What if you're about to go from 2 people to 10?
Growing from 2 to 10 staff? Most HR duties start with your first employee. What changes at 5 and at 10, in one UK table with the sources.
In short
- Almost every legal duty starts with your first employee: insurance, PAYE, right to work checks, the written statement, the pension, the harassment duty and health and safety.
- At five employees your health and safety policy and the main findings of your risk assessment must be in writing. That is the only headcount rule between 2 and 10 for most businesses.
- Unfair dismissal after six months' service from 1 January 2027 applies to every employer, whatever the size.
- The real change between 2 and 10 is practical: a short handbook, a first manager, one place for records and probation run the same way for everyone.
On this page 8 sections
- What HR do you need at each headcount?
- What do you need from your first employee?
- What changes when you reach five employees?
- Does anything change at ten?
- Which employment rights don't depend on your size?
- What should you put in place that the law doesn't ask for?
- Where do you start if you're already at six or seven?
- Frequently asked questions
Have you got two people now, a few more hires planned and a feeling that your HR should grow up somewhere along the way? Maybe at five, or at ten?
The short answer: Almost everything the law asks of an employer starts with your first employee, not your tenth. Between 2 and 10 people there is one headcount rule most businesses meet: at five employees, your health and safety policy and the main findings of your risk assessment must be written down. What really changes is the practical side, because the habits that work for two people, all in one room, stop working at eight.
So if you were waiting for a number, the number was one. That sounds worse than it is: if you already employ people, you have probably done most of the list. The job now is to make it hold at ten.
What HR do you need at each headcount?
When | What the law asks | Who it applies to |
|---|---|---|
From your first employee | Employers' liability insurance, at least £5 million, from the day you become an employer. | Almost every employer. The exemption is narrow: everyone you employ is a close family member, and it doesn't apply if your business is a limited company. |
Before the first payday | Register with HMRC as an employer, no more than two months before you start paying people. | Once, for the business. |
Before anyone starts work | Right to work check, with a dated copy kept. | Every employee. Since 1 October 2026, workers and individual subcontractors who start from that date too. |
On or before day one | Written statement of employment particulars. Disciplinary and grievance rules, pension and some other terms can follow within two months. | Every employee and worker. |
From your first employee's first day | Workplace pension duties. Enrol eligible staff within six weeks, and send The Pensions Regulator a declaration of compliance within five months, even if nobody needed enrolling. | Every employer. Automatic enrolment covers staff aged 22 to State Pension age earning at least £10,000 a year. |
From your first employee | Health and safety: assess the risks, show the law poster or hand out the leaflet, set up first aid and consult your staff. Keep a written fire risk assessment for your premises. | Every employer. The fire record applies to whoever is responsible for the premises, whatever their size, since 1 October 2023 in England and Wales. Scotland has its own fire rules. |
From your first employee | Take all reasonable steps to prevent sexual harassment of your employees, including by customers and other third parties, and don't permit any harassment of your employees by third parties. | Every employer, since 30 October 2026. The third-party duty covers harassment related to any protected characteristic, not only sexual harassment. |
When you hold personal data | Pay the ICO data protection fee, unless you are exempt. | Not needed if you only use personal data for staff administration, your own marketing and your accounts. CCTV for crime prevention means you pay. |
At five employees | Write down your health and safety policy and record the significant findings of your risk assessment. | Employers with five or more employees. |
Above ten staff | The ICO fee moves from tier 1 (£52) to tier 2 (£78), but only if your turnover is also above £632,000. | Businesses that pay the fee. |
From 1 January 2027 | Unfair dismissal protection after six months' service instead of two years, for dismissals from that date. | Every employer, whatever the size. |
What do you need from your first employee?
Most of that table. What to set up before the first payday puts it in order with the costs, the legal documents for a new employee has the checklist for every new starter and First Hire Ready does it for you for £795 + VAT.
Going from 2 to 10, the question changes: can you do it for every new person, the same way, without relying on memory?
What changes when you reach five employees?
