Your first employee: what has to happen before their first payday

Almost every item on a new employer's list can be repaired after the fact. If your employer PAYE reference has not arrived by the first payday, you run payroll and file late. If you are slow with the pension, you backdate the contributions; if the tax code is wrong, the next payslip corrects it.

One item has no repair. The check on your employee's right to work has to be done before they start work. Done on their second day, it protects you from that day onwards and does nothing at all for the first — the statutory excuse that stands between you and a civil penalty exists only if the check came first.

The check that cannot be done late

Three routes are lawful, and which one applies depends on who the person is. Someone with digital immigration status gives you a share code, which you check with their date of birth through the Home Office's employer service, satisfying yourself that the face on the screen is the person in front of you. British and Irish citizens have no share code: see the original passport yourself, or use a certified identity service provider that validates it digitally. Biometric residence permits and cards are no longer accepted documents, so an applicant who offers one needs to set up their eVisa account and give you a share code instead.

Keep the evidence — the online check profile, or copies of the documents — for the whole of the employment and two years after it ends. If their permission is time-limited, diary the expiry date today: the excuse lapses when the permission does, and the follow-up check is yours, not theirs. gov.uk sets out the accepted routes and the current penalty, which is charged per worker.

The written statement is a first-day document

Employees and workers are entitled to a written statement of the main terms on or before their first day. A few secondary items can follow within two months, but pay, hours, place of work, holiday, notice and start date belong in the document they receive at the start. Acas publishes a free template that is enough for a first hire. Northern Ireland has not caught up: the deadline there is still two months from the start date, and the templates live with the Labour Relations Agency rather than Acas, whose remit stops at the Irish Sea.

If you are planning a long informal trial, work to the right date. Until 1 January 2027 an employee needs two years' service to bring an ordinary unfair dismissal claim. From that date the Employment Rights Act 2025 reduces it to six months, and anyone who already has six months' service on 1 January 2027 holds the right from that day. A hire made now reaches it part-way through their first year, not their third, so plan the trial around six months.

Register for PAYE — but not whenever you like

You register as an employer once, before the first payday. There is a limit at the other end too: you cannot register more than two months before you start paying anyone, so registering in spring for an August start simply fails. The reference comes by post to the registered address, and HMRC's reply-time tool is the honest guide to how long that takes. If payday arrives and the reference has not, do not delay the wages: run the payroll on time, keep the submission, and send it as a late full payment submission once the reference reaches you.

A company whose only worker is its single director normally has to register too; the first outside employee is not what creates the obligation. The exception is narrow: no scheme is needed while nobody is paid at or above the National Insurance lower earnings limit and nobody has expenses or benefits, another job or a pension. Taking on an employee almost always ends it.

The pension duty starts by itself, on their first day of work

This is the one that catches people: nothing triggers it, and nobody writes to you first. The day your first member of staff starts work is your duties start date, and from then you must assess them, put them into a qualifying scheme if they meet the age and earnings test, write to them about what you have done, and pay your share.

Then the deadline that bites: a declaration of compliance to The Pensions Regulator within five months of that duties start date. You may postpone assessing the worker for up to three months, but postponement does not move the declaration deadline, which runs from the duties start date regardless. A missed declaration is non-compliance even where the pension itself was set up properly, and the penalties escalate daily.

And if the employee would rather have the money than the pension, you cannot agree to skip it. Enrol them first; only then can they opt out themselves, and you must not encourage it or raise it beforehand.

Payroll: the report is due on or before you pay

Ask for the P45 from the last job. If there isn't one, have them complete HMRC's starter checklist, which is what sets the tax code; without either you run an emergency code and the employee overpays until it corrects. Check whether student loan deductions apply at the same time.

The full payment submission has to reach HMRC on or before the date you pay, and that is the rule most often broken, usually by treating the report as a month-end task. Free software exists, including HMRC's own Basic PAYE Tools, but be clear about its limit: it does not assess anyone for automatic enrolment, so the pension work stays a separate job you do by hand.

Employers' liability insurance, and the family exemption that usually isn't

You need employers' liability cover from the day you become an employer, and the fine is calculated for each day you trade without it; a smaller separate penalty covers failing to produce the certificate, which must be available to your employees, electronically if they can genuinely reach it. Those are the Great Britain rules; Northern Ireland has its own order to the same effect, enforced by HSENI. The exemption for businesses employing only close family falls away if you trade through a limited company: a family company employing your brother needs cover like anybody else.

What costs the most

Not the fines — the wage. The minimum wage is banded by age, with a separate apprentice rate, and the rates rise in April, so a rate you agreed in writing in February can become unlawful in April without either of you touching the contract — and again on the employee's birthday when they move up a band. The apprentice rate is also narrower than it looks: it covers apprentices under 19, and older apprentices only during their first year, after which they move to the ordinary rate for their age. Read the current bands on gov.uk each spring, not from last year's article.

Two changes in force since April 2026 belong in the same budget. Statutory sick pay now runs from the first day of sickness, with no waiting days and no earnings floor, at whichever is lower of the flat weekly rate or a set percentage of average weekly earnings — so a part-time or low-paid first hire qualifies where they once would not. Paternity and unpaid parental leave are day-one rights, with no qualifying service.

One thing in your favour: Employment Allowance reduces your employer National Insurance bill, but it is claimed, not granted. A company whose only person on the payroll was its director generally could not claim it, and a first employee can make it eligible for the first time. Check it during your first payroll run, not at the year end.

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This is general information about how a process works, not advice about your situation. Thresholds, fees and deadlines change — check the official source linked above for the current figures, or ask a professional who can see your circumstances.