20 Jul 2020
Business owners often ask me: "What do I need to do if I want to take on my first employee?"
Here are the main factors that you need to consider ...
Employers liability insurance - if you employ at least one person, most businesses require at least £5m cover; this applies whether your employee is permanent, temporary or on work experience. You may be able to incorporate your employer's liability insurance into your other business insurances and you must display your insurance certificate where all your employees can see it
Register for PAYE - whether you process your own payroll or get your accountant to do it, in most cases you need to register with HMRC as an employer so that you can process / file your employees income tax and national insurance contributions each pay period
Access to an auto-enrolment pension scheme - if you are employing staff for the first time after 1st October 2017, in most cases you will need to register with the Pensions Regulator and choose a pension scheme for your employees that can be used for auto-enrolment. Your accountant or a pension advisor may be able to help you with setting this up
UK work eligibility - you need to check that every new employee is eligible to legally work in the UK. The best way to do this is to ask your new employee to bring in their original passport or birth certificate, take a copy and make a note on the copy of the date you made the check. Details on what to look for can be found on the GOV.UK website. To avoid discrimination, this should be done for all employees, regardless of their place of birth
Contract of employment - according to ACAS 'a contract of employment starts as soon as an offer of employment is accepted - starting work proves that the terms and conditions of the employer have been accepted'. However, an employee is legally entitled to receive 'a written statement of particulars' before or on their first day of their employment - this written statement details their terms and conditions of employment with your Company, including the main statutory entitlements (as a minimum) such as pay, holiday, sickness, notice, etc.
An itemised payslip - your employee is are entitled to an itemised payslip detailing their payments and deductions each period. It can be useful to breakdown payments / deductions into types, such as basic pay, holiday pay, overtime, pension, etc - this can help you, as an employer, demonstrate compliance with statutory employment rights
Policies & procedures - legally, as soon as you become an employer, you need to provide a disciplinary policy and a grievance policy. You also require a health and safety policy (although some may say this is not needed until you employ your fifth staff member) as you do have a duty of care to every employee as soon as they start working for you. Other policies and procedures based on statutory entitlements (such as sickness absence, holiday, maternity / paternity leave) and other legal compliances can be added as required, although it is good practice to have them. There is no legal obligation to provide a staff / employee handbook and, for micro and small businesses, this can initially be an unnecessary expense ... an accessible policy folder (either hardcopy or in a shared folder) works just as well