The Health and Safety Executive is clear: with five or more employees, your health and safety policy must be written down, and so must the significant findings of your risk assessment. That means the hazards, who could be harmed and what you do about it.
At four employees the policy can live in your head; at five it has to be on paper. I would write it down at four anyway, because a policy in your head can't be handed to the next person who starts.
A page on who is responsible for what, plus a short record of the main risks, is enough for a small office, cafe or studio.
Does anything change at ten?
Legally, very little. If you pay the ICO data protection fee, you stay in tier 1 while you have no more than 10 staff or a turnover of up to £632,000. Go past both and it is £78 a year instead of £52. The next headcount rule people quote, gender pay gap reporting, starts at 250 employees.
Which employment rights don't depend on your size?
Nearly all of them. None of these has a small employer exemption:
- unfair dismissal after six months' service, for dismissals from 1 January 2027, with no cap on the compensatory award
- the harassment duties, all reasonable steps to prevent sexual harassment and not permitting harassment by customers and other third parties, both since 30 October 2026
- whistleblowing protection, which every worker has from day one
You do not need a whistleblowing policy by law, as GOV.UK says plainly, though the government is consulting on whistleblowing until 8 January 2027. A short paragraph in your handbook on how to raise a concern is the minimum I would have.
Also, the Acas Code of Practice on discipline and grievances applies whatever your size, and unreasonably ignoring it can raise a tribunal award by up to 25%. Our employment law changes page tracks every date.
What should you put in place that the law doesn't ask for?
Growing changes this part. At eight, you hear "but you let Sam do it" for the first time, and you realise there was no rule, only a decision you made on a busy day.
So, the minimum that works:
- a short handbook at around five people. Holiday, sickness, lateness, how to raise a problem and your harassment policy
- a first manager, with a brief. When someone else starts approving holiday or dealing with lateness, tell them what they can decide alone and what comes back to you
- one place for records. Contracts, right to work copies, holiday and sickness, in one system or one locked folder per person. Since 6 April 2026 holiday and holiday pay records have to be kept for six years, so a spreadsheet on someone's laptop will not do
- probation run the same way for everyone. A review at month four or five, written down. With six months becoming the unfair dismissal threshold, that note matters
What you don't need at this size: an HR manager, a 40-page handbook or a policy for every situation you can imagine. If a document would sit in a folder unread, it is not protecting you.
Where do you start if you're already at six or seven?
With what you have. The HR Health Check shows what is missing and what to fix first. HR Foundations Build puts contracts, a handbook, core policies and onboarding in place, from £1,800 + VAT for up to 15 employees. If the records are the problem, HR Systems Setup gives you one place for them.
Frequently asked questions
At what number of employees do HR rules change in the UK?
Most duties start with your first employee. The main headcount rule for a small business is five: from five employees, your health and safety policy and the significant findings of your risk assessment must be written down. The next well-known one, gender pay gap reporting, starts at 250.
Do I need a staff handbook with five employees?
Not by law. You do need written disciplinary and grievance rules within two months of each person starting, and your sick pay terms from day one. A short handbook is the easiest place for both, and around five people is when we would write one.
Do small businesses have to follow the new unfair dismissal rules?
Yes. From 1 January 2027 employees can claim unfair dismissal after six months' service, for dismissals from that date, and there is no small employer exemption. Start written probation reviews now.
Do I need to pay the ICO data protection fee?
Only if you use personal data for more than staff administration, your own marketing and your accounts. CCTV for crime prevention, for example, means you pay. Tier 1 is £52 a year.
Going from 2 to 10 this year? HR Foundations Build gets the basics in place before the next hire. Or book a free 20-minute call and we will tell you what you need now and what can wait.
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This is general information for employers in England, Scotland and Wales, not legal advice. If you're dealing with a specific situation, speak to an employment solicitor. Checked against GOV.UK, legislation.gov.uk, Acas, HSE, the ICO, The Pensions Regulator and the Home Office employer guide on 7 November 2026.
