If your business is growing and you need extra capacity, you have several ways to meet the demand, which you can outline when learning how to write a business plan. You could outsource work, train existing staff, reorganise roles or take on new people. Whichever route you choose, bringing in extra help is an investment in your business. For women-led small businesses, choosing the right route affects your time, cash flow and capacity to grow.

ThThis guide explains what is a limited company, the main ways of employing people in the UK and how to choose the approach that best fits your needs.t covers permanent and fixed-term employees, agency workers, freelancers, directors and the legal duties you take on as an employer in 2026.

Before you recruit: assess your staffing needs

Before spending time and money on employing someone new, weigh up whether you really need to recruit. Look at your staffing needs against the wider objectives of the business.

You may need extra help immediately or be planning for the future. In both cases it pays to plan as far ahead as you can. Consider why you need extra help and how long you will need it for.

Ask yourself:

• Are you taking on your first employee to help grow the business or manage a heavier workload?
• Are you replacing an employee who has left? If so, why did they leave and what skills and experience have you lost?
• Do you need a skill that none of your existing employees has?
• Has your workload increased permanently, or is the rise only temporary?
• What will be the impact of taking on someone new? Do you have space, equipment and systems ready?
• Do you need long-term cover for yourself?

If you are taking on your first employee, you will usually need to register as an employer with HM Revenue and Customs (HMRC). GOV.UK has a step-by-step guide to employing someone, or you can call the HMRC New Employer Helpline on 0300 200 3211.

Alternatives to taking on new staff

Recruitment can be expensive and time-consuming, so consider these options first:

• Reorganising the company structure
• Sharing work among existing employees
• Promoting existing staff
• Asking part-time employees if they would consider more hours
• Improving efficiency by rearranging tasks or upgrading systems
• Offering overtime
• Adopting flexible working arrangements, such as staggered start times to extend cover
• Hiring temporary workers through an employment agency
• Offering short-term internships, work placements or apprenticeships

The main ways to take on extra people

The type of worker you choose will depend on factors such as how constant the work is, how long it will last and how many hours are needed each week.

Your main options are:

• Permanent employees can be full-time or part-time. They have an open-ended employment contract with you and are an investment in your business, but you also have employer obligations towards them.
• Fixed-term contract employees work for you for a set period or until a specific task is completed.
• Agency temporary staff are engaged by the agency and supplied to you. Your contract is with the agency, but you still have legal responsibilities towards the worker. From day one they must have access to the same on-site facilities and job vacancy information as comparable employees. After 12 weeks in the same role they are entitled to the same basic terms and conditions, including pay, working time, rest breaks and annual leave.
• Using self-employed freelancers, consultants and contractors reduces your employer obligations, but you must be sure they are genuinely self-employed. Medium and large private-sector clients are responsible for deciding a contractor’s employment status for tax under the off-payroll working rules (IR35). Get employment status wrong and you could face a bill for tax and National Insurance.
• Zero-hours contracts allow you to have people on call to work when necessary and mutually convenient. Generally you are not obliged to offer work, nor is the worker obliged to accept it. Exclusivity clauses, which stop a worker from taking work elsewhere, are banned. The government has proposed reforms that would give eligible zero-hours workers rights to guaranteed hours and compensation for cancelled shifts. See our guide to zero-hours contracts for women-led businesses for the latest position.
• If you plan to employ children or young people, remember there are restrictions on the hours and types of work they can legally do.

Full-time or part-time employees

Whether your employees are full-time or part-time, you have responsibilities to them. Some apply from day one, others after a minimum period of continuous employment.

• You must give them a written statement of employment particulars on or before their first day.
• You must give them an itemised payslip on or before each payday.
• You must provide a safe and secure working environment.
• You must have employers’ liability insurance of at least £5 million to cover claims for illness, injury or disease arising from their work. The minimum cover is set by the Employers’ Liability (Compulsory Insurance) Act 1969.
• You must register as an employer with HMRC and run a payroll, deducting income tax and National Insurance contributions and paying them over to HMRC. Check the current employer National Insurance thresholds on GOV.UK.
• You must meet your automatic enrolment pension duties for eligible staff. The Pensions Regulator sets the earnings trigger and qualifying earnings band each tax year; check the current figures on GOV.UK.
• Your employees are entitled to a minimum of 5.6 weeks’ paid holiday each year (including bank holidays, for full-time workers), limits on their working week, and minimum rest breaks under the Working Time Regulations 1998.
• You must pay at least the National Living Wage or National Minimum Wage. Rates are reviewed each April; check the current rates on GOV.UK. Lower rates apply to younger workers and apprentices.
• If a member of staff is off sick for four or more days in a row, they are usually entitled to Statutory Sick Pay. Check the current rate and lower earnings limit on GOV.UK.
• If an employee is pregnant or has recently become a parent, they may be entitled to maternity, paternity, adoption or shared parental leave and pay. Parents can also take up to 18 weeks’ unpaid parental leave before their child turns 18 under the Employment Rights Act 1996.
• You must consider all flexible working requests seriously. Employees have the right to request flexible working from their first day and can make two statutory requests in a 12-month period under current UK flexible working rules. See our guide to the Employment Rights Bill and flexible working for the latest developments.
• You must treat employees fairly and avoid discrimination. If things go wrong, they are entitled to fair treatment in dismissal, redundancy or business sale situations.
• If an employee is disabled, you must make reasonable adjustments to remove or reduce disadvantages caused by workplace features or arrangements.

