First UK Hire explained

Your First UK Hire: A Step-by-Step Checklist

Hiring your first employee in the UK is a big moment. It also comes with a surprising amount of admin. The UK has one of the most detailed employment law frameworks in the world, and the penalties for getting it wrong range from fines to employment tribunal claims.

But here is the good news: thousands of companies hire their first UK employee every year without a legal department or an in-house HR team. You just need to know what is required and in what order.

This checklist walks you through everything, from the moment you decide to hire through to your first payroll run and beyond. Whether you are a US company expanding into the UK, a European startup testing the market, or a founder hiring your first team member, this guide covers it all.

If you want a broader view of the hiring landscape, start with our hiring in the UK hub.

If you use an EOR like Agility, the EOR handles all of this. They already have a PAYE scheme, payroll software, and insurance in place. Our guide to using an EOR in the UK explains how it works.

How Do You Check a Candidate's Right to Work?

This is the first thing you do after offering someone a job. Under the Immigration, Asylum and Nationality Act 2006, every employer must check that their employee has the legal right to work in the UK before they start.

Here is the process:

1. Obtain original documents. The employee brings their passport, biometric residence permit, or other acceptable documents to you (or provides a share code for an online check).
2. Check the documents in the employee's presence. Verify that the documents are genuine, that the person presenting them is the same person in the photos, and that they have the right to do the work you are offering.
3. Copy and retain. Make a clear copy of each document, record the date of the check, and keep the copies for at least two years after employment ends.

You can also use the Home Office online checking service, which lets employees generate a share code that you verify on GOV.UK. This is the required method for employees with digital immigration status (like EU Settlement Scheme holders).

What if the candidate does not have the right to work? You cannot employ them. There is no workaround. The civil penalty for employing someone without the right to work is up to £60,000 per person.

Our detailed guide to right to work checks in the UK covers every document type and the full verification process.

What Must an Employment Contract Include?

UK law requires you to give every employee a written statement of employment particulars on or before their first day. This is not optional. The Employment Rights Act 1996 sets out exactly what must be included.

The "principal statement" (must be in a single document):

• Employer and employee names
• Job title and a brief description of the work
• Start date and the date continuous employment begins (often the same)
• Pay rate and how often you pay (monthly is standard in the UK)
• Working hours, including normal working days and hours
• Holiday entitlement and public holiday details
• Place of work and any travel requirements
• Pension arrangements (if applicable)
• Notice period

Additional information (can be provided in separate documents):

• Sick pay and procedure for reporting sickness
• Disciplinary and grievance procedures
• Any collective agreements that affect the employment
• Details of any training you require the employee to complete

A few things people get wrong:

• Holiday entitlement must be at least 28 days per year for a full-time employee (this includes bank holidays). The Working Time Regulations 1998 set this minimum. You can offer more, but not less.
• Notice periods must comply with statutory minimums: one week for employees with one month to two years' service, and one week per year of service for those with two to 12 years' service (up to 12 weeks). Your contractual notice period can be longer than this, but never shorter.
• Probationary periods are common but have no special legal status in the UK. An employee on probation still has the same statutory rights as any other employee (except unfair dismissal protection, which typically requires two years' service; from 1 January 2027 this falls to six months under the Employment Rights Act 2025).

Our guide to UK employment contracts covers contract terms in more detail.

What Are the Day-One Requirements?

Some things must be in place from the employee's very first day. Do not leave these until after they start.

Written statement of employment particulars. As above, the principal statement must be provided on or before day one. You can provide the additional information within two months, but best practice is to have everything ready before the start date.

Pension assessment. Under the Pensions Act 2008, you must assess every new employee for auto-enrolment into a workplace pension on their first day.

The assessment is based on their age and earnings:

• Aged between 22 and state pension age, and earning more than £10,000 per year? They must be auto-enrolled.
• Aged 16 to 21 or state pension age to 74, and earning more than £10,000? They have the right to opt in. (The Pensions (Extension of Automatic Enrolment) Act 2023 allows the government to lower the auto-enrolment age to 18, but this change has not yet been introduced.)
• Earning between £6,240 and £10,000? They have the right to opt in.
• Earning below £6,240? They can join a pension scheme voluntarily.

You must also provide every new employee with a letter explaining how auto-enrolment works and what their options are, even if they are not eligible for auto-enrolment.

Right to work check. This should be completed before day one, not on the day they arrive.

IT equipment and access. Not a legal requirement, but practically essential. Make sure their laptop, email, and system access are ready.

How Do You Run Your First UK Payroll?

Running payroll in the UK involves more than just calculating hours and cutting a cheque. Here is what happens each pay period.

Before the first payday:

1. Register as an employer with HMRC (if you have not already).
2. Set up your PAYE scheme and get your employer reference number.
3. Collect each employee's P45 from their previous employer (or have them complete a starter declaration if this is their first job).
4. Enrol eligible employees in your workplace pension scheme.
5. Set up your payroll software and enter employee details.

