Hiring your first employee is a big step in the growth of your business. You are turning over tasks you did by yourself to someone you don’t know, which can be a bit stressful. You also need to learn about your new responsibilities and requirements as an employer, and you might also need to find a recruiter you can trust, such as Stopgap Recruitment, to help you source candidates.
Here are ten things you need to know before hiring your first employee:
1. Complete The Proper Applicant Checks
Interviewing and selecting a potential employee is just the first step in your hiring process. Once you choose a prospective employee, you need to make sure they meet these requirements:
a. They have the right to work in the UK.
b. The pass criminal checks and other background checks you deem necessary.
(Don’t forget a DBS check is required if they will be working with children.)
2. Present A Statement of Employment to the Candidate
If you are hiring this employee to work for more than 1 month, you are required to send them a written Statement of Employment. You must give the employee this statement before they have worked for 2 months for your company. The statement explains the conditions of employment, so there is no misunderstanding between employee and employer.
3. You Must Provide Your New Employee An Employment Contract
Your employment contract must inform the employee of their rights, job responsibilities, and the working conditions they can expect. It should include both explicit terms of employment and outline implied terms of employment.
4. Verify Your Business Is Properly Insured For Adding An Employee
You need to make sure your business is protected from claims made by an employee. Employer’s Liability insurance (EL Insurance) helps protect you from claims made by employees who are injured on the job or become ill due to workplace issues. EL insurance may not be necessary if only close family members are employed in the business, but is still recommended. Check Act 1969, The Employer’s Liability (Compulsory Insurance) Act for more information on this subject.
5. Remember to Register With The HMRC As An Employer
You need to register as an employer during the first four weeks of your first employee joining the company. As an employer, you are now responsible for paying the agreed-upon wages, withholding income taxes (PAYE), and the National Insurance Contributions.
6. Rules For Paying Your Employees
As a new employer, you have a new reporting requirement for payroll. Each payday, you must give your employees a payslip which tells them the gross pay, their net pay, income tax withholding, NIC deduction, and any other payroll deductions which occur. Remember, since the start of RTI (Real Time Information) in 2013, it is required that you send your payroll data to the HMRC every payroll period. In the past, this was an annual reporting requirement, but since 2013, it must be done when you pay your employees.
Remember, you must pay equal to, or greater than, the current National Minimum Wage standards.
7. Evaluate Your Health & Safety Obligations
You are responsible for providing your employees with a safe workplace. You are not required to create an official Health and Safety policy until you hire your fifth employee, but now is the right time to review your risks and to start to formalize your policies. Carefully evaluate any workplace risks and attempt to eliminate them, or educate your employees.
8. Pension Auto-Enrollment Requirement
Are your new employees 22 years old, or older? You are required to enroll them in a workplace pension schema if they earn over £9,440 per year. Previously, this affected only larger companies, but in 2018 it became a requirement for all employers.
9. Learn About Holiday, Sick Pay, Maternity and Paternity Pay Regulations
There are many rules about your new employee’s rights for taking time off. Make sure to review your responsibilities for providing them with holiday time off, vacations, forced leaves of absence, and other forms of absence.
10. What Happens If Your New Employee Isn’t Right For The Job, Or Is No Longer Needed?
One of the most difficult to understand areas for new employers is legislation about dismissing an employee. If your former employee decides they were dismissed unfairly, they can request an employment tribunal to review their dismissal. This is most frequent when the employee feels the employer violated their employment contract.
The employment tribunal listens to cases involving failure to pay wages, unjust dismissals, and discrimination. You should document all warnings and evaluations for your new employee and have them sign the paperwork for your protection.