For a fuller checklist of HR duties, see the Prowess Human Resource Toolkit for Small UK Businesses.

Fixed-term contracts

Sometimes it makes sense to take someone on for a fixed term. A fixed-term contract ends:

• after a specified time set in advance
• when a specified task is completed
• when a specified event does or does not happen

For example, a retailer might take on someone for three months to cover the Christmas rush, or you might employ someone to cover maternity, paternity or adoption leave.

When fixed-term contracts work well

Fixed-term contracts let you bring in specific skills and labour exactly when you need them.

Unless you can objectively justify different treatment, you must give fixed-term employees the same pay, conditions, benefits, pension opportunities and access to permanent vacancies as comparable permanent employees. They also have the same employment rights.

Under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, anyone employed on fixed-term contracts for four or more years will usually be classed as permanent if their contract is renewed or they are re-engaged on a new fixed-term contract. The only exemptions are where further fixed-term employment is objectively justified, or the four-year period has been lengthened under a collective or workplace agreement. These regulations do not apply to apprentices, students on work placements of a year or less, or people on certain training courses and temporary work schemes.

Tax matters for fixed-term staff

You make the same tax and National Insurance arrangements for fixed-term employees as for permanent employees.

Taking on agency workers

Agency staff can be ideal for emergency temporary cover. It can cost more than employing a temporary worker directly, but the agency handles most of the administration.

You usually pay the agency and the agency pays the worker. The rate may include National Insurance, holiday and sick pay, plus the agency’s fee and margin.

The agency is responsible for making sure workers receive rights such as those under the Working Time Regulations and the National Minimum Wage.

However, agency workers also have rights in your workplace. From day one they must have access to the same collective facilities and information about relevant job vacancies as comparable employees. After 12 weeks’ continuous employment in the same role they are entitled to the same basic terms and conditions, including pay, working time, night work, rest periods, breaks and annual leave.

You should give the agency details of your terms and conditions so it can ensure the worker receives equal treatment after 12 weeks. Research the agency’s reputation before using it: a worker’s poor experience, such as late or incorrect pay, can reflect badly on your business.

Employment agencies must comply with the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003. They cannot charge workers fees for finding work and must check that workers hold any legally required qualifications.

Even though agency staff do not work directly for you, you are responsible for their health and safety. They may be at greater risk because they are unfamiliar with your premises and practices.

Freelancers and outside contractors

Using freelancers or outside contractors is a way to bring in extra skills and labour without taking on all the responsibilities of an employer. These workers are self-employed or belong to separate outside companies.

For example, you might use an IT contractor to build your website or a freelance PR consultant for a promotional campaign.

When freelancers suit your business

Genuinely self-employed freelancers and contractors usually handle their own income tax and National Insurance. However, you must check whether you are responsible for deducting tax under the off-payroll working rules (IR35). Medium and large private-sector businesses must decide the employment status of contractors they use. Get this wrong and HMRC may pursue you for unpaid tax and National Insurance.

People who are genuinely self-employed do not have the same rights as employees. Depending on their contract, they may qualify as workers and be entitled to rights such as holiday pay. If you are unsure about someone’s employment status, seek professional advice.

The National Minimum Wage does not usually apply to people who are genuinely self-employed and paid through their own business.

You still have health and safety responsibilities for freelancers and contractors working for you. Check whether your insurance covers non-employees on your premises, and avoid discriminating against anyone who carries out work for you, whether employed or self-employed.

Directors and managers

Every limited company must have at least one director. Directors are appointed by shareholders to run the company on their behalf and have wide-ranging responsibilities under the Companies Act 2006, covering health and safety, tax, employment law and filing duties. There are serious penalties for failing to meet these duties, so choosing the right director matters.

Some people cannot become directors, including anyone who:

• has been disqualified by the courts from acting as a director
• is an undischarged bankrupt, unless a court gives permission
• is under the age of 16

Taking on a manager

You may want to take on a manager to cover you while you are away or free you up to grow the business. Think carefully about the qualities, experience and skills the candidate will need before you delegate day-to-day running. When you prepare the job description, advert and interview questions, keep the managerial responsibilities in mind.

Next steps for employing people in the UK

For women-led small businesses, getting these foundations right makes employing people in the UK less risky and more sustainable. Work through the checklist below before you advertise a role:

1. Decide whether you need a permanent employee, fixed-term cover, agency staff or a freelancer.
2. Register as an employer with HMRC before you pay your first employee.
3. Set up payroll, employers’ liability insurance and a workplace pension scheme.
4. Check the current National Living Wage and National Minimum Wage rates before you advertise a role.
5. Put a written contract and statement of employment particulars in place on or before day one.
6. Keep up with the Employment Rights Bill employer timeline so you know which duties apply and when.

Useful contacts

Acas Helpline
0300 123 1100

HMRC New Employer Helpline
0300 200 3211

National Minimum Wage Helpline
0800 917 2368

GOV.UK – Employing people
www.gov.uk/employing-staff