How to hire your first employee
If you decide you need employees to run your business there are several steps you need to follow to make sure you are a legal employer.
Write a job description
The first thing you need to do when you start your search for your first employee is to write a job description. Your job description should include a clear definition of the position, the title of the position, a list of duties and responsibilities and qualifications you would like your applicant to have.
Set a salary
Next, you need to set a salary for the job position. By law, you need to pay your employees the National Minimum Wage. You also need to make sure that you can afford to pay the wage you set.
Advertise the job
Using the job description you wrote, you can advise your role. This could be online, in relevant publications, using a recruiter or in your place of work.
Choose candidates and hold interview
When you’ve had applications, you can choose your candidates and hold an interview. You can’t discriminate against hiring someone due to personal characteristics such as religion, sex, gender reassignment or age. Read more about questions you can’t ask during an interview on the HMRC website.
Check they have the right to work in the UK
When you’ve chosen a potential employee, you must check if the person has the right to work in the UK. You can do this on the HMRC website.
You may need to apply for a DBS check
You may also need to do a DBS check on your potential employee. This is applicable if the job relates to children, vulnerable people or security.
Make a job offer
Once your candidate has accepted the job by phone or email, it’s important to follow up with a formal job offer. This should include:
- Employee’s name
- Full job title
- Salary
- Employment start date
- Terms and conditions of the job
- Benefits and compensations
- Conditions of any probationary period
- Any outstanding requests for documentation to prove right to work in UK, or any other background checks
If you are employing someone for more than one month they will need a written statement of employment.
Get employers’ liability insurance
As soon as you employ someone you will need employers’ liability insurance. Your policy must cover you for at least £5 million and come from an authorised insurer. This helps cover you if your employee is injured or sick due to their work.
It’s important to know 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 certificate or refuse to make it available to inspectors.
Register with HMRC
4 weeks before you pay your staff you need to register with HMRC as an employer. It can take up to five working days to get your employer PAYE reference number.
Workplace pension scheme
You can also check with HMRC if you need to enrol your staff in a workplace pension scheme.
You must enrol and make an employer’s pension contribution for all staff who:
- Are aged between 22 and the State Pension age
- Earn at least £10,000 a year
- Normally work in the UK (this includes people who are based in the UK but travel abroad for work)
Paying your employees
When you pay your employee, you normally have to operate PAYE as part of your payroll. PAYE is the HMRC system to collect Income Tax and National Insurance from employment.
You can do PAYE by either paying a payroll provider to do it for you, or doing it yourself using a payroll software.
Provide a safe working environment
As an employer, you have a legal responsibility to provide a safe working environment. This includes having a health and safety policy, completing a risk assessment and having the correct insurance. You can read more about the detailed guidelines on the HSE website.
Holiday and parental leave
The basic rule is that almost all workers are legally entitled to 5.6 weeks’ paid holiday a year. There are also rights you need to be aware of around parental leave and statutory sick pay. You can read more about these rights on the HMRC website.
