulars on day one
  • Enrol eligible employees in a workplace pension automatically
  • SSP day-one rule applies from 6 April 2026
  • Use HMRC Basic PAYE Tools, accounting software, or specialist payroll software for RTI

Frequently asked questions

When should I register as an employer with HMRC? Up to four weeks before your first payday. HMRC issues your PAYE reference and Accounts Office reference, both needed for payroll.

Do I need employers’ liability insurance for one employee? Yes. The Employers’ Liability (Compulsory Insurance) Act 1969 requires cover from the moment you employ even one person. Minimum cover is £5 million.

When must I issue a contract of employment? On day one. The Employment Rights Act 1996 requires a written statement of particulars to be in place from the first day of employment for employees and workers.

Do I have to enrol my employee in a pension? Yes if they meet the eligibility criteria — aged 22 to State Pension age and earning above the £10,000 trigger. Employer minimum contribution is 3% of qualifying earnings.

What changed for SSP in 2026? From 6 April 2026, Statutory Sick Pay is payable from day one of sickness (no three-day waiting period) and the Lower Earnings Limit eligibility threshold has been removed. The rate is 80% of average weekly earnings or £123.25 weekly, whichever is lower.

Useful resources

HMRC — Become an employer https://www.gov.uk/register-employer

Acas — Day-one rights https://www.acas.org.uk/

The Pensions Regulator — Workplace pensions for employers https://www.thepensionsregulator.gov.uk/en/employers