Hiring Your First Employee in a UK Trades Business: A Step-by-Step Guide
Hiring your first employee in a UK trades business involves more paperwork than most people anticipate, but it is entirely manageable with a clear checklist. Here is what you need to do.
Before They Start: Employer Registration
You must register as an employer with HMRC before or on your employee’s first payday. Do this at GOV.UK: Register as an Employer. You will receive a PAYE reference number which you need to process payroll. Allow up to five working days for registration.
Right to Work Check
You must check that your employee has the legal right to work in the UK before they start. For UK and Irish citizens, a passport or birth certificate plus National Insurance number is sufficient. For other nationalities, the Home Office online check service applies. Failing to carry out right to work checks carries civil penalties of up to £20,000 per illegal worker.
Employment Contract
Employees have the right to a written statement of particulars from day one of employment (since 2020). This must include: job title, pay, hours, holiday entitlement, notice period, and place of work. A simple one-page document for straightforward arrangements covers this requirement. GOV.UK employment contract guidance covers the required content.
Payroll, PAYE, and Auto-Enrolment
As an employer you must operate PAYE — deducting income tax and National Insurance from your employee’s wages and paying these to HMRC monthly. You also pay employer’s NIC (currently 13.8% on earnings above the secondary threshold). Auto-enrolment into a workplace pension is mandatory for eligible employees. Payroll software (Xero, QuickBooks, Sage) handles these calculations. HSE’s construction employer guidance covers the safety obligations that also come with employing people on-site.
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Download CoreQuote Free on AndroidRegister with HMRC via GOV.UK before your employee’s first payday. You receive a PAYE reference number to operate payroll. Allow up to five working days.
Yes — all employees have the right to a written statement of employment particulars from day one. A simple document covering the key terms is sufficient.
The Construction Industry Scheme (CIS) applies to payments to subcontractors, not employees. If you hire genuine employees (PAYE), CIS does not apply. If engaging self-employed subcontractors, CIS deductions apply instead.
