A guest blog by Nicola Wallbank of Julian Taylor Solicitors
In our ‘Summer of Growth’ series of articles, we asked employment law specialist, Nicola Wallbank to offer her guide to one of the major milestones for a growing business – taking on the first employee:
Hiring your first employee is an exciting milestone, but it can be daunting if you are used to doing things on your own. There are a number of key things to consider when making this important step:
- Think carefully about the role, and whether you need an employee at all. In some cases, for example where the particular tasks you need covering require specific skills (such as IT or marketing), then you might consider outsourcing to a consultant or freelancer to start with.
- If you decide you need an employee, then consider what skills or qualifications the individual needs. What salary can you afford (ensuring you are minimum wage compliant)? Is this a full or part-time position? Is this a permanent or temporary role? Staff can be taken on a fixed-term or casual basis. You need to consider what will work for you and get the right type of contract in place.
- Consider the job description and advertise the role. Make sure you observe the requirements of the Equality Act 2010 so that your adverts and recruitment processes do not discriminate against anyone with a protected characteristic such as disability, age, sex, race, nationality etc. Once you have interviewed your shortlisted candidates and made your selection, you will be at the exciting stage of making an offer. Make your offer conditional upon receipt of satisfactory references and passing the right to work checks, and don’t forget to take up those references!
- You must conduct some simple right to work checks to ensure a job applicant is legally allowed to work for you in the UK. The checks generally involve obtaining, checking and copying certain identification documents before an employee starts work. These checks help to prevent illegal working and give you a statutory excuse against liability for civil penalties if you are found to have inadvertently employed someone you shouldn’t have due to their immigration status.
The Home Office has published comprehensive guidance on these checks. Because of COVID-19, and the fact that face to face checks are currently tricky, you can undertake adjusted checks until 31 August 2021. For some roles, for example, those involving working with children, a criminal record (DBS) check may also be required.
- You will need to register as an employer with HMRC before the first payday so that you can pay appropriate tax and national insurance. For most small limited companies this will be an online application. It can take up to 5 working days to get your PAYE reference number and you cannot register more than 2 months before you start paying people. Consider how you will run payroll – you may want to find a payroll provider.
- As soon as you become an employer you need to have employers’ liability insurance covering you for at least £5 million, with an authorised insurer. This is the insurance that pays compensation if an employee becomes ill or is injured because of the work they do for you. You can face substantial fines for every day that you are not properly insured, and further fines if the certificate of insurance is not displayed to staff (physically or electronically). You may not need insurance if you are employing certain family members or someone overseas, so check your obligations.
- All employees and workers must be given a written statement of terms and conditions from day 1 when they start work. This must set out certain key terms of employment. Not only is this a legal requirement, but having a written contract that makes the terms clear can head off disputes in the future. Although not a legal requirement, you should also consider including important protections for your business for example relating to IP, confidentiality, and post-termination restrictive covenants.
- Any employees aged over 22 who earn at least £10,000 per year will need to be enrolled in a pension scheme and receive at least the minimum required employer contributions. You can read more about your pensions obligations here.
- Be aware of basic employment protections – an employee has the right not to be discriminated against or dismissed for certain protected reasons.
Nicola Wallbank is a Partner at Julian Taylor Solicitors, a leading firm of experts in complex employment law. Based in Oxfordshire, Nicola and her experienced colleagues help many clients from the local area, London and internationally. The team is known for its dedicated and responsive approach, making sound judgements and serving clients’ interests in all aspects of human resources and employment law.