Hiring

Making a few preparations before taking on a new member of staff sets the foundations for a successful employment relationship and can save you a lot of headache in the long run.

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Create your Contract of employment

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Choose the employer

Most employers in the UK are private companies registered in England and Wales. However, individuals and sole traders can also be employers. For more information, read Business structures.

It is also possible to hire employees direct from a foreign-registered company or personally or through other corporate structures like partnerships. Hiring staff direct from a foreign entity may mean that company has established a UK presence for tax and corporate reporting purposes, so seek appropriate advice if you decide to take this route.

Buy insurance

All employers of staff based in England and Wales must, by law, purchase Employer’s Liability Insurance coverage of at least £5 million. Read this Quick Guide for more information about business insurances.

This type of insurance pays out if an employee suffers personal injury at work.

You must display your insurance certificate to employees.

Make tax arrangements

You must register with Her Majesty’s Revenue and Customs (HMRC) when you employ someone, with very few exceptions.

This applies even if a company that you own employs you.

You will need to make arrangements to withhold income tax from employees’ wages and pay this to HMRC (PAYE), along with employer’s national insurance contributions.

In practice, many small businesses outsource their arrangements for tax and payroll.

Do your homework

Employment in the UK is highly regulated, with most aspects of the employer-employee relationship subject to legal rules.

You don’t need to become an expert straight away, but research now will save you time and trouble later on.

As a minimum, you will need to be ready to ensure that any offer of employment you make complies with certain minimum standards. Consider using Rocket Lawyer's offer of employment to ensure you meet these.

When you hire someone, you form a relationship under which you each have duties. The employer has to pay wages to the staff and the staff have to work in accordance with their employment contracts or written statements. All this is regulated by HMRC, who need to be kept fully informed of the status and actions of the parties. 

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Create your employment contract

Answer a few questions. We'll take care of the rest