Bringing someone onto the payroll is one of the most satisfying milestones a small business can hit. It is also the moment you take on a stack of legal duties that did not exist when it was just you. Miss a step and the consequences range from an awkward conversation to a fine that dwarfs a month's wages.

The good news is that onboarding follows a fairly predictable order. Get the sequence right once, turn it into a checklist, and every future hire becomes routine. Here is what a UK small employer actually needs to do in 2026, roughly in the order you should do it.

This article is general information, not legal, tax or HR advice. Employment law and tax thresholds change, so confirm the current rules on GOV.UK or with a qualified accountant, HR adviser or solicitor before you act on anything here.

Before they start: get the legal foundations in place

The work that protects you happens before day one. Three things matter most.

First, check the person's right to work in the UK. This is a legal requirement for every employee, regardless of nationality or how long you have known them, and the penalties for getting it wrong are eye-watering. You either view and copy original documents in their presence, use the Home Office online checking service, or use a certified Identity Service Provider for British and Irish citizens with a valid passport. Keep the evidence for the duration of employment and for two years afterwards. Our guide to right-to-work checks for small employers walks through each route in detail.

Second, issue a written statement of employment particulars. Since 2020 this must be given on or before the first day of work, not within two months as the old rule allowed. It covers pay, hours, holiday, place of work, notice periods and more. Many small firms fold this into a fuller contract; if you are unsure what belongs in it, see what to put in your employment contract.

Third, make sure you actually have employers' liability insurance. You are legally required to hold at least the minimum cover from the day your first employee starts, and you must display or make the certificate available. Trading without it can mean a hefty daily fine.

The single most common onboarding mistake small employers make is treating the contract and the right-to-work check as paperwork to chase up later. By law, both belong before the first shift, not after it.

Register as an employer and set up payroll

If you have not employed anyone before, you need to register as an employer with HMRC. Do this in good time — registration can take up to a few weeks, and you cannot run your first payroll without your PAYE reference. As a rule of thumb, register before the first payday and ideally well ahead.

You will then need payroll software that reports to HMRC in real time (RTI) every time you pay someone. From your new starter you will want their P45 from a previous job, or a completed starter checklist if they do not have one, plus their National Insurance number and bank details. If payroll is new territory, start with the basics of PAYE and payroll for small employers so the first run does not catch you out.

Sort out the workplace pension

Automatic enrolment is not optional and it is not just for big companies. Every employer has duties from the day their first member of staff starts, even if that person turns out not to qualify for enrolment. You must assess whether the new starter meets the age and earnings criteria, enrol those who do into a qualifying scheme, write to them about their rights, and complete a declaration of compliance with The Pensions Regulator.

Even staff who do not have to be enrolled may have the right to ask to join, so you cannot simply ignore the rules for part-timers or lower earners. The mechanics, contribution levels and timing are covered in our explainer on auto-enrolment pensions for small businesses.

Prepare the policies and paperwork they'll rely on

You do not need a hundred-page staff handbook, but a few documents protect both sides. At a minimum, have a clear disciplinary and grievance procedure (referencing one is a legal requirement, and the Acas code matters if a dispute ever reaches a tribunal), a health and safety policy if you employ five or more people, and a basic data protection and privacy notice telling staff how you handle their personal data.

It is also worth deciding in advance how you will handle holiday, sickness and any benefits. A quick scenario: a café owner hires their first part-time barista, agrees the shifts verbally, and three months in there is a row about how much holiday has accrued. A one-page policy and an accurate written statement would have avoided the whole thing.

The first day and first week

Legal compliance and a warm welcome are not in competition — the same checklist serves both. Aim to do the following:

  • Confirm right-to-work evidence is on file and dated before they start work.
  • Hand over the signed contract or written statement and keep a copy.
  • Collect payroll information — P45 or starter checklist, NI number, bank details, and emergency contact.
  • Give a health and safety induction appropriate to the role, including fire exits, first aid and any specific risks.
  • Explain the pension, even briefly, and tell them when assessment happens.
  • Set out the probation period, who they report to, and how their first review will work.

A short, organised first day signals that you are a serious employer. It also massively reduces the chance of a misunderstanding turning into a claim later.

A quick word on tenders and being a credible employer

If you sell, or hope to sell, to the public sector, your status as a compliant employer is not just an HR matter — it is a selling point. Many tenders ask about employment practices, health and safety records, and increasingly about social value such as fair work and training. Having your onboarding, policies and insurance in good order makes those questions easy to answer. You can see the kinds of opportunities that ask for this when you search live UK tenders and read a few specifications.

Frequently asked questions

Do I really need a written contract for a part-time or casual worker?

You must give every employee a written statement of the main employment terms on or before their first day, and most workers are entitled to one too. Whether someone is full-time, part-time or casual does not remove the duty — the hours and pattern simply form part of what you write down. A clear written record protects you far more than it protects them.

When do I have to set up a workplace pension?

Your automatic enrolment duties begin on the day your first member of staff starts work, not later. You must assess them, enrol anyone who qualifies, and complete your declaration of compliance with The Pensions Regulator within the deadline (commonly five months from your duties start date). Check the current timescales on GOV.UK, as they can change.

What happens if I forget the right-to-work check?

Employing someone without a valid check can lead to a civil penalty per worker, and knowingly employing someone with no right to work is a criminal offence. A correct, dated check before the first day gives you a statutory excuse against the civil penalty, which is exactly why it must come first.

Onboarding is far less daunting when it is a list rather than a memory test. Build the steps above into a simple template, keep it to hand for every hire, and you will stay compliant without the stress. For more plain-English guides on hiring, tax and winning public-sector work, you can sign up for our email updates and we'll send the useful bits straight to your inbox.