What do I need to know when taking on a member of staff?

Your business is going great, you have too much work to do yourself and it’s time to take on your first member of staff. Exciting times no doubt but what do you need to know before you make that step.

  1. Decide what kind of person you want – This may be stating the obvious but many businesses large and small spend too little time on this. Really think about what you need, the skills and the type of person that will support your business. Write a job description, prepare a person specification, this will help when you come to recruiting and really help focus your mind on what you need. Have a think what kind of employee you want eg full-time permanent, part time, zero hours, contractor etc
  2. 2. Recruit – Many small businesses often hire either a family member or a friend as their first employee. While there are advantages to this and they may be lovely people, they may not be exactly what you need and you might be better to look at the market and get someone who meets your person spec. Also, some small businesses may think that by employing family/friends that they don’t really have to bother with all the legal stuff which of course is wrong.
  3. Applicant ChecksOnce you have found a suitable candidate for the position, 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). This should be done even if you know them well.


  1. 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. 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 as a contract can be verbal or written, but it helps you if you have a written contract which will set out how you want your employee to work. Ideally, put together a company handbook which will outline all the policies and procedures both statutory eg dealing flexible working requests, maternity/paternity leave etc and any others you want to include.


  1. Make sure your business is adequately insured – Employers Liability 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.


  1. 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.


  1. 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. 


  1. Be aware of your Health & Safety obligations – Unsurprisingly, as an employer, you will be responsible for providing your employees with a safe and secure environment for working in. You don’t need a formal written H&S policy unless you have five or more employees, however, you should take the time to assess the risks your staff face at work.


  1. Pension auto-enrolment – New legislation means that employers must enrol their staff into a workplace pension scheme if they are aged 22 or over.


  1. 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. Get advice and put these in a handbook.


  1. 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. Get advice early if you have an issue.

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