A Small Business Guide to Hiring Your First Employee

Taking the Leap

Hiring your first employee is a significant milestone. It means your business is growing — but it also means new responsibilities. Here’s what to get in order.

Register as an Employer

You must register with HMRC as an employer before your first payday. This gives you a PAYE reference number which you’ll need for payroll submissions.

Set Up Payroll

You’ll need payroll software (or an accountant who runs payroll for you) to calculate tax, National Insurance, and student loan deductions, and to submit Real Time Information (RTI) to HMRC.

Choosing Payroll Software

Options range from HMRC’s free Basic PAYE Tools to commercial software like Sage or Xero Payroll. For most small businesses, we recommend letting us handle it — it’s one less thing to worry about.

Auto-Enrolment Pensions

You have a legal duty to enrol eligible employees into a workplace pension scheme. You must contribute at least 3% of qualifying earnings, with the employee contributing 5%.

Employment Contracts

Every employee must receive a written statement of employment particulars on or before their first day. This covers pay, hours, holiday entitlement, and notice periods.

Employer’s Liability Insurance

This is a legal requirement as soon as you hire staff. You must have at least £5 million of cover, and the certificate must be displayed (or made available) in your workplace.

How Thyme Helps

We offer a complete payroll service: setup, monthly processing, payslips, RTI submissions, and year-end reporting. We’ll also help you get pension auto-enrolment set up correctly from day one.