The first hire is a milestone. It is also the moment a business takes on legal responsibilities that did not exist the day before, several of which start on the employee's first day or even earlier.
Most founders get the big things right. Where they come unstuck is timing: a step that should have happened before day one gets done a month later, if it gets done at all. This is the order we recommend.
1. Be clear about what you are hiring
Start by confirming the person will genuinely be an employee, not a contractor. The label you use does not decide it; the way the work is actually done does. Getting this wrong creates tax and employment risk that is hard to unwind later.
Then check the full cost, not just the salary. Since April 2026 the National Living Wage for workers aged 21 and over is £12.71 an hour. On top of pay you will have employer National Insurance, pension contributions and sick pay. Statutory Sick Pay is now payable from the first day of sickness absence, after the waiting days were removed in April 2026.
2. Before you make an offer: right to work
You must check that every new employee has the right to work in the UK, and do it before they start. Do it properly and keep a record. The civil penalty for employing someone without the right to work, where no correct check was made, is up to £60,000 per worker.
3. Before the first payday: register as an employer
You need to register with HMRC and set up PAYE before your first payday. You cannot register more than two months before you start paying people, so time it for the weeks before your hire begins. You also have to tell HMRC about the new employee on or before their first payday.
4. Before day one: insurance and a safe workplace
Employers' Liability insurance is required as soon as you become an employer, with cover of at least £5 million from an authorised insurer. The fine for not having it is £2,500 for every day you are uninsured. Keep the certificate where employees can see it.
You also need to assess the risks in the work you are asking someone to do. Once you have five or more employees, your health and safety policy must be written down and shared with staff.
5. On day one: the written statement
This is the step founders most often miss. Every employee must receive a written statement of their main terms on their first day. It covers pay, hours, holiday, sick pay, notice and other core terms. Some further details can follow within two months, but the essentials cannot wait.
A well-drafted contract does this job and protects the business too. It is worth getting right once and reusing.
6. From day one: workplace pension
Your pension duties begin on the day your first employee starts work. Staff aged 22 to State Pension age who earn over £10,000 a year must be automatically enrolled. You have six weeks to write to them about it, and five months to declare to The Pensions Regulator that you have complied.
7. The first 90 days: onboarding and probation
The legal minimum gets someone through the door. It does not make them effective. A simple plan for the first week, clear objectives for the first three months and a scheduled probation review make far more difference than most founders expect.
Probation is about to matter more. For dismissals from 1 January 2027, employees will be able to claim unfair dismissal after six months' service rather than two years. A probation period with real check-ins and written feedback is now part of protecting the business, not just good practice.
Set it up once, properly
None of this is complicated on its own. The risk is doing it in a rush, one hire at a time, and ending up with ten slightly different contracts and no records. A few days spent building templates, a checklist and a single place for employee records will save you weeks later, and it is the foundation everything else is built on.