Hiring your first employee brings a set of legal obligations that catch many first-time UK employers off guard. Understanding the essentials before you make an offer protects both you and the person you're bringing on board.
Registering as an employer with HMRC
Before your first employee's start date, you must register as an employer with HMRC (this can be done up to two months in advance but must be done before the first payday) and set up PAYE (Pay As You Earn) to deduct Income Tax and National Insurance from wages. You'll also need employer's liability insurance — a legal requirement for almost all UK employers, with a minimum cover of £5 million, protecting you if an employee is injured or becomes ill because of their work.
Many small e-commerce businesses use a payroll provider or accountant to handle PAYE submissions and payslips from the outset, since getting this wrong (late submissions, incorrect deductions) can trigger HMRC penalties even for genuine first-time mistakes.
The written statement of employment particulars
UK law requires every employee to receive a written statement of employment particulars on or before their first day of work — this is a legal minimum, not a courtesy, and must include job title, start date, pay and pay frequency, working hours, holiday entitlement, sick pay arrangements, notice periods, and the location of work. Many employers combine this with a fuller written contract covering additional terms, which is good practice even though only the core particulars are strictly mandated by law.
National Minimum Wage and National Living Wage
Pay must meet at least the National Minimum Wage or National Living Wage rate for the employee's age band, reviewed and typically increased every April — check the current GOV.UK rates before setting pay, since underpayment (even unintentional, such as failing to account for unpaid working time like mandatory pre-shift briefings) can result in HMRC penalties and a requirement to repay arrears. Rates differ by age bracket and for apprentices, so confirm you're applying the correct one for each employee.
Deductions from wages (for uniform, till shortages, damaged stock) are tightly restricted by law and can easily result in an unlawful deduction if they take pay below minimum wage or aren't clearly agreed in writing in advance — take specific advice before making any wage deductions beyond standard tax and National Insurance.
Holiday entitlement and sick pay
Almost all UK workers are entitled to a statutory minimum of 5.6 weeks' paid holiday per year (28 days for a full-time employee working five days a week, pro-rated for part-time staff), which can include bank holidays depending on how your contract is worded. Holiday pay must be calculated correctly, including for irregular-hours and part-year workers, an area that's seen significant legal clarification in recent years and is worth checking current ACAS guidance on directly.
Statutory Sick Pay (SSP) is payable to eligible employees who are off sick for four or more consecutive days, at the current statutory rate for up to 28 weeks — many small employers choose to offer more generous contractual sick pay, but SSP is the legal floor you cannot pay below for eligible staff.
Probation periods, notice and dismissal basics
- A probation period (commonly three to six months) is not a separate legal status but a contractual arrangement that typically allows shorter notice periods and closer performance review during that window.
- Statutory minimum notice periods increase with length of service — at least one week's notice after one month's employment, rising with tenure.
- Employees generally need two years' continuous service to bring an unfair dismissal claim, but discrimination and certain other claims can be brought from day one regardless of length of service, so a fair, well-documented process still matters even in the first weeks.
- ACAS (the Advisory, Conciliation and Arbitration Service) publishes free, practical guidance and a statutory Code of Practice on disciplinary and grievance procedures that UK tribunals expect employers to broadly follow.
Where to get help as a first-time employer
ACAS offers free helplines and detailed online guidance covering contracts, disputes, disciplinary processes and more, and is generally the best first stop for a UK employer with a specific question. For anything beyond the basics — restructuring, a difficult dismissal, a discrimination concern — a modest spend on an employment solicitor or HR consultant for a one-off consultation is far cheaper than the cost of an employment tribunal claim brought about by a process handled incorrectly.
How This Connects to the Rest of Your Operation
As with most things covered in Operations, Hiring & Culture, UK employment law basics for hiring your first member of staff works best when it's revisited periodically rather than decided once and forgotten. If you haven't already, Employers' Liability Insurance: What You Need When Hiring Your First Staff is a useful companion read on this exact point.
For related reading: If you haven't already, Writing Job Descriptions and Interviewing for Your Early E-Commerce Hires is a useful companion read on this exact point. This connects directly with Peer Networks and Mentorship for UK E-Commerce Founders: Where to Find Real Support, which walks through the practical detail.