Guide
The complete employment lifecycle: employer responsibilities from hire to exit
A comprehensive guide to employer responsibilities across every stage of the employment relationship, from lawful advertising and recruitment through onboarding, day-to-day management, handling problems, and ending employment. Covers the Equality Act 2010, Acas Code of Practice, Employment Rights Act 2025 changes, and post-employment obligations.
Employing people brings significant legal responsibilities at every stage of the relationship. Getting things right from the start protects both your business and your employees, and reduces the risk of costly tribunal claims.
This guide walks through each stage of the employment lifecycle so you can see your obligations as a whole. For detailed procedures at each stage, follow the links to specific guides.
The employment lifecycle
- Pre-hiring: Advertising lawfully, avoiding discrimination, and considering immigration sponsorship
- Recruitment and selection: Interviewing fairly, avoiding prohibited questions, and making conditional offers
- Onboarding (day one): Written statement of particulars, right to work check, PAYE starter checklist, auto-enrolment, and workplace induction
- Probation periods: What probation does and does not change about legal rights
- During employment: Statutory rights including pay, holidays, sick pay, rest breaks, and flexible working
- Performance management: Capability procedures and reasonable adjustments
- Discipline and grievance: Following the Acas Code of Practice
- Absence management: Trigger points, occupational health, and disability considerations
- Ending employment: Fair dismissal, redundancy, notice periods, and settlement agreements
- Post-employment: References, restrictive covenants, and data retention
- Employers' liability insurance
- Required from day one (minimum £5 million coverage)
- PAYE registration
- Before first payday (allow 1-2 weeks for processing)
- PAYE threshold 2025-26
- £242/week (£1,048/month, £12,570/year)
- Written employment particulars
- Must be provided on or before first day of employment
- Right to work checks
- Before employment begins (penalties up to £45,000 first offence, £60,000 repeat offence per worker)
- Pension auto-enrolment
- Within 3 months for eligible employees (earning £10,000+)
- National Living Wage (21+, from 1 April 2025)
- £12.21/hour
- Statutory Sick Pay 2025-26
- £118.75/week (payable from 4th day of absence)
- Statutory holiday entitlement
- 5.6 weeks (28 days full-time)
Stage 1: Pre-hiring
Your legal obligations begin before you speak to a single candidate. The Equality Act 2010 applies from the moment you advertise a role.
Advertising lawfully
- Job adverts must not discriminate against any of the 9 protected characteristics (age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, sexual orientation)
- Avoid language that implies a preference for a particular age group, gender, or other protected characteristic, even indirectly
- Specify a genuine occupational requirement only where the Equality Act 2010 permits it (Schedule 9) — for example, requiring a female care worker for intimate personal care of female service users
- If a role genuinely requires certain characteristics, document your reasoning and keep it on file
Immigration sponsorship
If you plan to hire workers from outside the UK who need a visa, you must hold a sponsor licence from UK Visas and Immigration. Applying for a sponsor licence takes around 8 weeks. You cannot employ a worker on a Skilled Worker visa until the licence is in place and you have assigned a Certificate of Sponsorship.
Stage 2: Recruitment and selection
Interview best practice
- Use structured interviews with consistent questions for all candidates to reduce the risk of unconscious bias
- Score candidates against objective, job-related criteria agreed before interviews begin
- Keep interview notes — they may be needed to defend a discrimination claim
Prohibited questions
Section 60 of the Equality Act 2010 restricts pre-employment health questions. You must not ask about a candidate's health or disability before offering them a job (or placing them in a pool of candidates to be offered a job), except in limited circumstances:
- To determine whether reasonable adjustments are needed for the recruitment process itself
- To monitor diversity of applicants
- Where a health requirement is an intrinsic function of the role
- To establish whether the candidate can carry out a function essential to the job
Breaching s.60 does not give rise to a standalone claim, but it reverses the burden of proof in any subsequent disability discrimination claim — the employer must show that disability played no part in the decision.
