Taking on your first member of staff can seem like a minefield, but it doesn’t have to be. Here’s how to comply with your new legal responsibilities and reporting obligations.
“It’s really best to get it right from the start, instead of letting things slide and planning to sort them out later,” says Liz Sebag-Montefiore, Director of HR consultancy 10Eighty.
So have a read through our guide to get off to a flying start with your new hire, and increase your chances of smooth sailing later on.
Fair recruitment process
First of all, you must make sure you recruit staff fairly – it’s against the law to discriminate against anyone.
Start with the wording in your job advert. There are a lot of things you might think are ok, but actually aren’t. For example, you can’t say you’re not equipped for staff with a disability. This is essentially you saying ‘people with disabilities need not apply’, and is likely irrelevant to the job being advertised.
Phrases like ‘recent graduate’ are also out of bounds. Similarly, insisting on a ‘young, dynamic’ candidate would also rule out older people. It’s best to stick to the actual requirements of the job.
When interviewing, steer clear of asking candidates if they have, or plan to have, children. Even if you’re just making conversation, this is private information that should not be used in the decision-making process. Remind yourself of the other “protected characteristics” ahead of the interview.
You cannot reject someone just because they have a foreign-sounding name, or refuse to employ a person with a spent criminal conviction to their name.
Beware of unconscious bias, too. “Removing names, gender and any other personal details from job applications should guarantee that your shortlist is fair in this respect,” says Alan Price, HR expert at Peninsula.
- Seek professional advice so you don’t fall foul of discrimination laws.
- Maintain records explaining why you chose one candidate over another.
- Remember that applicants can request to see the interview notes.
Right to work in the UK
You have a legal obligation to check that your proposed new staff member can legally work in the UK.
“Don’t accept excuses, unauthorised documents or copied documents,” Sebag-Montefiore, HR consultancy Director, says. “Also, remember to retain copies of all the original documents you check.”
- Follow the government’s advice.
- If in doubt, contact an employment lawyer.
Contract of employment
Your chosen candidate will be in your employment as soon as they accept your offer of a job, whether the offer is in writing or not.
“However, bear in mind they have a right to receive a written contract once they reach one month’s continuous employment, and from 6th April 2020 this will be their right from day one,” says Price.
He adds: “Failing to provide a contract, or providing a contract without all the required information, will leave you open to tribunal claims.”
You can check what to include in a contract here.
“You may choose to offer the employee enhanced entitlements when it comes to their pay or annual leave. Otherwise, they mustn’t receive any less than the statutory minimum,” Price says.
Also, your new employee has some rights that are normally implied (but not spelled out) in their contract. For example, they are entitled to a safe and healthy working environment, and a reasonable degree of privacy. The latter means that any monitoring of their phone calls, email and internet use must be reasonable and overt.
Sebag-Montefiore confirms: “You can’t ask your employees to sign away their rights in an employment contract.”
- If you use a free employment contract template, double-check that it complies with current legislation. Otherwise, obtain one through a HR firm.
- Get Employers’ Liability insurance as soon as you become an employer, should anything happen to your employee at work. You can be fined £2,500 every day you are not properly insured.
PAYE and payroll
You need to register as an employer with HMRC before you start paying your new employee – you can do this up to four weeks before.
“This has to be done whether you’re self-employed or running a limited company,” says Zoe Whitman, owner of bookkeeping practice But the Books.
“Once you’re registered, you’ll need to run monthly payroll to calculate your employee’s salary and the correct deductions, pay them, issue a payslip and make a monthly return to HMRC (called a Full Payment Submission) on or before payday. You’ll also need to pay any PAYE and National Insurance deductions to HMRC by their deadline the following month.”
- If you decide to operate payroll yourself, use free HMRC-recognised software.
Assuming your new employee is aged between 22 and the State Pension age, and that they will earn at least £10,000 a year, you’ll need to set up and enrol them in a workplace pension scheme.
You’ll need to pay at least 3% of their “qualifying earnings” into the scheme. Under most schemes, it’s their total earnings between £6,032 and £46,350 a year before tax. The employee will usually pay a minimum of 5%.
“Confirmation of these deductions should be listed on the individual’s pay statement,” says Price.
He adds: “The employee may choose to opt-out, but this isn’t permanent and they will need to be re-enrolled every three years, at which point they will be able to opt-out again if they wish.”
- Remember that the State Pension age is under review and may change in the future.
- Use the Pensions Regulator’s tool for employers to set up a workplace pension scheme.
Training your staff
Taking on your first employee is exciting – it means you’re doing well and are taking steps to grow your business to the next level. Just ensure that you understand and comply with all the legal bits, and seek expert advice if in doubt.
Further reading on running your business as a new employer;
- HMRC guide on employing someone for the first time
- ACAS guide for new employers
- The misconceptions about diversity and inclusion in the workplace
Iwona Tokc-Wilde is a business journalist.