Employing Staff For The First Time
It can be confusing what you need to do the first time you are employing staff for the first time. This article outlines the 7 key steps you need to do when employing staff.
Step One:
Decide on how much to pay someone for the first time when employing staff. You must pay someone at least the national minimum wage. The national minimum wage is outlined below:
| Year | 23 and Over | 21 to 22 | 18 to 20 | Under 18 | Apprentice |
| April 2023 (Current) | £10.42 | £10.18 | £7.49 | £5.28 | £5.28 |
| April 2024 | £11.42 | £11.44 | £8.60 | £6.40 | £6.40 |
The national minimum wage normally changes every year as the cost of living increases. You must be aware of this and adjust the pay you are paying your employees accordingly. Violating this minimum could lead to legal liability.
When considering how much to pay for a role within your company could include:
- How skilled is the work?
- What is the industry standard of pay?
- What responsibilities will the employee have?
- What will the employee be ultimately responsible for?
- Will / could the employee deliver a return on your investment for that wage?
Things not recommended to take into account include:
- Your personal relationship with the employee
- What you would like to have earned in their role / at their age
- Their age or any other discriminatory attribute
An employment contract dictates the work and remuneration an employee will earn. It can be based on multiple factors but must be a meeting of the minds.
Step Two:
Check if the potential employee has the legal right to work in the UK. This may involve other employment checks as well. If you are found to be employing someone without the legal right to work within the UK, the company could face serious consequences and this could include the directors being personally liable.
You should look out for someone being a UK citizen or having a right to work card.
Step Three:
If you own a company in a sensitive industry, for example childcare or with vulnerable people, you may need to run a DBS check on those employees. This is formerly known as a CRB check.
There are four main types of DBS checks. These include:
- Basic check which shows unspent convictions and conditional cautions.
- Standard check which shows unspent /spent convictions and conditional cautions.
- Enhanced check which shows the same as a standard check along with information held by the police that is considered relevant to the role.
- Enhanced check with barred lists which shows the same as the enhanced check plus if the individual has been barred from doing the role.
Step Four:
Gaining employment insurance is a must. This would be an employer’s liability insurance. This insurance will help you pay compensation if an employee is injured or becomes ill due to the work they do for the company.
The minimum amount the policy must cover is £5 million and come from an authorised insurer. The penalty for not being insured is £2500 ever day you are not properly insured. In addition, you might have the insurance but if you do not display your employer’s liability insurance certificate or refuse to make it available to inspectors when they ask, you could be fined an additional £1000.
Step Five:
Send the details of the job, including any terms and conditions, in writing to your employee. You need to give your employee a written statement of employment if they are going to be employed for more than 1 month.
The written statement is made up of:
- The main document (known as a principal statement)
- A wider written statement
The main document must be provided on the first day of employment and the wider written statement within 2 months of the start of employment.
Step Six:
You must register as an employer with HMRC. You can do this up to 4 weeks before you pay your new staff. This also includes if you are using sub-contractors.
You must register before the first payday and it can take up to 15 working days to get the employer PAYE reference number. Please note you cannot register more than 2 months before you start paying people.
In practice, you may need to pay an employee before you get your PAYE reference number. In this situation you should:
- Run payroll
- Store your full payment submission
- Send a late full payment submission to HMRC
Step Seven:
This is the final stage, and it is crucial from an employee’s point of view. This stage you must check if you need to automatically enrol your staff into a workplace pension scheme. These schemes help ensure the employee has a pension at the end of their working career.
Reference Guide from HMRC: Click Here
By Mark Lawson
