Small business hiring guide
Hiring your first employee is a major step for any small business. Before someone starts, you need more than a salary figure — you need clear terms, payroll setup, right to work checks, workplace pension planning and the right employment documents.
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Quick answer
Your first hire needs a practical readiness plan: the role, the money, the checks, the documents, and the systems that make employment work from day one.
Hiring budget
Salary is not the full cost. Employer National Insurance, pension contributions, equipment, software, recruitment, onboarding and management time can all affect whether the hire is affordable before you make an offer.
Step-by-step checklist
Work through these steps before the employee starts. They help turn a verbal hiring decision into a documented, workable employment relationship.
Step 1
Write down what the person will actually do before you start interviewing. Clear role design makes the offer, contract and probation expectations much easier to manage.
Step 2
Think carefully about whether you need an employee, a worker, or a genuinely self-employed contractor. Do not label someone as a contractor simply to avoid employment obligations if the practical relationship looks like employment.
Step 3
Check the current National Minimum Wage and National Living Wage rules for the hours actually worked. Decide how salary, hourly pay, overtime, commission, bonuses, holiday and sickness will operate in practice.
Step 4
An offer letter helps record the main commercial terms and any conditions before the full contract is signed. Conditions might include references, right to work checks, DBS checks where appropriate, or other role-specific checks.
Step 5
Right to work checks should be completed before employment starts. This guide does not give immigration advice, so use the appropriate current process for the candidate and keep a clear record of the check.
Step 6
This is the core document for your first hire. Clear written terms should cover the role, pay, hours, holiday, sickness, notice, confidentiality, pension, probation, place of work and the policies that apply.
Step 7
Plan PAYE, payslips, employer National Insurance, pension assessment, contribution handling and payroll records before the employee starts. Many small businesses use an accountant or payroll provider for this step.
Step 8
Policies do not need to be overcomplicated, but employees should know how key workplace processes work. Put practical procedures in place before a dispute or request forces you to improvise.
Step 9
A good first week reduces confusion and helps you spot issues early. Prepare access, equipment, training and a realistic induction plan before the start date.
Step 10
Probation is useful, but it is not a free pass. Set review dates, explain expectations, keep notes of performance concerns, and use a fair process if the role is not working out.
Documents before day one
Start with the contract, then support it with the offer letter and workplace policies that explain how common situations will be handled.
Primary document
Set out the employee’s role, pay, hours, holiday, sickness, probation, notice, pension, confidentiality and core workplace terms before they start.
Create contract →Supporting document
Confirm the offer, start date, salary, role, location and any conditions such as references or right to work checks.
Create offer letter →Supporting document
Give managers and employees a clear route for conduct concerns, investigations, hearings, outcomes and appeals.
Create policy →Supporting document
Explain how employees can make flexible working requests and how the business will review, consult and respond.
Create policy →Avoidable risk
Most first-hire problems are not caused by one dramatic decision. They usually come from rushed setup, unclear expectations, and missing records.
Only budgeting for salary
Hiring without clear written terms
Treating an employee like a freelancer
Forgetting pension or payroll setup
Not checking right to work before the start date
Leaving policies until a dispute happens
Not documenting probation or performance concerns
Copying a contract from the internet without checking it fits the role
Status decision
Some businesses do not need an employee. A genuine freelancer or contractor arrangement may be suitable for project-based work, short-term specialist support, or services delivered independently. But labels are not decisive: the real working relationship matters, and misclassification can create employment status, tax and operational risk.
Employment law reform
Employment law is changing, so first-time employers should avoid old templates and build a habit of keeping contracts, policies and processes under review. Pay particular attention to early-employment management, probation records and flexible working procedures.
Related resources
Use a practical checklist for pay, hours, holiday, sickness, notice, confidentiality, policies and written particulars.
Open contract checklist →Estimate salary uplift, employer NI, pension, equipment and onboarding costs before making an offer.
Open calculator →A wider legal checklist for contracts, staff, freelancers, debt recovery, GDPR and business ownership.
Open toolkit →Track upcoming employment law reform and the practical document changes employers should plan for.
Read reform guide →Compare whether the real working relationship points towards employment or a genuine contractor arrangement.
Compare options →Browse employment contracts, offer letters, policies and related templates for UK employers.
Browse documents →Before someone starts, define the role, check pay and working hours, complete right to work checks, prepare written employment terms, set up payroll, consider workplace pension duties, plan policies and records, and organise onboarding. This is general information, not legal advice.
First employee documents
Start with clear written terms. Bracton helps small businesses create practical employment documents before a new employee starts.
This guide is general information only and is not legal advice. For complex hiring, immigration, tax or employment status questions, take advice on your specific facts.