Hiring with confidence: Legal essentials for first-time employers

In this webinar, Julia Collingwood, Enterprise Nation's people operations manager, discusses legal requirements and best practices for first-time employers with Simon Obee, head of HR advisory at Employment Hero.

An employment lawyer of more than 20 years, Simon covers what small businesses need to know legally when recruiting employees and managing their workforce.

This session is part of Enterprise Nation's Talent Hub programme.

Topics covered in this session

• Why small businesses should treat hiring as a strategic investment

• How abiding by employment law means keeping up to date with the regulations and putting proper documentation and workplace policies in place

• Why it's crucial to hire staff who fit with your company culture, and set clear expectations from the beginning

• The importance of being proactive when working to address and resolve workplace issues

Key points from the webinar

Legal considerations before hiring your first employee

Financial readiness and budgeting

• Employers must assess the full financial implications before hiring.

• Key costs include:

  • salary and National Insurance contributions (NIC)

  • tax deductions and pension contributions

  • work equipment and software subscriptions

  • recruitment expenses (such as job postings, hiring platforms, onboarding costs)

• Remember – there's government assistance to support your recruitment. For example, Employment Allowance helps eligible employers reduce their National Insurance contributions.

Mandatory legal and administrative points

• Employers' liability insurance: Legally required and protects against employee workplace injuries or accidents.

• Registering with HMRC: Employers must register at least four weeks before hiring to remit PAYE (Pay As You Earn) tax and NIC contributions.

• Setting up a pension scheme: Most employees must be automatically enrolled in a workplace pension. Employers need to choose a pension provider that fits their business needs.

• Setting up payroll:

  • Employers must pay salaries on time, make the correct tax deductions and issue payslips.

  • Payroll can be outsourced or managed in-house using payroll software. Employment Hero and other HR providers offer automated payroll solutions.

Ongoing obligations for employers

Determining the correct employment status

• Employers must distinguish between employees and contractors (freelancers).

• Employee classifications affect tax, benefits and legal rights.

Types of employee contracts

• Full-time vs. part-time employment.

• Zero-hours contracts (flexible work agreements).

• Fixed-term contracts (short-term employment for a set duration).

• Each type has different entitlements (for example, paid leave, notice periods).

Legal right to work and minimum wage

• Employers must verify employees' legal right to work in the UK:

  • British and Irish citizens – passport check.

  • Foreign nationals – visa verification through the government's online system.

• Businesses must comply with the UK's minimum wage laws. Different wage rates apply based on age groups and apprentice status.

Providing essential employment documentation

• Employment contracts and statements of terms:

  • No legal requirement for a formal contract, but a written statement of terms is mandatory.

  • The statement must include salary, working hours, probation period and notice period.

  • Employers should provide a more detailed contract to protect confidential business information and clarify intellectual property (IP) rights.

• Workplace policies:

  • Although not all policies are needed by law, they help reduce risk.

  • Essential policies include:

    • disciplinary and grievance policies (for managing workplace disputes)

    • a health and safety policy (mandatory for businesses with five or more employees)

    • sexual harassment and anti-discrimination policies (make sure they keep to equality laws)

  • Without clear policies, employers risk being hit with higher legal penalties if they become involved in workplace disputes.

Best practice for first-time employers

Hire in line with your company values

• Employers should define their business's mission and values.

• Bringing in new hires who fit the company culture reduces turnover and keeps job satisfaction high.

• Job descriptions should highlight company values to attract the right candidates.

Setting clear expectations and role definitions

• Comprehensive job descriptions help prevent misunderstandings.

• New hires should fully understand the scope of their job, their responsibilities and what's expected of them in terms of performance.

• Clear communication makes future disputes around performance or behaviour less likely to arise.

Addressing performance issues early

• Employers should hold performance discussions regularly to prevent issues from escalating.

• Providing early feedback and warnings makes sure:

  • employees have a fair chance to improve

  • employers follow legal procedures in cases where they have to end a worker's employment

• Poorly managed terminations can lead to legal disputes and financial penalties.

Taking decisive action when needed

• If an employee consistently underperforms, employers should:

  • follow proper disciplinary procedures

  • keep written records of performance issues and warnings

  • take corrective action in line with UK employment law

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