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How To Take On Your First Employee?

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What to know as a business start up

Jodie Hill Thrive law employment lawyer,

By Jodie Hill

Starting a business can be a daunting but exciting time and so can taking on staff, so to make it easier here are the what to know’s, the checklists and what we can offer to help make things easier for you.

When you are expecting a new employee for the first time, there are 7 things you must do.

  1. Decide how much you are going to pay that employee. You must pay your employee at least the National Minimum Wage
  2. Check if someone has the legal right to work in the UK. You may have to do other employment checks as well.
  3. Check if you to apply for a DBS check if you work in a field that requires one.
  4. Get employment insurance and upon hiring your first employee, as an employer you need employers’ liability insurance.
  5. Send details of the job including terms and conditions in writing to your employee, such as an offer letter.
  6. Tell HM Revenue and Customs (HMRC) about your new employee but registering yourself as an employer. This can be done up to 4 wees before you pay your new staff.
  7. Check if you need to automatically enrol your staff into a workplace pension scheme.
  8. Register with ICO

Taking on a new Employee

Taking on a new employee is something to be celebrated, making sure you have all the

necessary procedures, policies and documents in place is essential, to a positive

employer/employee relationship, while being legally compliant.

The Checklist: The Contract and Handbook

The Contract

  1. Every employee should be issued with a Statement of Terms within 2 months of their start date. This is usually contained in a Contract of Employment and it must be compliant with s.1 Employment Rights Act 1996.
  2. The contract should
    1. be tailored to your business but still meet all the requirements of a legally enforceable contract.
    2. should set out the employment conditions, rights, responsibilities, and duties. The contract must be followed until it ends, for example when notice is given by either party or when the employee is being dismissed, place of work, wages and hour etc.
    3. Should be signed by both parties – whilst this isn’t a legal requirement it helps if a dispute ever arises if it was signed at the time.
  3. Contrary to popular belief a written, an employment contract does not need to be written to be legally enforceable. You can verbally enter into a contract of employment. (you must still provide the written section 1 statement within 2 months though)
  4. Terms of a contract can be made up of many different documents such as emails, letters, offer letter, contract and other documents where the terms are discussed. We always suggest ensuring everything is in a written contract to avoid any ambiguity in the working relationship.

The Handbook

Every employee should be given a staff handbook at the start of their employment which sets out the relevant procedures in regards to complaints, disciplinary procedures, uniform and other administrative parts of the employment such as booking holidays, overtime, sickness and absence, drug policies, whistleblowing and maternity leave, to name the main elements.

The use of telephones, email, internet and personal use of these should be outlined in the handbook.

The following policies should also be in the handbook:

  • Equal Opportunities Policy
  • Disciplinary Rules and Procedures
  • Grievance Procedure
  • Health and Safety Policy
  • Data Protection Policy

The more detailed your staff policy is the more understanding your employees have of the way you run your business and gives the business more transparency be effectively communicating with your employees.

Having the handbook on multiple platforms such as a paper copy and PDF downloadable file will also help so employees can easily access and draw references from it.

The Pros & Cons of taking on a self-employed contractor

The idea of taking on someone who is self-employed may not be someone’s first thoughts, however there are many advantages of doing so.


  • You have no tax liability
  • You have no National Insurance liability
  • Reduced training expenses
  • You do not have to pay them a salary
  • They do not share the same rights as employees in terms of the right to paid holiday, statutory sick pay, right to 52 weeks maternity leave, paternity an parental rights, and after a year’s service, the right not to be unfairly dismissed.

However, with any position there are disadvantages to consider and these should not be overlooked.


  • You have little control over that person
  • They may have little loyalty to you and the business
  • Instead of a salary they may want a % of fees or profits
  • They are able to work for a number of different people and busineses


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