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Before you hire: insurance, PAYE, fair recruitment ​

Some of your duties as an employer start before anyone works a shift: the right insurance from the day you become an employer, a PAYE scheme before the first payday, and a recruitment process that does not discriminate, from the advert to the offer. This guide covers what a restaurant, café, pub or takeaway needs in place before taking on staff, and before each new hire.

Work out their employment status ​

Status decides the person’s rights and your duties, including PAYE.

  • Worker: agrees to do the work personally for a reward and can only send someone else to a limited extent. Workers get the minimum wage, paid holiday, rest breaks and protection from discrimination. Casual staff are often workers: signs include a contract that says “casual”, “zero hours” or “as required” and working under a manager’s supervision.
  • Employee: works under an employment contract and has all the rights of a worker and more, such as minimum notice and protection against unfair dismissal, some only after a qualifying period.
  • Self-employed: runs their own business and takes responsibility for its success or failure. Not paid through PAYE, and mostly outside employment law.

The label is not decisive: a tribunal looks at how the arrangement works in practice. Someone can have one status in employment law and another for tax; you must work out both (HMRC has an online tool for tax). Getting it wrong can mean unpaid tax and penalties.

Get employers’ liability insurance ​

You need employers’ liability insurance as soon as you become an employer. It pays compensation if an employee is injured or made ill by their work for you.

  • At least £5 million of cover for any one occurrence, including costs, from an authorised insurer (check the Financial Conduct Authority register). The Health and Safety Executive (HSE) notes most insurers offer at least £10 million.
  • The certificate. Your insurer issues it within 30 days of the cover starting or being renewed. Display a copy at each workplace where staff can easily read it or, since 1 October 2008, make it available electronically if every employee it covers has reasonable access. Show it to an inspector who asks. You no longer have to keep old certificates, but HSE strongly advises keeping a full record, as some illnesses appear decades later.
  • Exemptions. You do not need it if all your employees are close family (such as a spouse, civil partner, parent, child or sibling), but HSE says this does not apply to a limited company. A company whose only employee is its owner, holding 50% or more of the shares, is also exempt. HSE adds that you may need cover for someone you control and equip even if you call them self-employed.
  • Penalties. Up to £2,500 for every day you are not properly insured, and up to £1,000 for not displaying the certificate or showing it to an inspector.

The Act covers businesses in England, Scotland and Wales; Northern Ireland has its own law with a similar duty to insure.

Register as an employer with HMRC ​

Register as an employer with HMRC before the first payday, but not more than two months before you start paying people. Your employer PAYE reference arrives by letter; if you must pay someone before then, run payroll, store the Full Payment Submission and send it to HMRC late. From then on you report pay and deductions to HMRC on or before every payday, and each new employee on or before their first payday. A bureau or accountant can run payroll, but you stay legally responsible for every PAYE task. Pensions duties follow too: see our guide to workplace pensions.

You do not have to advertise, but Acas says it lowers the risk of discrimination. You must not discriminate because of a protected characteristic: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation. These rules come from the Equality Act 2010, which does not extend to Northern Ireland; there, ask the Labour Relations Agency.

  • Wording. Acas’s examples of risky wording: “recent graduate” or “highly experienced” (age) unless the job needs it; “barmaid” or “handyman” (sex), so describe the job, not the person; “German” instead of “German-speaking” (race); and a rule such as a hairnet in the kitchen, which could disadvantage someone who covers their head in another way for religious reasons.
  • Where. Acas suggests at least two ways or places, not only one social media site.
  • Date of birth. Only on the application form if the job needs a certain age, such as selling alcohol; otherwise on a separate monitoring form that whoever chooses candidates does not see.
  • Never ask whether someone is married, single or in a civil partnership, or has or plans to have children.
  • Tell applicants what you will need (proof of right to work, references, any health check) and how you will use their personal information. Offer another format, such as large print, where that is reasonable.

Interview fairly ​

  • Adjustments. Acas’s guidance is that you must ask everyone you invite whether they need adjustments to attend, such as an accessible room or more time for a written test, and make those that are reasonable.
  • Consistency. The same questions for everyone, ideally with more than one interviewer and a scoring system. Avoid using people’s personal social media.
  • Notes. Store notes and recordings securely and follow data protection rules; ask permission before recording an online interview.
  • Trial shifts. Acas says an unpaid trial should be reasonable, such as two hours or a shift, and not usually longer than one day; if it is not genuinely a test, the minimum wage is due. See our guide to the minimum wage.

Health questions: wait until the offer ​

Under section 60 of the Equality Act 2010 you must not ask about an applicant’s health, including disability, before offering them work (a conditional offer counts) or putting them in a pool to choose from. The exceptions are narrow: whether they need adjustments for the interview or a test, whether they can do a task intrinsic to the job (after reasonable adjustments), diversity monitoring, and positive action for disabled people. The Equality and Human Rights Commission enforces this, and acting on the answers can be disability discrimination. After the offer you can ask, and must consider adjustments.

Make a conditional offer ​

Acas advises a written offer with the job title, pay, hours, benefits, pension, holiday, place of work, start date, any probation, how to accept and any conditions, such as references or a health check, and asks for written acceptance. If a condition is not met you can withdraw the offer, giving the reason; withdrawing an unconditional offer could be against the law. The written statement of employment particulars is due on or before the first day: see a new starter’s contract, payroll and first day.

References. Ask at the offer stage, with the applicant’s permission. There is usually no legal duty to give one, but a reference must be fair and accurate, and can be brief (job title, salary, dates). It should not mention absences linked to disability or parental leave, or adjustments.

Check the right to work ​

Before you employ anyone, check that they can work in the UK, without discriminating because of where people are from: employing an illegal worker without a correct check risks a civil penalty, and a reference is no substitute. See our guide to right to work checks.

What the Employment Rights Act 2025 changes ​

  • In force since 6 April 2026: paternity leave and unpaid parental leave are day-one rights, with no qualifying period.
  • In force since 1 October 2026: most employment tribunal claims, including applicants’ discrimination claims, can be brought within six months instead of three, for acts on or after that date. Keep your notes.
  • Not yet in force when checked: for dismissals with an effective date of termination on or after 1 January 2027, the unfair dismissal qualifying period falls from two years to six months and the cap on the compensatory award goes.

A short checklist ​

  • Employment status worked out for employment law and for tax.
  • Employers’ liability insurance of at least £5 million from day one, with the certificate on display or available electronically.
  • Registered with HMRC as an employer before the first payday.
  • A neutrally worded advert in more than one place, with no date of birth on the form unless the job needs it.
  • The same interview questions for everyone, adjustments offered, notes kept securely.
  • No health questions before the offer, except the narrow exceptions.
  • A written, conditional offer, with references asked for at that stage.
  • A right to work check before the person starts.

Sources ​

This guide is general information, not legal advice. For your own business, call the Acas helpline (in Northern Ireland, the Labour Relations Agency) or ask an employment adviser.