Conditional offers
Job offers are typically made conditional on satisfactory references, right to work verification, and (where relevant) DBS checks, medical fitness, or professional registration. Make the conditions clear in the offer letter. Withdrawing an offer after health questions reveal a disability may amount to discrimination if the condition does not genuinely affect the candidate's ability to do the job.
Stage 4: Probation periods
Probation periods are a contractual arrangement, not a separate legal status. An employee on probation has the same statutory rights as any other employee from day one, including:
- Protection from discrimination under the Equality Act 2010
- Right to the National Minimum Wage / National Living Wage
- Right to a written statement of employment particulars
- Protection from automatically unfair dismissal (whistleblowing, pregnancy, trade union membership, asserting a statutory right — no qualifying period needed)
- Right to request flexible working (day-one right since April 2024)
- Statutory notice of at least 1 week (after 1 month's service)
Ordinary unfair dismissal currently requires 2 years' continuous employment in Great Britain (1 year in Northern Ireland). This means employers have more flexibility to end employment during a typical probation period — but dismissal must still not be for a discriminatory or automatically unfair reason.
Employment Rights Act 2025 change
From 1 January 2027, the qualifying period for ordinary unfair dismissal reduces to 6 months, with a new initial period of employment concept replacing traditional probation in unfair dismissal law. Employers should plan for a lighter- touch but fair dismissal process during the first 6 months.
Stage 5: During employment — statutory rights summary
Every employee is entitled to the following statutory rights throughout their employment. These are minimum standards — contracts can be more generous but cannot go below them.
- National Minimum Wage / National Living Wage: Currently £12.21/hour for workers aged 21 and over (from April 2025). Lower rates apply for younger workers and apprentices.
- Holiday: 5.6 weeks (28 days for full-time workers) per year, including bank holidays if the contract includes them.
- Statutory Sick Pay: £118.75/week from the 4th day of sickness absence (for employees earning at or above the Lower Earnings Limit). From April 2026, SSP becomes payable from day one of absence under ERA 2025.
- Rest breaks: 20 minutes uninterrupted rest if working more than 6 hours; 11 hours daily rest; 24 hours weekly rest (or 48 hours per 14 days).
- Working time: Maximum 48-hour average week (workers may opt out voluntarily).
- Flexible working: Day-one right to request (up to 2 requests per year, employer must respond within 2 months and consult before refusing). Changed by the Employment Relations (Flexible Working) Act 2023, in force from 6 April 2024.
- Itemised pay statement: Employers must provide a written payslip on or before each payday.
- Family leave: Maternity, paternity, adoption, shared parental, parental, and carer's leave. Paternity and unpaid parental leave become day-one rights under ERA 2025.
Stage 6: Performance management
Where an employee is not meeting the required standard, follow a capability procedure. This typically involves:
- Identifying the specific shortfall with evidence
- Giving the employee a reasonable opportunity to improve, with support (training, mentoring, adjusted targets)
- Setting a review period and documenting progress
- Considering whether a disability or health condition may be contributing — if so, the Equality Act 2010 duty to make reasonable adjustments applies (including adjustments to performance targets, working hours, or equipment)
- Following the Acas Code of Practice before any formal action
Stage 7: Discipline and grievance
The Acas Code of Practice on Disciplinary and Grievance Procedures is not legally binding, but employment tribunals must take it into account. An unreasonable failure to follow the Code can result in compensation being adjusted by up to 25% — increased for the employer if they failed to follow it, or reduced if the employee failed.
