A checklist for small employers hiring a first employee in England and Wales, covering the contract, right to work, pay, holiday, pensions and insurance.
Hiring your first employee in England and Wales is the point at which a business becomes an employer. The steps below are the ones that apply to that first hire. This is general information about the law in England and Wales, not advice on a particular person or a particular contract.
Before they start
Confirm that the person will be an employee, rather than a self-employed contractor or an agency worker. The word on an invoice does not decide the point. Where you control how, when and where the work is done, and you must offer work that they must perform, you are likely taking on an employee. The label matters because tax, paid holiday and dismissal rights follow the real relationship.
Complete a right to work check before the employment starts, using the current Home Office process, and keep the evidence of that check. A check carried out in the right way is what gives the employer a statutory excuse if it later turns out that the person did not have the right to work.
Put employers' liability insurance in place before any work is done. The duty arises when you employ someone. A small number of family-only arrangements are excepted. Make the certificate available to the person you employ.
Register with HMRC as an employer for PAYE before the first payday, so Income Tax and National Insurance can be reported.
The written contract on day one
An employer must give a written statement of employment particulars on or before the employee's first day. The employment contract should name both parties and state the start date, the job title or a short description of the work, the place of work, pay and how often it is paid, the hours, holiday, sick pay, and notice. If you are using a probationary period, write down how long it lasts and what notice applies during it. Confidentiality, and any restrictive covenants, belong in the contract from the start if you want to rely on them.
A staff handbook can hold the longer procedures, as long as the contract tells the employee where to read them.
Pay, hours and holiday
Pay at least the National Minimum Wage or National Living Wage that applies to the employee's age. The rates change, so use the current figure rather than last year's payroll. Give an itemised pay statement on each payday.
The Working Time Regulations 1998 give most workers 5.6 weeks of paid holiday a year, including bank holidays. They also limit average working time to 48 hours a week unless the adult worker has agreed, in writing, to opt out, and they set daily and weekly rest and a 20-minute rest break for an adult worker whose working day is longer than six hours. Recording working time is simpler when the contract states the hours and the holiday year.
Pension, equality and safety
Assess the new employee for automatic enrolment in a workplace pension. Where they qualify by age and earnings, enrol them and write to them about it. The Pensions Regulator publishes the current earnings thresholds.
Hiring, and the first weeks of work, are covered by the Equality Act 2010. Do not set a requirement that disadvantages someone because of a protected characteristic. Where the employee is disabled, consider reasonable adjustments before refusing a change to hours, equipment or the workplace.
The duty to protect health and safety applies from the first day, under the Health and Safety at Work etc. Act 1974. A written health and safety policy, and a written record of the significant findings of a risk assessment, are required once you have five or more employees. With a single employee you still need to identify the real risks of the job and explain how to work safely.
Data and a route for complaints
You will hold personal data from the outset: the right to work evidence, bank details, an emergency contact, and health information if you operate sick pay. Tell the employee what you hold and why, and keep it no longer than you need it. Data protection in the workplace is part of the hire, not a project for later.
Tell the employee how to raise a grievance, and how you will deal with conduct or performance. Pointing them to the ACAS Code of Practice on disciplinary and grievance procedures is enough at this stage. A business with one employee does not need a long hearing procedure on day one. It does need the employee to know where that procedure will be found.
Checklist
- Right to work check completed, and the evidence kept, before day one.
- Employers' liability insurance in place.
- PAYE registration in hand before the first payday.
- Written particulars given on or before the first day.
- Pay at or above the current minimum for the employee's age, with an itemised pay statement.
- Holiday and working hours written down.
- Workplace pension assessment done.
- The health and safety risks of the actual job explained.
- A privacy notice, and a route for raising a grievance.
Where the draft contract, the hours, or the status of the role is not straightforward, take employment law advice for employers on the paperwork before the person starts.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
