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Five things have to exist before your new starter walks in. Here they are, what each one costs if you miss it, and what changes on 1 January 2027.
You have made the offer and they start in a fortnight. Five things have to exist before they walk in: a written statement of terms, a completed right-to-work check, PAYE registration, employers' liability insurance, and a decision on pensions. The duties start on their first day, not when the paperwork catches up — and the cheapest item on the list carries the biggest daily penalty.
Broadly, staff aged 22 to State Pension age earning at least £10,000 a year must go into a qualifying scheme. The declaration of compliance is the item most often missed, and the penalty for missing it is entirely avoidable.
The statement is the legal floor: pay and when it is paid, hours, holiday, place of work, notice, probation, sick pay, other benefits, training entitlement. A proper employment contract carries all of that and then adds the parts that actually protect you — confidentiality, ownership of anything they create, and where the role justifies it, restrictive covenants.
Failing to provide the statement can add an award of two or four weeks' pay where the employee succeeds in another tribunal claim. The clean route is one document that does both jobs, signed before they start.
The label on the invoice does not decide it. If they work hours you set, under your direction, using your equipment, cannot send a substitute and are expected to keep turning up, they are very likely an employee or a worker whatever the paperwork says.
Getting it wrong costs in two directions at once: back-dated holiday pay, notice and employment rights on one side; unpaid PAYE and National Insurance with interest on the other. It also tends to surface only when the relationship ends badly. Decide on the facts before day one and write down why you reached that answer.
On top of gross pay sit employer's National Insurance, pension contributions once auto-enrolment bites, employers' liability insurance and the cost of running payroll. Then the costs that never make the spreadsheet: holiday, which is time you pay for and get no work from, statutory sick pay, and the management time a first hire absorbs while they learn the job. Get the numbers from your accountant before you make the offer — we do not give tax advice, and a salary that looked affordable in isolation often is not once the on-costs land.
A made-up scenario, not an account of a real matter. A café owner hires their first full-time employee on a Monday, meaning to do the contract that week. The new starter has an accident on day three. There is no signed statement of terms, no recorded right-to-work check, and the employers' liability policy has not gone live. What should have been one insurance claim becomes three problems at once, and the daily penalty for being uninsured is running the whole time. An hour the week before would have covered all of it.
Ordinary unfair dismissal claims need two years' continuous service today, so a short-serving employee usually cannot bring one. That is not the same as no risk. Discrimination and whistleblowing claims have no qualifying period at all, and neither do the automatically unfair reasons — a dismissal connected to pregnancy, to raising a health and safety concern, or to asserting a statutory right is a claim from day one.
The Employment Rights Act 2025 cuts the qualifying period from two years to six months from 1 January 2027. It does not become a day-one right. But a probation period running past six months stops being the safety net it is now, so follow a short, documented, fair process even when you think you do not have to.
Run the free employment documents checker to see what is missing right now — it takes a few minutes and costs nothing. Then get the statement and contract written before the start date rather than after it.
An employment starter pack at £895 +VAT covers the contract and written statement, an offer letter, a confidentiality agreement and a contractor template. If you also want the policy set — disciplinary, grievance, holiday, sickness and the rest — HR policies and a staff handbook start at £1,495 +VAT. Payroll, PAYE and pension mechanics are your accountant's side, not ours. Book a legal review and bring the start date with you. This is general legal information, not advice on your situation.
Go deeper on the documents in our guide to employment contracts for employers, and on the wider policy set in staff handbooks and policies. Prices are on fixed-fee work.
This is general legal information, not advice on your situation. For advice tailored to your business, book a legal review. Buzz Legal Ltd is not a firm of solicitors and is not regulated by the SRA; it provides non-reserved business legal support, and reserved legal activities are carried out by RHF Solicitors, authorised and regulated by the Solicitors Regulation Authority (no. 324115).
Leave your email and we'll send the before-day-one checklist — the five documents and checks that must exist before your new starter walks in, and what each one costs if it does not.
You must give a written statement of the main employment terms on or before their first day. It is a day-one right under the Employment Rights Act 1996, it applies to workers as well as employees, and the contents are specified: pay, hours, holiday, place of work, notice, probation, sick pay, other benefits and any training entitlement. A full contract goes further and adds the protections you actually want — confidentiality, intellectual property, restrictive covenants — but the statement is the legal minimum and it cannot wait. Failing to provide one can add an award of two or four weeks' pay where the employee succeeds in another tribunal claim.
In almost all cases yes, from their first day. The Employers' Liability (Compulsory Insurance) Act 1969 requires most employers to hold cover of at least £5 million from an authorised insurer, and the penalty for trading without it can run to £2,500 for each day you are uninsured. You also have to be able to produce the certificate, and failing to make it available can cost a further £1,000. The exemptions are narrow, the main one being a company whose only employee owns at least 50% of the share capital. It is the cheapest item on the list and the one most often forgotten.
Only if the reality genuinely is self-employment, and the label on the invoice does not decide it. If they work hours you set, under your direction, using your equipment, cannot send a substitute and are expected to keep turning up, they are very likely an employee or a worker whatever the paperwork says. Getting it wrong is expensive in two directions at once: back-dated holiday pay, notice and employment rights on one side, unpaid PAYE and National Insurance with interest on the other. It also tends to surface when the relationship ends badly, which is the worst possible moment.
Automatic enrolment duties start on the day your first member of staff begins — there is no grace period. Whether you must actually enrol them depends on age and earnings: broadly, staff aged 22 to State Pension age earning at least £10,000 a year must be put into a qualifying scheme. But the duties apply even where nobody qualifies. You still have to assess every member of staff, write to them explaining their position, and complete a declaration of compliance with The Pensions Regulator within five months of your duties start date. Your accountant or payroll provider normally handles the mechanics.
Less risk, not none, and the difference catches people out. Ordinary unfair dismissal claims currently need two years' continuous service, so a short-serving employee usually cannot bring one. But discrimination and whistleblowing claims have no qualifying period at all, and neither do a list of automatically unfair reasons — dismissals connected to pregnancy, raising a health and safety concern, or asserting a statutory right are claims from day one. The Employment Rights Act 2025 cuts that qualifying period from two years to six months from 1 January 2027, which narrows the window sharply.
Clear scope · fixed fees available. Buzz Legal Ltd is not a firm of solicitors and is not regulated by the SRA.