Employing staff is a big step for any new business. An extra set of hands can boost your businesses’ productivity and can even help you offer additional services to your clients or customers. But employing staff for the first time brings forward financial, tax and legal obligations for employers.
Taking on staff is a huge responsibility, and it’s important you’re aware of your obligations as an employer. There are numerous steps you need to follow to legally and effectively hire staff. You could even face hefty fines if you don’t follow certain rules or break an employment law.
Here’s a step by step guide for small businesses starting to employ staff. (If you’d like to rest assured you’re being legally compliant when employing staff, we offer a New Employee Package, which includes everything new businesses need to employ staff legally and effectively. Give us a call on 0207 043 4000 to find out more.)
For starters, you’ll need to decide if you want to employ permanent employees or hire contract workers or freelance workers. There are pros and cons for each, and you have different obligations depending on what kind of hiring option you pick.
Additional checks will be necessary depending on what sector your business is in. For example, if your business is in a field involving care, security or teaching, you will need to DBC check before hiring them.
As an employer, you must provide a written statement of employment, which sets out the conditions of employment, to anyone you will be hiring for a month or longer. It must be provided within two months of the employee’s start date.
For any employee, you should also provide an employment contract outlining their responsibilities, rights and working conditions. Employment contracts should include job title, pay, hours of work, included benefits, holiday leave, employment start date and notice periods. You’ll also need to provide protective contracts for self-employed or contract workers you hire as well.
Get adequate employer’s liability insurance
As soon as you become an employer, you will need to invest in employer’s liability insurance, which will help you pay compensation in case an employee becomes ill or injured at your company’s place of work or due to the work they undertake for you.
The policy must come from an authorised insurance company and provide your business with up to £5m of coverage. It’s against the law if you don’t have the necessary insurance from the first day you employ staff, and you must display a copy of the insurance certificate in your place of work.
Businesses are typically required to register as an employer with HMRC within four weeks of employing their first employee. Businesses can register online, and it usually takes up to two weeks to finalise.
You will then be responsible for paying members of staff a pre-agreed salary and deducting any PAYE and National Insurance contributions from their salaries. You must provide all employees with payslips detailing all of this information and any other deductions, such as pension contributions.
There are a number of statutory rights that must be provided to employees, involving terms of employment, working hours, pay, discrimination and workplace conditions. You are obligated to pay employees at least the National Minimum Wage, and the wage depends on an employee’s age.
Additionally, you will need to set up a workplace pension scheme for eligible staff. Employees between the age of 22 and the State Pension Age who earns more than £10,000 per year need to be automatically enrolled.
To find out how we can help you comply with the legal obligations surrounding employing staff, including employment law and employment contracts, get in touch with our experienced team on 0207 043 4000 or firstname.lastname@example.org.
An employee handbook sets forth company policies that form part of your employment contracts, covering areas such as holiday, internet usage and conflicts of interest. It often begins with an introduction to the business, setting out your new company’s aims and ethos, whether that's works hard, parties hard, or perhaps you can an eco or sustainable vision.
You need to decide whether you want to set up payroll yourself or outsource this to a small business accountant or bookkeeper. Using an accountant for payroll services can save valuable time, ensure you are compliant and help you become more tax efficient.
It’s also necessary to keep up-to-date records of all of your employees for at least six years. It can be helpful to have a file and electronic version including information, such as their full name, address, contact details, emergency contact details, tax details and signed employment contract.
At Accounts & Legal we offer a New Employee Package, which includes everything new businesses need to employ staff legally and effectively. This includes the correct contracts, an Employee Handbook, a legally correct offer letter and job descriptions. We’ll also draft the necessary company policies, and it is tailored to your business. Better still, we provide businesses with an editable version so it’s just a one off cost but can be used throughout the life of your business.
We can also take care of all of your legal and accounting needs as a small business. Give us a call on 0207 043 4000 or email email@example.com for more information on the legal and accounting aspects of employing staff at a small business, or get an instant quote here.