Employment contract for your first employee

Employing someone for the first time brings a set of obligations that arrive on the first day: a written statement of the main terms, which the contract supplies, the minimum wage, holiday and rest, statutory sick pay, a pension, employer's liability insurance, PAYE and a right to work check. The contract is where the terms the law requires and the terms the business wants are set out in one document the employee signs, and it becomes the template for everyone the business employs after that. I draft that contract for the employer for a fixed fee of £595, delivered in five working days, as a template the business can reuse for the grade.

Who this is for

Business owners in England and Wales taking on their first employee, from a sole trader hiring an assistant to a start-up making its first hire, who want the contract right and the obligations understood.

What matters in a first employee's contract

The written particulars the law requires from day one

Section 1 of the Employment Rights Act 1996 requires an employer to give an employee a written statement of the main terms on or before the first day: the parties, the start date, pay and when it is paid, hours and days and whether they vary, holiday and holiday pay, sick leave and pay, other paid leave, benefits, probation, notice, job title, place of work, training the employer requires, and the pension; the contract contains all of them, so that the business meets the obligation by issuing the contract, and a business that issues no written terms faces an award if the employee later brings any tribunal claim.

Pay, hours and the minimum wage

The contract should state the salary or hourly rate, which must be at or above the rate under the National Minimum Wage Act 1998 for the employee's age for every hour worked including training and travel between assignments, the pay interval, the working hours and days, any overtime and how it is paid, and the limit of forty-eight hours a week averaged under the Working Time Regulations 1998 unless the employee signs an opt-out, which the contract should contain as a separate signature rather than a buried clause; the employee's entitlement to an itemised payslip and the employer's PAYE obligations run from the first payment.

Holiday, sickness and the statutory floors

The contract should give at least the statutory minimum paid holiday under the Working Time Regulations 1998 (five point six weeks a year including bank holidays for a full-time worker, pro rata for part-time), say how the holiday year runs and how leave is booked and carried over, and set out sick pay: statutory sick pay under the Social Security Contributions and Benefits Act 1992, payable from the first day of sickness since the changes made by the Employment Rights Act 2025 came into force, with any company sick pay the business chooses to add; the contract should also refer to the family leave rights the employee has by statute rather than restate them.

Probation, notice and ending the employment

A probation period lets the employer assess the employee with a shorter notice period, and the contract should state its length, the review process and the notice during it, with the employee's statutory minimum notice under section 86 of the Employment Rights Act 1996 as the floor; the Employment Rights Act 2025 is removing the qualifying period for unfair dismissal and introducing a statutory initial period of employment with a lighter process for dismissal during it, on a timetable the regulations set, and the probation clause should be drafted now with that in mind, with a fair process followed in any dismissal regardless of length of service because discrimination and other day-one claims do not depend on it.

The registrations and insurance that come with employing

Before the first payday the business must register as an employer with HMRC for PAYE, hold employer's liability insurance under the Employers' Liability (Compulsory Insurance) Act 1969 and display the certificate, check the employee's right to work under the Immigration, Asylum and Nationality Act 2006 and keep the evidence, assess the employee for automatic enrolment into a workplace pension under the Pensions Act 2008, and comply with the Health and Safety at Work etc. Act 1974 for the employee's workplace; the contract cannot do those things, but the note that comes with it lists them, because the contract is the least of it.

Confidentiality, property and the clauses a small business needs

The contract should contain confidentiality obligations, a clause confirming that work the employee creates in the course of employment belongs to the employer under section 11 of the Copyright, Designs and Patents Act 1988, the return of property and data on leaving, the employer's right to make deductions the employee agrees to in writing under section 13 of the Employment Rights Act 1996 (overpayments, training costs on a sliding scale), a data protection statement referring to the privacy notice under the UK GDPR, the employer's policies (disciplinary and grievance procedures, which the law requires to be identified), and restrictive covenants only where the role justifies them, drafted narrowly so that they can be enforced.

What it costs

Employment contract, £595. One template you can reuse for a grade of staff. Five working days.

Staff handbook and core policies, £995. Five working days.

Buying online forms the engagement on payment. The scope is what the employment contracts and handbooks page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke contract drafted for how you employ people
• Restrictive covenants drafted at a scope a court will uphold
• Confidentiality and intellectual property provisions that put ownership where it belongs
• The statutory particulars, so the document does the job section 1 of the Employment Rights Act 1996 requires it to do
• Flexibility clauses where you genuinely need them, drafted to survive challenge
• Core policies: disciplinary, grievance, sickness absence, equal opportunities, data protection and, increasingly, AI use
• One round of amendments

What is not included

• Acting for employees
• Employment tribunal representation
• Payroll, pensions auto-enrolment and tax
• Immigration and sponsor licence work
• Day to day HR handling, disciplinaries, grievances and redundancy processes

Questions I am often asked

Do I need a contract if I only employ one person part time?

You need to give written particulars on or before the first day whatever the hours, and a contract is the document that does it. The obligations that come with employing (PAYE, insurance, pension, right to work) apply from the first employee.

Can I put a six-month probation in the contract?

You can state a probation period of any reasonable length with a shorter notice during it. The new statutory initial period under the 2025 Act will set the framework for dismissal in the early months once in force, and the clause is drafted with it in mind.

What else do I have to do before the first payday?

Register for PAYE, take out employer's liability insurance, check the right to work, set up the pension assessment and sort out the workplace's safety. The note with the contract lists them; none of them can wait for the end of the first month.

Related guidance and services

• Employment contracts and handbooks, £595, the service this page describes
• Consultancy and contractor agreements, £595
• Settlement agreements for employers, £795
• Employment contract for a part-time employee
• Consultancy agreement versus employment contract: which one you need

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.