First Employee Hiring Checklist

TL;DR: Hiring your first employee involves employer registration, payroll setup, employment contracts, workplace insurance, and at least a dozen compliance steps — complete them before the first day.

What You Need to Know

Hiring your first employee is a significant milestone for any business. It is also a significant compliance event. The moment you employ someone, you become an employer — and employers have legal obligations that did not exist when you were operating alone.

These obligations include registering as an employer with the tax authority, operating a payroll, withholding income tax and social security contributions, providing a written employment contract, and obtaining employers' liability insurance (mandatory in most countries).

Missing any of these steps creates legal exposure, potential penalties, and risks to the employment relationship itself. This checklist walks you through what you need to do before, on, and after your first employee's first day.

How It Works: A Practical Overview

Before You Hire

Step 1: Decide on employment type. Are you hiring a permanent employee (full-time or part-time), a fixed-term employee, or engaging an independent contractor? The distinction has major legal and tax implications. See our guide on full-time vs. part-time vs. contractor for detail.

Step 2: Write a job description. A clear job description sets expectations, informs the hiring process, and forms part of the employment documentation. It should include: job title, key responsibilities, required qualifications, reporting relationships, and location.

Step 3: Comply with anti-discrimination law in advertising and hiring. Employment advertisements must not discriminate on the basis of protected characteristics: race, sex, age, disability, religion, sexual orientation, national origin, and others (varying by jurisdiction). Interview questions and selection criteria must be based on genuine occupational requirements.

Step 4: Conduct appropriate background checks. Depending on the role and jurisdiction, you may need or be entitled to conduct reference checks, criminal record checks (DBS checks in the UK), right-to-work verification, and professional qualification verification.

Step 5: Verify the right to work. In all seven countries, employers must verify that the person they are hiring has the legal right to work in that country. Employing someone without the right to work can result in significant civil penalties and, in some cases, criminal liability.

Setting Up as an Employer

Step 6: Register as an employer with the tax authority.

• UK: Register as an employer with HMRC (https://www.gov.uk/register-employer)
• France: Register with URSSAF and the relevant social protection body
• Sweden: Register with Skatteverket as an employer
• Australia: Register with the ATO for PAYG withholding
• New Zealand: Register with the IRD as an employer
• Canada: Register with the CRA for payroll deductions
• USA: Apply for an Employer Identification Number (EIN) with the IRS; register with your state unemployment agency

Step 7: Set up payroll. You must operate a payroll system that calculates gross pay, deducts income tax and social security/national insurance contributions, and makes net pay to the employee. You can use:

• Payroll software (Xero, QuickBooks, FreshBooks, HMRC Basic PAYE Tools, etc.)
• A payroll bureau or bookkeeper
• Your accountant

Step 8: Obtain employers' liability insurance. This is legally mandatory in the UK (minimum £5 million cover), France, Sweden, and Australia. In the USA, workers' compensation insurance is required in most states. This insurance covers you if an employee is injured or becomes ill as a result of their work.

Documentation to Prepare

Step 9: Prepare the employment contract. A written employment contract (or statement of terms) must be provided before or on the first day of employment in most jurisdictions. The contract should cover:

• Job title and description
• Start date
• Salary and payment frequency
• Working hours
• Holiday entitlement
• Notice periods
• Place of work
• Probation period (if applicable)
• Disciplinary and grievance procedures (reference to policy)
• Confidentiality obligations

Consult a qualified solicitor or employment specialist to draft or review your employment contract.

Step 10: Prepare an offer letter. The formal offer of employment should be made in writing, stating the terms of employment. It should be conditional on satisfactory references and right-to-work verification if these have not yet been completed.

Step 11: Prepare new employee information pack. Include:

• Employee handbook (or reference to where policies are available)
• Payroll information form
• Emergency contact form
• Bank details form (for direct salary payment)
• Enrolment forms for any workplace pension or benefits

Step 12: Enrol in workplace pension (where required). In the UK, employers must automatically enrol eligible employees in a workplace pension scheme (auto-enrolment). Similar requirements exist in Australia (superannuation), Canada, and other jurisdictions.

On the First Day

• Complete right-to-work document checks and copy relevant documents
• Complete and sign employment contract
• Provide employee handbook / policies
• Set up payroll records for the new employee
• Complete any required regulatory registrations (e.g., HMRC new starter checklist in the UK)
• Conduct induction on workplace policies, safety procedures, and role expectations

After the First Day

• Submit real-time payroll information on or before the first pay day (RTI in UK; STP in Australia)
• Register the new employee with relevant social security / pension bodies
• Add the employee to your employers' liability insurance certificate
• Keep employment records for the required retention period (typically 6 years in the UK, 7 years in Australia)

Country-by-Country Comparison

Common Mistakes to Avoid

1. Hiring before registering as an employer. If you pay an employee before registering as an employer and setting up payroll, you are potentially making undeclared payments that create significant tax liability. Always register first.
2. Misclassifying employees as contractors. Using an independent contractor arrangement when the true nature of the relationship is employment is known as "sham contracting" and creates serious legal exposure — the worker may be entitled to employment rights they were not given, and you may face back-tax claims. Read our guide on employment vs. contracting classification.
3. Skipping the written contract. Even if a written contract is not legally mandatory in your jurisdiction, not having one creates significant risk when disputes arise. Always provide a written contract.
4. Not completing right-to-work checks. Failing to verify the right to work can result in civil penalties of up to £20,000 per illegal worker in the UK, or equivalent penalties in other countries. This check must be completed before employment commences.
5. Forgetting about workplace health and safety. As soon as you have employees, health and safety law applies. At minimum, conduct a risk assessment of the workplace, prepare a basic health and safety policy (required by law for companies with 5+ employees in the UK), and provide basic safety induction to all new employees.

Next Steps: Get Started Today

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MmowW Scrib🐮 is a document preparation service, not a law firm. We do not provide legal advice. For employment law matters, consult a qualified solicitor or employment specialist.

Frequently Asked Questions

Q: How much does it cost to employ someone beyond their salary?

Employers pay significantly more than just the employee's gross salary. On top of salary, you typically pay: employers' national insurance / social security contributions (13.8% of salary above threshold in UK; varies elsewhere), pension contributions (minimum 3% employer in UK), and the cost of any benefits. The total employer cost is commonly 20–30% above the gross salary in most countries.

Q: Do I need employment contracts for part-time employees?

Yes. Part-time employees have the same entitlement to written employment contracts as full-time employees. In many countries, part-time employees also have the same pro-rata entitlement to annual leave, sick pay, and other statutory rights. Treating part-time workers less favourably than full-time workers can constitute unlawful discrimination.

Q: What is the difference between a probation period and a trial period?

A probation period (typically 3–6 months) is a period at the start of employment during which performance is assessed and, in most countries, the employee can be dismissed with shorter notice and fewer procedural requirements. A trial period is sometimes used informally but has no distinct legal status in most jurisdictions. Having a clearly documented probation period with defined assessment criteria provides the most legal protection.

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