Taking on your first employee is a milestone that changes the shape of your business. It also brings a set of legal duties you cannot opt out of. The good news is that none of it is mysterious once you break it down into stages. This guide walks through the practical steps, from working out what you actually need to the first week on the job.

Start with the work, not the job title

Before you write an advert, be honest about the gap you are filling. Is there genuinely enough work for someone? A rule of thumb used by many small firms is that a full-time role needs roughly a year's worth of sustainable demand, not a busy quarter.

Next, decide the employment status you are offering, because it drives tax, rights and risk:

• Employee — works under your direction, gets a contract, statutory rights including holiday and sick pay.
• Worker — more casual, fewer rights, but still entitled to minimum wage and holiday pay.
• Self-employed — genuinely in business on their own account. You cannot simply label someone self-employed to save on tax; HMRC and tribunals look at the reality of the arrangement.

Most first hires are employees. Budget not just the salary but employer's National Insurance, pension contributions, any tools or equipment, and the time you will spend managing and training.

Get the pay and the payroll right

Pay must meet the current National Minimum Wage or National Living Wage for the person's age and status. Rates change every April, and apprentices have their own rate, so check the figures on GOV.UK before you advertise rather than relying on last year's number. Deductions for uniforms or tools can push pay below the legal minimum, so be cautious.

There are three things to sort out before anyone starts:

• Register as an employer with HMRC for PAYE, which can take a few weeks, so do it early.
• Take out employers' liability insurance — legally required for almost all businesses, with a minimum cover of £5 million.
• Know your pension duties. You must automatically enrol eligible staff into a workplace pension scheme and contribute. The thresholds change periodically, so confirm the current earnings trigger.

Holiday entitlement for an employee is 5.6 weeks a year, which you may include bank holidays within. Statutory sick pay, notice periods and parental rights all apply from day one in most cases, even during a probation period.

Write the advert and the job description

A good job description is short and specific: the main duties, the skills genuinely needed, who the person reports to, hours, location and pay. Avoid asking for a long list of qualifications when the work does not require them — it narrows your pool and can look like indirect discrimination.

When advertising, describe the role accurately. If it is four days a week in a workshop, say so. If there is genuine flexibility, say that too. Word of mouth, local job boards and industry groups often outperform big national sites for a first hire, and a friendly, specific advert beats corporate language every time.

Interview fairly and check the essentials

Ask every candidate broadly the same questions and score their answers against the same criteria. That protects you from bias claims and helps you compare properly. Keep notes for at least six months.

Questions about age, plans to have children, religion, health or disability unrelated to the job should be avoided. If someone mentions a disability, focus on reasonable adjustments you could make rather than on the condition itself.

Before they start, you must complete a right to work check — usually by checking an original document such as a passport or share code, with the person present. Do this for every hire, without exception, and keep a dated record. If the role involves working with children or vulnerable adults, a DBS check may also be needed.

Make the offer and issue the paperwork

A written statement of particulars must be given on or before the first day of employment. It should cover pay, hours, holiday, place of work, probation terms, notice periods and how disciplinary and grievance procedures work. If your pension scheme is mentioned in the contract, include the details.

Set a probation period — three to six months is common — with a review date built in. Remember that employees gain full unfair dismissal protection after two years' service, so use probation to assess honestly and give feedback early rather than hoping a poor fit will fix itself.

It is worth reading the ACAS Code of Practice on disciplinary and grievance procedures before you need it, and joining a payroll or HR advice service if the admin feels heavy.

Plan a proper induction

The first month sets the tone. Prepare a simple checklist: health and safety briefing, where things are kept, who to ask for what, how to use your systems, and how you will keep in touch. Small things matter — a named buddy, a written schedule for week one, and a clear first-week task that produces something useful.

Book short catch-ups at the end of week one, month one and month three. Ask what is unclear, not just whether they are happy. Good induction reduces early resignations and saves you the cost of recruiting twice. Get this right, and your first hire becomes the foundation for the next one.