So you’ve decided your business needs an extra pair of hands – someone with expertise, who can help lighten the load. Well, there’s a lot you need to know before they clock on, from the pension to PAYE.
First, are you in a good position to take someone on?
Can you afford it? Have you double-checked how much the national minimum wage is and how much National Insurance you’ll need to pay? Have you thought about pension contributions, sick pay and payments for maternity or paternity leave? Is your office safe and accessible? Will you be able to store your employees’ data securely?
If you can say ‘yes’ to all of the above, you’ve pretty much nailed it and the rest of the formalities are pretty straightforward. Also – and this is the bonus – you can take care of most of them quickly online.
Second, what sort of employee are you looking for?
In most cases, you’ll be hiring someone full-time or part-time. But there are other options (like fixed-term and those dreaded zero-hour contracts) and each comes with its own obligations for you as an employer, along with rights for your employee. But let’s assume you’re employing someone full-time.
Is your candidate allowed to work in the UK?
Bring it up during the interview. And don’t forget – if you ask one candidate, you’ll need to ask them all, to avoid any discrimination.
The Home Office recommend following their Obtain/Check/Copy process. Look at the applicant’s original documents, check they’re valid while the applicant is with you, make copies of the documents and record the date you checked them.
Full details, including a list of accepted documents, are in the Home Office’s right to work checks guide.
Do you need to do a DBS check?
The Disclosure and Barring Service (DBS) check is what used to be called the Criminal Records Bureau (CRB) check. As long as your employee isn’t in a healthcare role, or working with children, or elderly, ill or disabled adults, you can probably skip this stage. But, if you’re not sure, see the government’s checklist.
Get everything down on paper
Even if you’ve verbally offered someone a job, follow up with a formal offer letter, along with the contract. If your offer comes with conditions or depends on a reference, make it clear now. That way everyone knows where they stand.
Aside from the contract itself, give a written statement of employment particulars (AKA getting the basics down on paper). Include:
- the business’s name
- the employee’s name, and their start date
- job title and description
- working hours, and where the job’s based
- how much you’re paying your employee and how often
- how much holiday your employee gets
If the job is temporary, say how long it will last. If it’s a fixed-term contract, include the end date.
Finally (nearly there), include any information about notice periods, collective agreements, pension and grievance procedures. It’s a lot to work through, but once it’s done, you can roll it out to other employees – result.
An employee handbook will cover a lot of this (if you’ve got one). Otherwise, you can create a personalised breakdown with this handy template.
Register as an employer with HMRC and set up PAYE
It’s important to let HMRC know that you’re now an employer (go you!). If your employees are earning over £116 a week, it’s likely you’ll need to pay them through Pay As You Earn. The government guidelines spell everything out, but in short you’ll need their name, address, a tax code, pay and deductions information and a payroll ID.
This is where employing people can get complicated, so you might want to consider buying payroll software or even outsourcing to take the pain away.
Don’t forget about the pension
All employers have to offer a pension to staff who qualify. (Even if you don’t currently have a pension scheme, you’re going to need one.) The Pensions Regulator has more information about who qualifies, how to set up a scheme and what contributions you’ll need to pay.
Take out employers’ liability insurance
You might already have public liability or professional indemnity insurance for your business. If you do, you can probably just ask your insurer to add employers’ liability insurance to your package without too much fuss.
You’ll need to have this ready by the time your employee starts, and the policy must cover you for at least £5m. It protects you against any claims because of injury or illness and – this is the scary bit – you can face a fine of up to £2,500 for every day you don’t have it. It’s a top-of-the-to-do list kind of action.
In a nutshell
There’s quite a lot to do before you bring in a new person. First, make sure you’re in a position to take on the costs and that you’ve covered all the bases, from keeping their personal data secure to keeping them safe. Make sure your employee is legally allowed to work in the UK. And sum up their role, responsibilities and other details like pay and holidays in writing, so you’re both clear about everything.
Also, get the right insurance cover, let HMRC know you’re now an employer and understand your PAYE and pensions obligations. It sounds a lot, but the toil will be worth it when Secret Santa time comes round.