HR Handbook
Hiring your first employee is a significant milestone — and a significant responsibility. Employment law in the UK is comprehensive, and getting it wrong can be costly. This handbook covers everything you need to hire, manage and retain staff correctly, from writing a job description to handling redundancy.
Hiring your first employee is one of the most significant decisions you'll make as a business owner. It brings new capabilities and capacity — but also new costs, responsibilities and risks. Getting the timing right matters.
The right time to hire is when you have consistent, predictable demand that you can't meet alone, and when the cost of the hire is justified by the revenue or value they'll generate. Hiring too early — before you have stable revenue — puts the business under financial pressure.
Before hiring a permanent employee, consider alternatives: freelancers or contractors for project-based work, part-time employees to test the waters, or outsourcing specific functions (bookkeeping, marketing, admin) to specialists.
When you do decide to hire, be clear about what you need. Write a detailed job description before you start looking. Know what skills are essential versus desirable, what the role will involve day-to-day, and what success looks like in the first 6 months.
Understand the full cost of employment before you commit. Salary is just the start — you'll also pay Employer's National Insurance (13.8% on earnings above £9,100), pension contributions (minimum 3% of qualifying earnings), and potentially other benefits. The total cost of employment is typically 20–30% above the salary.
Good to know
- Calculate the full cost of employment before making an offer
- Consider a probationary period — typically 3–6 months — to assess fit before confirming employment
- Start with a part-time role if you're not sure you have enough work for a full-time hire
- Get your employment contract and HR policies in place before your first employee starts
Watch out for
- Hiring before you have stable, predictable revenue to cover the cost
- Underestimating the total cost of employment — salary is just the beginning
- Not having an employment contract ready before the employee starts
- Treating employees as contractors to avoid employment obligations — HMRC investigates this
Related guidance
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