The Pre-Hire Scorecard: What UK Startups Should Prove Before a First Contract Is Signed
Photo: Francisclarke, CC BY-SA 4.0, via Wikimedia Commons
Taking on a first employee changes the legal and financial shape of a UK company. Payroll becomes a recurring obligation, pension duties begin, and the business acquires responsibilities that cannot be backdated into good order. The practical response is not a last-minute burst of paperwork but a short, scored audit completed before anyone signs a contract.
Why the audit belongs before the contract
A start date concentrates risk. Once a founder has promised a salary and a colleague has resigned elsewhere, the temptation is to proceed and fix gaps later. HMRC, the Pensions Regulator and the Home Office do not operate on that timetable. A missing PAYE scheme can delay the first real-time information submission; an unassessed pension duty can trigger a declaration of compliance problem; and a right-to-work check completed after work begins is not a check in the sense the guidance intends.
The audit below is deliberately narrow. It covers the controls a small UK employer needs before the first payday, not every HR policy a larger business might adopt. Score each control as 0, 1 or 2, using evidence rather than intention.
The pre-hire scorecard: ten controls, twenty points
| Control | Evidence to hold before day one | Score |
|---|---|---|
| PAYE and RTI registration | HMRC PAYE reference and a tested real-time information route | 0-2 |
| Employer's liability insurance | Current certificate covering at least the statutory minimum | 0-2 |
| Right-to-work check | Dated, retained evidence checked before employment starts | 0-2 |
| Written statement of particulars | Contract or statement issued on or before day one | 0-2 |
| Payroll run readiness | Software, pay frequency, cut-off dates and a trial run | 0-2 |
| Auto-enrolment assessment | Duties start date, qualifying earnings and postponement notices | 0-2 |
| Pension compliance plan | Owner and diary date for the declaration of compliance | 0-2 |
| Worker data and privacy | Lawful basis, retention rule and payroll access controls | 0-2 |
| Statutory payments and leave | Written position on sick pay, family leave and holiday | 0-2 |
| Employer cost reserve | Cash set aside for employer NICs, pension and payroll fees | 0-2 |
Use a simple scale: 0 means no evidence, 1 means partial or undocumented, and 2 means evidence is held and someone owns the control. A score of 16 or more suggests the business is close to ready. A score of 10 to 15 calls for fixes before the start date. A score below 10 should pause the hire until the basics are in place.
The score is a management tool, not a legal certificate. It helps a founder see where a costly gap sits before a query arrives.
The six must-haves in more detail
PAYE and real-time information
An employer normally registers for PAYE before the first payday. The scheme gives the business a PAYE reference and the route for sending payroll reports to HMRC. Registration is not the same as payroll readiness: the founder also needs to know who will run the payroll, how the first full payment submission will be sent, and what happens if the payroll software rejects it.
Auto-enrolment pensions
Every employer has pension duties, even where the first hire is part-time or young. The duties start date is generally the first day of employment, although postponement can apply if the employer notifies the worker correctly. The business must assess workers against the qualifying earnings rules, enrol eligible jobholders, and complete a declaration of compliance with the Pensions Regulator within five months of the duties start date. A founder who says no one will be eligible without checking earnings and age has not completed the assessment.
Right-to-work checks
The check must happen before employment begins. The employer should follow current Home Office guidance, keep a dated copy or online check record, and diarise repeat checks where permission is time-limited. A check completed during induction, after the person has started work, is a red flag in an audit and a weak position in any later dispute.
Employment contracts and written statements
A written statement of particulars must be given on or before day one. It should cover pay, hours, holiday, notice, probation, pension arrangements and the principal place of work. A contract template copied from another jurisdiction is not a shortcut. UK-specific clauses on holiday pay, notice and confidentiality matter, and the statement should match what payroll will actually do.
Employer's liability insurance
Employer's liability insurance is compulsory for most UK employers. The certificate should be current, accessible and sufficient for the workforce. The scorecard asks for evidence, not a promise that cover will be arranged before the first payday.
Payroll setup
Payroll readiness means more than buying software. The founder needs a pay frequency, a cut-off date, opening balances, a process for sick pay and holiday pay, and a trial run before the first live submission. Payslips must be issued. If an accountant runs payroll, the founder should still know who approves the numbers and who holds the PAYE correspondence.
Red flags that should pause hiring
- A start date is fixed but no PAYE scheme exists.
- Pension duties are dismissed as irrelevant without an earnings assessment.
- Right-to-work evidence is planned for the induction day.
- The contract is a foreign template with no UK holiday or notice terms.
- Cash reserves cover salary but not employer NICs, pension contributions and payroll fees.
- One person holds all payroll access and no one else can retrieve the records.
A two-week pre-hire action plan
Days one to three: register or confirm PAYE, check the insurance certificate, and open the pension assessment. Days four to six: issue the written statement, complete the right-to-work check and confirm payroll cut-offs. Days seven to ten: run a dummy payroll, document the pension declaration owner and set the employer cost reserve. Days eleven to fourteen: review the scorecard, fix any control scored below two, and record the evidence in one folder.
What good looks like on day one
On the first day, the employer can show a PAYE reference, a current insurance certificate, a completed right-to-work check, a written statement, a tested payroll route and a documented pension assessment. The founder also knows the true cost of the hire, including employer NICs and pension contributions, and has cash reserved for it. That is a more useful definition of readiness than a signed contract alone.
