When I first became an employer I didn’t have a clue what steps I needed to take, which meant lots of searching online as a reactive measure or learning the hard way. On looking back I can think of four key points I wish I had better knowledge of prior to taking on my first employee. That would have meant my focus was more on the individual rather than the process as an employer.
1. The costs of employment
Make sure your business can afford to take on its first employee. If you are thinking of providing someone with an annual salary of say £18,000, you will also need to budget for additional costs on top of this.
Employers National Insurance Contributions for 2014/15 are currently 13.8% of earnings above the government defined threshold.
If the employee is off sick and they qualify for statutory sick pay, they are entitled to £87.55 per week for up to 28 weeks at the time of writing.
Pensions have become a priority under the current government and employees must be enrolled in a workplace pension if they meet certain criteria. Details of the criteria along with other information such as the minimum employer contributions can be found on The Pensions Regulator website.
I won’t reel off more costs because I’m not trying to paint a picture of doom and gloom. The point is to make sure it is financially viable for your business to take on its first employee, beyond what might initially be seen as the cost of £18,000.
Of course, there may be financial help available to through local funding schemes to assist you with taking on your first employee, so it’s worth searching around and talking to your local Job Centre. Additionally, the Employment Allowance of up to £2,000 is available for eligible employers.
2. Right to Work
Ensuring someone’s right to work in the UK is crucial as employing an illegal worker could leave you facing a fine of up to £20,000.
The GOV.UK website is the best place to find out what your duties are as an employer, what documents you should check, copy and retain and how to avoid discrimination. It’s important to note that much of this takes place prior to allowing someone to start working for you.
3. Registering with HMRC as an employer
HMRC advise that registering as an employer can take up to 2 weeks, so allow yourself time to read up on what you need to do, complete the forms, and hear back from them. This process will provide you with a PAYE number which you will need to pay employees, so it needs to be done before their first payday.
4. Contract of employment
If an employee will be working for a month or longer then a written statement of particulars must be provided to set out the main terms of employment. This statement will need to be issued within 2 months of the employment start date.
However, most businesses will issue a contract of employment (or rather two copies of the contract) which will include contractual agreements, as well as a written statement of particulars. Once both copies of the contract are signed by the employee and employer, each party will retain one for reference.
ACAS is a great resource for this topic as not only do they provide online guidance but they also give an example of a written statement.
These considerations are neither exhaustive nor exclusive but are intended to provoke thought on the matters to take into account when first taking on an employee, and I hope you find them useful.