On each payday:

1. Calculate gross pay (salary, bonuses, overtime, etc.).
2. Deduct income tax through PAYE. The amount depends on the employee's tax code, which HMRC provides.
3. Deduct employee National Insurance contributions (currently 8% on earnings between £242 and £967 per week, and 2% above £967 per week).
4. Deduct employee pension contributions (typically 5% of qualifying earnings for the standard auto-enrolment scheme).
5. Calculate employer National Insurance contributions (15% on earnings above £96 per week, or £5,000 per year).
6. Calculate employer pension contributions (minimum 3% of qualifying earnings).
7. Generate payslips for each employee showing all deductions.
8. Submit an FPS (Full Payment Submission) to HMRC on or before each payday.
9. Submit an EPS (Employer Payment Summary) if you need to claim any reductions (like statutory sick pay or statutory maternity pay).

After each payday:

1. Pay the employee their net pay.
2. Pay HMRC the tax, NI, and student loan deductions (usually by the 22nd of the following month for electronic payments, or the 19th for cheque payments).
3. Pay the pension provider the employee and employer contributions.

Our PAYE explained guide goes into more detail on how the tax calculations work.

What Are Your Ongoing Employment Obligations?

Once your employee is set up and payroll is running, there are ongoing obligations you cannot ignore.

Statutory annual leave. Every full-time employee is entitled to at least 28 days of paid leave per year (including bank holidays). This is set by the Working Time Regulations 1998. You can offer more, but not less. Leave accrues proportionally for part-time employees and new starters.

Statutory sick pay (SSP). If an employee is off work sick for more than three consecutive days, they are entitled to SSP from the first day of sickness (from 6 April 2026). SSP is £123.25 per week (or 80% of average weekly earnings, if lower) for up to 28 weeks. The employer pays SSP and can reclaim some costs if eligible. The Social Security Contributions and Benefits Act 1992 governs SSP.

Statutory maternity, paternity, and shared parental leave. These are extensive topics, but the key points:

• Maternity leave: Up to 26 weeks of ordinary maternity leave plus 26 weeks of additional maternity leave (52 weeks total). Statutory Maternity Pay (SMP) is paid for up to 39 weeks. The Employment Rights Act 1996 and the Social Security Contributions and Benefits Act 1992 set out the rules.
• Paternity leave: Up to two weeks of paid paternity leave. The Paternity, Adoption and Shared Parental Leave (Amendment) Regulations 2024 expanded this.
• Shared parental leave: Parents can share up to 50 weeks of leave and 37 weeks of pay.

Real Time Information (RTI) reporting. You must submit payroll data to HMRC every time you pay an employee. This is a legal requirement. Late or missing submissions result in penalties.

Pension re-enrolment. Every three years, you must re-enrol eligible employees who have opted out of the pension scheme. The Pensions Regulator sends a reminder, but it is your responsibility to act on it.

Employment record keeping. You must keep records of pay, deductions, leave, and working hours for at least three years (six years for tax records).

If any of this feels overwhelming, you are not alone. Most first-time UK employers find the compliance burden heavier than expected. Our guide to workplace pensions in the UK covers the pension side in more depth.

How Does an EOR Simplify This Entire Process?

If this checklist feels like a lot, an Employer of Record takes care of nearly all of it.

When you use Agility EOR to hire your first UK employee, here is what changes:

• No PAYE registration needed. The EOR uses their own scheme.
• No payroll software required. The EOR runs payroll and submits RTI on your behalf.
• No pension scheme to set up. The EOR handles auto-enrolment and ongoing contributions.
• No contract drafting. The EOR provides an Employment Rights Act 1996-compliant contract.
• No right to work check to manage. The EOR conducts and records the check.
• No insurance to arrange. The EOR's employers' liability cover applies.
• No HMRC submissions. The EOR handles all RTI and EPS filings.

You still manage the employee's day-to-day work, performance, and career development. The EOR handles the compliance.

For companies making their first UK hire, this removes the risk of getting something wrong and lets you focus on what matters: finding the right person and helping them succeed.

Our overview of how to use an EOR in the UK walks through the full process from start to finish.

Your Pre-Hire Checklist at a Glance

Here is a summary you can use as a reference:

[ ] Decide whether to set up a UK entity or use an EOR
[ ] Register as an employer with HMRC (or confirm EOR handles this)
[ ] Set up payroll software (or confirm EOR handles this)
[ ] Arrange employers' liability insurance (or confirm EOR handles this)
[ ] Set up a workplace pension scheme (or confirm EOR handles this)
[ ] Conduct a right to work check before the employee's first day
[ ] Prepare a written statement of employment particulars (principal statement)
[ ] Prepare additional employment information (sick pay, disciplinary, grievance)
[ ] Complete the pension auto-enrolment assessment
[ ] Issue the contract for the employee to sign before their first day
[ ] Prepare IT equipment and system access
[ ] Run the first payroll and submit RTI to HMRC

Ready to hire your first employee in the UK? Get in touch with Agility EOR and we will handle the compliance so you can focus on building your team.