Hiring

Before you hire, it's essential to understand the different types of employment relationships, as this determines the individual's rights and your legal obligations. Misclassifying someone can lead to legal disputes and financial penalties. The three main categories are:

• employees - work under an Employment contract and have the full range of employment rights

• workers - have a more casual relationship (eg on a Zero hours contract) and have some core rights like minimum wage and paid leave, but less protection than an employee

• self-employed contractors - run their own business, are responsible for their own tax, and have very few employment rights. They typically work under a Consultancy agreement

For a detailed breakdown of the differences, read Consultants, workers and employees. For the purposes of this guide, ‘employees’ also refers to ‘workers’ unless otherwise specified. 

Before you even write a job advert, you need to lay the legal and financial groundwork to ensure your business is ready to take on the responsibilities of an employer.

Calculate the true cost of an employee

The cost of hiring is more than just the advertised salary. To create a realistic budget, you must also account for:

• employer's National Insurance contributions - which you pay on your employee's earnings

• workplace pension contributions - which are mandatory under auto-enrolment rules

• employers' liability insurance - you must have at least £5 million of cover, and it is a legal requirement from the day you hire your first employee. This type of insurance pays out if an employee suffers a personal injury at work

Register as an employer

You must register as an employer with HMRC before your new employee's first payday. You can do this online up to 4 weeks before they are due to start. This process sets you up for PAYE (Pay As You Earn), which is the system used to collect income tax and National Insurance from your employee's salary.

Note that in practice, many small businesses outsource their arrangements for tax and payroll.

This stage focuses on finding and selecting the right person for the role while adhering to fair and legal recruitment practices.

How to write a job description

A clear Job description is essential for attracting suitable candidates. It should accurately detail the role's responsibilities, the required skills and experience, the location, and the salary range. Using a clear and common job title will also help your advert perform better on job sites.

Advertising the role fairly

You can advertise your role through various channels, such as online job boards or social media. It is a legal requirement under the Equality Act 2010 that your job advert is not discriminatory. The language you use must be inclusive, and the requirements you list must be justifiable for the role.

How to conduct legal and effective interviews

During the interview process, all questions must relate specifically to the candidate's ability to do the job. You must avoid any questions about a person's 'protected characteristics' under the Equality Act, such as their age, religion, marital status, or nationality. You also have a legal duty to make reasonable adjustments for disabled candidates to ensure they are not disadvantaged during the interview process.

For more information on the entire recruitment process, read Recruitment.

Once you have chosen your preferred candidate, you need to formalise the offer and carry out the final, crucial legal checks.

Making a job offer

It is best practice to make your initial job offer in writing and to state that it is conditional upon the satisfactory completion of pre-employment checks. This means the offer is not final until these checks have been passed. Use our Job offer letter to offer a role to a candidate.

Checking an employee's right to work in the UK

This is a critical legal responsibility for all employers. You must check that every potential employee has the legal right to work in the UK before they start their employment. You can be fined heavily for employing someone who does not have this right.

For more information on these checks, read Recruitment and Work permits and employing overseas workers.

Carrying out background checks (including DBS)

If the role involves working with children or vulnerable adults, or is in a field like security or healthcare, you may be legally required to apply for a basic or enhanced criminal record check from the Disclosure and Barring Service (DBS).

For more information on these checks, read Recruitment.

Finalising the employment

The final stage involves putting the legal paperwork in place and preparing for your new employee's first day to ensure a smooth start.

Issuing the employment contract

Providing a formal employment contract is essential for protecting your business and giving your new employee clarity on their role. While you are legally required to provide a written statement of particulars on or before day one, a full Employment contract is best practice as it covers all terms and conditions in much more detail. For detailed information on what to include in this document, from job duties to notice periods, read our guide on Employment documents.

Preparing for their first day (onboarding)

A good onboarding process helps your new hire settle in and become productive quickly. Before they arrive, you should prepare their workspace and equipment and plan an induction to introduce them to the team.

Alongside these practical steps, you must have your key HR systems in place. This includes setting up your payroll system to pay them correctly, having your workplace pension scheme ready for auto-enrolment, and establishing a secure, GDPR-compliant system for keeping employee records.

You also need to be aware of your wider HR obligations, which, depending on your size, will involve adopting and implementing different HR policies and procedures. For example, all employers need to make workplace health and safety arrangements. However, employers with at least five employees must have a written Health and safety policy in place. It is good practice to collate all of your key policies in an Employee handbook. For more information, read our guide on HR policies and procedures.

Hiring an employee is a regulated process with significant legal responsibilities at every stage. Getting the process right from the start not only ensures you stay compliant but also helps you attract the best talent and build a strong foundation for a positive employer-employee relationship.

To formalise your relationship with your new hire, you can make an Employment contract. When hiring staff, follow our Checklist for new employers. For more information, read Hiring for a startup, Hiring an intern and Hiring an apprentice. Remember, you can always Ask a lawyer if you have specific questions about your legal obligations as an employer.