Taking on your first employee is a big deal. Not only will you be handing over responsibility for part of your business to someone new, but you will also have to be aware of your duties and obligations as an employer.
Here are ten things you must bear in mind when taking on your first member of staff.
1. Carry out applicant checks
- Once you have found a suitable candidate for the position you’ve advertised, you must make sure that your prospective employee a) has the right to work in the UK, and b) passes any further checks which may be appropriate to their new position – particularly criminal record checks (a DBS check if they’re working with children in any capacity, for example. This used to be known as a CRB check).
2. Provide a statement of employment
- You must send a written statement of employment to anyone who will be working for you for a month or more. This document provides the employee with the conditions of employment, and must be provided within two months of starting work. Find out more in our guide to employment contracts.
3. All employees must have a contract of employment
- You must provide all employees with an employment contract which outlines the employee’s rights, responsibilities, and working conditions. This doesn’t have to be a formal written document, and contains both explicit and implied terms of employment. Find out more in our guide to employment contracts.
4. Make sure your business is adequately insured
- This type of cover will protect your business from claims made by employees who have been injured or fallen ill at the workplace. Unless you have no employees (e.g. you run a company to provide your own services to clients), or run a business with only close family working for you, you must take out adequate EL insurance cover due to the terms of the Employers’ Liability (Compulsory Insurance) Act 1969.
- You can read a concise guide to the Act, courtesy of the HSE here (PDF).
- You can get an instant online quote for a variety of business-related insurance policies via Hiscox.
5. Register as an employer with HMRC
- In almost all cases, you must register as an employer with HMRC within four weeks of taking on your first employee. As an employer, you will be responsible for paying your staff a pre-agreed salary, and deducting any PAYE (income tax) and National Insurance Contributions from staff salaries. Find out more here.
6. Paying your employees
- When you pay your staff, you have to provide each employee with a payslip which details their gross and net pay, income tax and NICs deducted, and any other deductions (such as pensions contributions). Since the implementation of the RTI (Real Time Information) regime in 2013, you must also submit payroll data to HMRC each time you pay your staff. Previously, this information needed to be provided at the end of each tax year.
- You must also comply with the National Minimum Wage legislation. View the prevailing rates here.
- You can find out more about paying an employee for the first time here (HMRC PDF).
7. Be area of your Health & Safety obligations
- Unsurprisingly, as an employer, you will be responsible for providing your employees with a safe and secure environment to work in. You don’t need a formal written H&S policy unless you have five or more employees, however you should take time to assess the risks your staff face at work.
- Find out more on the Health & Safety Executive site.
8. Pension auto-enrolment
- New legislation means that employers must enrol their staff into a workplace pension scheme if they are aged 22 or over and earn more than £9,440 (2013/14 tax year). Only larger businesses are affected now, but the new rules will be phased in for all employers by 2018.
- Read more about these ‘staging dates’ on the The Pension Regulator site.
- Find out if your employee will be automatically enrolled via this handy GOV.UK tool.
9. Be aware of holiday, sick pay, maternity / paternity pay rules
- A wide range of legislation govern employees’ rights to taking time off – either for holidays, or due to forced periods of absence.
- Take some time to familiarise yourself with the rules here.
10. What happens if things don’t work out?
- Perhaps the most complex area of employment legislation covers what happens when an employee is made redundant. If you don’t handle the dismissal fairly (or an employee resigns because you have breached your contract with them), an unhappy ex-staff member may decide to take your business to an employment tribunal.
- Employment tribunals typically involve disagreements over pay, the circumstances behind the dismissal, or some kind of discrimination.
- Read this useful ACAS guide to dismissing employees.
You can check out Xero’s 12-step checklist for hiring employees for more information.