As the director of a successful start up, you may find your business activities outgrowing what you can deliver. Or perhaps you are building a team for a brand new business venture, soon to open its doors. Whatever the case, follow our easy to use guide for how to hire an employee, to keep the process simple.
Register as an Employer
You normally need to register as an employer with HM Revenue and Customs (HMRC) when you start employing staff, or using subcontractors for construction work. You must register even if you’re only employing yourself, for example as the only director of a limited company. You must register before the first payday. It can take up to 5 working days to get your employer PAYE reference number. You cannot register more than 2 months before you start paying people. Alternatively Prestige BM can handle the registration for you.
You must pay your employee at least the National Minimum Wage. You will also need to pay National Insurance contributions for your employee. There is a £4000 allowance for small businesses. Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to £4,000. If you are just starting out you make sure your business has enough turnover to pay for your new staff and that the level of business you expect supports this, before you set out to hire a new employee. This can be especially challenging in a dynamic economic climate. Prestige Business Management can help you evaluate your business prospects and conduct a cash flow analysis. In addition to pay you will also need to offer a pension fund, this is called automatic enrollment
How to Hire a New Employee
If you haven’t already, you will need to write a job description. Here you need to outline your new employee’s tasks and responsibilities. You need to explain your expectations and list any minimum requirements, such as education level or prior, professional experience. You’ll also need to decide how much to pay your new employee. This could be a definite wage, or you may state a range within which their salary will fall, depending on their experience. Include any terms and conditions specific to the role you are advertising. You will need to give your employee a written statement of employment if you’re employing someone for more than 1 month. You will need your employees P 45, if they don’t have one then they need to complete the new starter checklist.
Check if someone has the legal right to work in the UK. You may have to do other employment checks as well. Check if you need to apply for a DBS check (formerly known as a CRB check) if you work in a field that requires one, e.g. with young or otherwise vulnerable people or in the field of security. Get employment insurance – you need employers’ liability insurance (EL insurance) as soon as you hire an employee. Your policy must cover you for at least £5 million and come from an authorised insurer. EL insurance will help you pay compensation if an employee is injured or becomes ill because of the work they do for you. You can be fined £2,500 every day you are not properly insured. You can also be fined £1,000 if you do not display your EL certificate or refuse to make it available to inspectors when they ask. Check that your insurer is authorised via the Financial Conduct Authority. You may want to use an insurance broker to help you buy EL. Prestige Business Management can offer guidance to help you select EL insurance or an insurance broker. Tell HM Revenue and Customs (HMRC) by registering as an employer. You can do this up to 4 weeks before you pay your new staff. Check if you need to automatically enrol your staff into a workplace pension scheme.
Your Employer Responsibilities
You have a duty of care to your new employee, from the moment you hire them and throughout their time working with you, so familiarise yourself with your responsibilities right from the start. The main approach to take is to act in good faith and treat your employees fairly. Allow employees to raise concerns and respond to them immediately. If you have an issue with an employee, discuss it with them as soon as possible and clarify any uncertainties. It’s good practice to draw up a code of conduct for your employees.
Your employees are entitled to a certain amount of annual leave, which needs to be stated in their contract. Most workers who work a 5-day week must receive at least 28 days, typically this includes bank holidays, so if the business is closed on a bank holiday, this will normally amount to 20 days paid annual leave a year. This is the equivalent of 5.6 weeks of holiday. The main types of leave you need to be aware of are, annual leave, sick leave, bereavement leave, parental leave, jury duty and public holidays. You need to understand the number of days employees are entitled to. Also learn what pay rate is required by law if, for instance, an employee works on a public holiday. It may be different from their normal pay.
Health and Safety
You are legally required to keep employees healthy and safe at work. Employer responsibilities include providing a suitable work environment, safe systems of work, safe equipment and training for handling risks and monitoring your employees’ health and safety at work. A health and safety specialist can help create a workplace health and safety plan for your business. Remember to display your EL certificate and make it available to inspectors when they ask.
If you need to keep employees’ sensitive data on file, you need to ask their permission and reassure them that this will not be mishandled or used for any other purpose than originally agreed to. Keep that information safe and secure and avoid passing it onto unauthorised people. You must give them a copy of the information you hold about them if they ask.
Perhaps the biggest of your employment responsibilities is on payday. Pay employees the right amount, on the day and frequency stated in the agreement. Use the method of payment you agreed on. Deduct the correct amounts for income tax, pension, and National Insurance. Be sure to deduct the right amount for each pay period based on your employee’s earnings and tax code. Talk to Prestige Management for the best ways to manage this with software and good accounting. Or let us take the whole thing off your hands and let the professionals deal with it.
At Prestige Business Management we can help your Business
At Prestige Business Management we can help you understand the best solutions for the success and future of your business. Find out what we can do for you. Call us today on 0203 773 2927.