How to hire your first employee as a tradesperson

At some point most growing trade businesses hit the same wall: more work than one person can do. Hiring someone is the obvious answer, but it comes with legal duties, new costs and a different way of working. This guide walks through the steps in order.

Employee, worker or subcontractor?

First, decide what kind of help you need, because the legal status matters:

• Employees work under your direction, usually set hours, and have the most employment rights. You run payroll for them.
• Workers have some rights, such as minimum wage and holiday pay, but fewer than employees.
• Self-employed subcontractors run their own business, invoice you and are responsible for their own tax. In construction, they may be under CIS.

Calling someone self-employed does not make them self-employed. HMRC and the courts look at the reality: who controls the work, whether they can send a substitute, who provides the tools and whether they work for others. Getting it wrong can lead to back tax and claims, so check HMRC's employment status guidance if you are unsure.

The legal must-dos before day one

1. Register as an employer with HMRC

You normally need to register as an employer before the first payday, and it can take a while for the registration to come through, so do it early. Once registered you will run PAYE payroll, deducting income tax and National Insurance and reporting to HMRC each time you pay someone, through Real Time Information (RTI). Most small firms use payroll software or an accountant.

2. Check their right to work in the UK

You must check that anyone you employ has the right to work in the UK, before they start, following Home Office guidance. Keep a copy of the documents or the online check. Civil penalties for employing someone without the right to work are significant.

3. Get employers' liability insurance

Employers' liability insurance is compulsory as soon as you employ someone, with cover of at least £5 million from an authorised insurer. Many trades already have public liability insurance, but that is a different policy. Check your cover before the first day.

4. Give a written statement of employment

Employees and workers are entitled to a written statement of the main terms of employment on or before their first day, covering pay, hours, holiday, job title, start date and more. A written contract that includes these terms meets the requirement. Acas has free templates.

5. Set up a workplace pension

Under automatic enrolment, you must enrol eligible staff into a workplace pension and contribute to it. Your duties start from the day your first employee starts. Generally you must enrol staff aged 22 to State Pension age who earn over the earnings trigger, which has been £10,000 a year, and others can ask to join. The Pensions Regulator's website explains what to do and when.

Pay: what to budget for

Minimum wage

You must pay at least the National Minimum Wage or National Living Wage for the employee's age. From April 2026, the National Living Wage for workers aged 21 and over is £12.71 an hour. Rates change every April, so check GOV.UK. Remember that unpaid travel between jobs can count as working time for minimum wage purposes.

The true cost of an employee

The wage is only part of the cost. Budget for:

• Employer National Insurance above the secondary threshold, though the Employment Allowance can reduce this for many small employers
• Pension contributions, a minimum percentage of qualifying earnings
• Holiday pay: full-time staff are entitled to 5.6 weeks of paid holiday a year, including bank holidays if you choose
• Sick pay: Statutory Sick Pay rules are changing as part of the employment reforms, so check the current position
• Equipment, uniform, phone and van costs
• Training and supervision time

A useful rule of thumb is that an employee costs noticeably more than their gross wage once all of this is included. Make sure your prices cover it.

Health and safety

As an employer you must assess the risks your work creates and take reasonable steps to control them. If you employ five or more people, you must write down your health and safety policy and the significant findings of your risk assessments. Even with one employee, written risk assessments and method statements (RAMS) for higher-risk work are good practice, and contractors will ask for them. You also need to report certain accidents under RIDDOR.

Setting your first hire up to succeed

Legal compliance is the minimum. What makes a first hire work is clarity:

• Write down how you do things. Checklists for common jobs, photos of what "done properly" looks like, and how you talk to customers.
• Give them the information they need on their phone. Job addresses, access notes, what to bring and what the customer has asked for.
• Agree how time is recorded. Clocking in and out, travel time and breaks, so pay is accurate and fair.
• Plan their first two weeks. Shadowing you, then simple jobs, then working alone.
• Review regularly. A short weekly chat in the first month catches problems early.

Keeping good people

Skilled trades staff are in demand. Fair pay matters, but so do reliable hours, decent equipment, being trusted and being thanked. Recognising good work, sharing customer feedback with the person who did the job and offering a clear path to more responsibility all help.

How Cuppaflow helps

Cuppaflow gives your new starter an app on their phone that installs from the browser, shows only their own jobs with access notes and checklists, and works offline. They clock in and out with GPS, timesheets build automatically, and you can manage availability, holidays and rota in one place. Custom roles control what each person sees, and the document library holds your health and safety documents and RAMS. It does not run payroll, but timesheet exports make payroll simple for you or your accountant.