How do You Hire Your First Employee?

Hiring your first employee can be nerve-wracking. In this guide, we explain the steps that you as the employer need to take when hiring your first employee.

Hiring your first employee is an exciting sign that your business is expanding. However, it's important to be sure that you're getting the right person for the right role - and to make sure that both you and your future employee have a mutual understanding of what this means.

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Determine the job requirements

Determine what exactly the role will require. Once you have an understanding of the role requirements, do some research to find out what other businesses are offering for this kind of role. If you're unable to provide anything within this salary range, you may have to adjust your expectations of the role. Remember, you must pay your employees more than minimum wage.

Once you are determined the role and its salary, create a job description. Job descriptions generally follow the following format: 

  • Description of the job
  • Specific requirements of the role
  • Company information
  • An overview of salary and benefits

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Advertise the role

Decide where the role would be best advertised. You may choose to work with a recruiter, or alternatively, there are job sites and platforms like LinkedIn where you can list the job yourself. There are strict regulations around recruitment, so make sure that you are aware of these: read about preventing discrimination on

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Interview candidates

Interviews are key part of the hiring process for both you and your potential employee. An interview gives both parties the opportunity to determine whether the role is a good fit. It also allows you and your future employee to find out whether you have good rapport. This particularly important in a small business when you'll be working closely at all times. Once you are happy with the number of applicants that have been interviewed, shortlist suitable candidates.

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Draw up a contract of employment

A contract of employment is crucial to the hiring process. It is a formal agreement between the employer and employee. The bare minimum that can be provided to an employee is a "statement of terms", which must be provided to the employee within two months of their start date. Most employers provide an employment contract, which is more detailed than simply a "statement of terms". This reduces the likelihood of misunderstanding the terms of employment, between the employer and employee.

Note: Remember to make sure that you are registered with the HMRC as an employer. This is something that you will have done already if you are employing yourself as a director of your company. 

What should a contract of employment include?

A contract of employment should include the following: 

  • Names of the employer and employee
  • Start date
  • Job title and description 
  • Salary details (including bonuses)
  • Place of work
  • Working hours
  • Holidays
  • Details of probation/notice periods

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Carry out pre-employment checks

There are a number of checks that should be carried out on an applicant to ensure that they are suitable for the job. These checks vary according to the role your are recruiting for, but may include:  

  • Criminal record checks
  • Health checks
  • Right to work in the UK

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Make sure that you are insured

As an employer, you will need to make sure that you have employers' liability insurance in place. Employers' liability insurance is a legal requirement for any business - regardless of size - that employs people. It will cover the cost of claim and legal defence expenses and compensation should an employee get injured or become unwell as a result of the work they are carrying out for the business. 

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Make sure that you are abiding by regulations

There are many regulations around employment. Some that you may need to carry out include*:

    • Pensions - All UK employers are required by law to auto-enroll employees into a pension scheme.  Find out more about the rules around workplace pensions at
    • Holiday - Most employees who work at least five days per week are entitled to 28 days’ paid annual leave per year, which may include bank holidays. Find out more about holiday entitlement rules at
    • Maternity/paternity leave - Find out about Statutory Maternity Pay and Leave: employer guide at
    • Health and safety - Ensure you have completed necessary risk assessments for the role and provided training, implemented appropriate procedures, and where necessary provided personal protective equipment (PPE) with training in how to use for the role. Find out more at health and safety at Can you employ someone if you are a sole trader?

      *Please note that these rules may not apply for all contracts, e.g. zero hour contracts

Sole traders can hire employees. However, like other businesses, they must collect income tax and National Insurance Contributions (NICs) from employees and pay these directly to HMRC. This involves operating a PAYE (Pay As You Earn) payroll scheme.

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Employers' liability insurance from Towergate

At Towergate we offer bespoke employers' liability insurance policies to suit your needs. Read more about our policies online or call us on 0344 346 0409 to speak to a specialist adviser.

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About the author

Alison Wild Bcom Hons MAAT MATT Taxation Technician Commercial Tax Pensions Insurance And Marketing Specialist AuthorAlison Wild BCom (Hons), MAAT, ATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (AAT) and also has considerable experience as a residential landlord.