Employing your first staff member is a huge achievement for your business. In addition to taking on a certain amount of obligations and duties, you will be giving another person the responsibility for taking care of certain tasks within your business. You can seek advice on hiring specific employees; for example, advice on hiring a nanny is available from a nanny PAYE service.
In general, the 10 things that you will need to do to ensure that these obligations and responsibilities are taken care of are:
1. Background Checks
There are three important background checks that you need to run on a potential staff member before employing them:
- Is your candidate allowed to work in the UK?
- Criminal history check
- Credit record check
You may also want to run a DBS check if the person in question will be working with children.
2. Statement of Employment
Any person who will be employed for longer than one month will require a statement of employment which provides them with the terms and conditions of their employment. This statement should be provided within two months of the date of employment.
3. Employment Contract
Every employee must be offered and sign an employment contract. This contract must list their rights and responsibilities as well as conditions of work. The contract may be informal and both implied and explicit terms and conditions of employment may be contained in the document.
Once you have an employee, you are at risk of having a claim for expenses related to an injury or illness in the workplace being made against you. Make sure that your current business insurance covers Employers’ Liability and that the cover provided by the policy is adequate. If it doesn’t, you will need to take out an EL insurance policy. If you are not covered and an injury or illness does occur in the workplace, the business will have to pay the costs or you could even be held personally liable.
5. HMRC Registration
Every employee must be registered with HMRC within the first four weeks of being employed. You will be responsible for deducting PAYE or income tax as well as National Insurance Contributions from your employees’ agreed salary every month and paying the funds over to HMRC.
Even if you have only one employee, you will need to provide them with a payslip that details their gross and net salary as well as all their deductions including PAYE, income tax, NICs, pension, etc. You will also need to submit your payroll information to HMRC for every payment cycle under the rules and regulations of the Real Time Information Regime (RTI) that was instituted in 2013. (Prior to 2013 Payroll submissions were only required on an annual basis, at the end of every tax year.) Be aware that you will also need to comply with National Minimum Wage policies.
7. Health and Safety
Every employer needs to ensure that they provide a safe and secure environment in which their employees can work. Although you aren’t required to have a formal Health and Safety Policy in place for less than five employees, it is important to assess any hazards or risks that your staff members may be exposed to in their line of work or in the workplace.
8. Pension Enrolment
Every employee over the age of 22 years who earns in excess of £9,440 per year must be enrolled in a recognized pension scheme. Although this was only required for larger companies in the past, it has become necessary for all employers since 2018.
Every employee is entitled to time off whether this is for a holiday, due to illness, maternity, paternity or for any other reason stated in their employment contract.
10. Dismissal, Redundancy and Resignation
One of the most complicated areas of legislation governing employment concerns redundancy, dismissal and resignation. An unfair dismissal could result in a tribunal which could cost your business at the end of the day. Issues of unfair dismissal are usually with regards to pay, discrimination or the reasons given for their dismissal. It is critical to ensure that the right procedures are followed in dismissing an employee and that the reasons are aligned with current legislation.