Key requirements:
- Investigate the matter fully before taking formal action
- Notify the employee in writing of the issue and invite them to a meeting
- Allow the employee to be accompanied by a colleague or trade union representative at any formal meeting
- Give the employee a reasonable opportunity to state their case
- Offer a right of appeal against any formal disciplinary decision
Stage 8: Absence management
Employers should have a clear absence management policy covering:
- Trigger points for formal review (for example, a set number of days or instances of absence in a rolling period)
- Return-to-work conversations after every absence to understand the cause and offer support
- Occupational health referrals where absence is prolonged or frequent, to get professional advice on fitness and adjustments
- Disability considerations: if an employee's absence is related to a disability, consider reasonable adjustments (phased return, modified duties, additional leave) before taking formal action. Applying sickness triggers rigidly to disability- related absence may amount to discrimination.
Stage 9: Ending employment
Types of dismissal
Under the Employment Rights Act 1996 (s.98), there are five potentially fair reasons for dismissal:
- Capability (including health) — the employee cannot do the job to the required standard
- Conduct — the employee's behaviour warrants dismissal
- Redundancy — the role is no longer needed or the workplace is closing
- Statutory restriction — continued employment would breach the law (for example, loss of a driving licence for a delivery driver)
- Some other substantial reason (SOSR) — a catch-all for situations that do not fit the first four, such as a breakdown in trust or a business reorganisation that is not a redundancy
Even where a reason is potentially fair, the employer must show that dismissal was reasonable in all the circumstances and that a fair procedure was followed.
Notice periods
Statutory minimum notice under s.86 of the Employment Rights Act 1996 is 1 week per complete year of service, up to a maximum of 12 weeks. Employment contracts commonly specify longer notice. Payment in lieu of notice (PILON) is only available where the contract allows it, or by mutual agreement.
Settlement agreements
A settlement agreement is a legally binding contract under which the employee agrees to waive specified employment claims in return for a payment (typically including an ex gratia sum). To be valid, the employee must receive independent legal advice from a qualified adviser. Some rights cannot be waived, including accrued pension rights and the right to enforce the terms of the agreement itself.
Stage 10: Post-employment obligations
References
Employers are not legally obliged to provide a detailed reference (except in financial services regulated by the FCA). However, any reference given must be true, accurate, and fair. A misleading reference — whether too positive or unfairly negative — can lead to a claim from either the former employee or the new employer.
Restrictive covenants
Post-employment restrictions (non-compete, non-solicitation, non-dealing, non-poaching) are enforceable only if they go no further than reasonably necessary to protect a legitimate business interest. Courts will not rewrite an unreasonable covenant — it will simply be void. Take legal advice before relying on restrictive covenants.
Data retention
Keep employment records only as long as necessary. ICO guidance recommends:
- PAYE records: 3 years after the end of the tax year they relate to (HMRC requirement)
- National Minimum Wage records: 6 years from the end of the pay reference period
- Right to work documents: during employment plus 2 years after employment ends
- Recruitment records: normally 6 months after the recruitment exercise (to allow for discrimination claims)
- General personnel files: 6 years after employment ends (to cover limitation periods for breach of contract)
Employment Rights Act 2025: key changes ahead
The Employment Rights Act 2025 (Royal Assent December 2025) introduces phased changes that employers should prepare for:
- Unfair dismissal qualifying period reduced to 6 months (from 1 January 2027), with a new initial period of employment concept
- SSP from day one of sickness, removing the 3 waiting days and the lower earnings limit (from April 2026)
- Paternity leave and unpaid parental leave become day-one rights (removing the current 26-week and 1-year service requirements respectively)
- Trade union membership: written statements must inform employees of their right to join a trade union (from April 2026)
- Fire and rehire: dismissal and re-engagement on worse terms becomes automatically unfair (from October 2026)
- Third-party harassment: employers become liable for harassment of employees by customers, clients, and contractors (from October 2026)
- Zero-hours contracts: workers gain a right to guaranteed hours matching their actual working pattern
- Tribunal time limits: extended from 3 months to 6 months for most claims (from October 2026)
- Fair Work Agency: new unified enforcement body combining HMRC NMW enforcement, GLAA, and EAS (launching April 2026)