Hiring Employees: Essential Considerations for Employers
There are countless benefits to adding members to your team, including being able to distribute your workload more effectively, bring more diverse ideas to the table and aid in the development of a talented and skilled workforce. However, there are several considerations to keep in mind. This article will provide insight into what some of those considerations are.
General considerations
When hiring an employee, it is important to consider:
What hours will the employee work?
What kind of work will they be doing? Can an existing employee take on any duties that the prospective employee would perform?
The specific skills that the employee must have - is there a specific requirement for the position?
The details of the position - is it full-time or temporary?
What it will cost to pay them? Do not disregard any additional costs, such as uniforms and training.
Registering as an employer
When you start hiring employees or using subcontractors, you must register as an employer with HMRC. Even if you choose not to hire anyone and are the sole employed individual, you must still register as an employer on the Government website, which can be done here. Registration must take place prior to the first payday.
The only exception to registration is if your employees earn less than £486 per month. However, it is your responsibility as the employer to review this and make any necessary changes, for example, if you give your employee a raise that takes them above the threshold, in which case registration becomes mandatory.
Employer’s Liability Insurance
A duty of care is established the moment you become an employer; the employer owes the employee a certain standard of care and responsibility. An employee will expect and rely on an employer for certain things, such as working conditions that are reasonable.
A key legal responsibility as an employer will be to obtain Employer’s Liability Insurance (EL insurance). EL insurance is applied when an accident occurs at work involving an employee who is injured or ill and decides to file a compensation claim against their employer.
The cost of such insurance will vary depending on the nature of the business and the risks involved in the work performed. Working in a factory, for example, is potentially riskier than working in an office. However, the minimum amount of coverage required is £5 million.
The consequences for failing to pay EL insurance are severe - for example, fines of up to £2,500 per day that a business is not insured. Failure to pay could also seriously harm a company's reputation, and if it is discovered that the employer is not taking responsibility for the health and safety of its employees and does not have the necessary insurance policies in place, it will be detrimental to the hiring process. For more information on EL insurance click here.
Completing a self-audit report and performing daily and weekly health and safety checks, particularly on equipment, can help with this process. If you provide a detailed risk assessment of your business, you may also be able to reduce your annual premiums.
Right to Work
During the interview process, employers will ask employees to bring their right-to-work documents, which are usually a British passport, a work Visa or a work permit. Prospective employees must also bring their National Insurance number with them.
Checking the documents is simple, but it is often overlooked. Checking whether information, such as date of birth, is consistent across all forms filled out by the individual is an important part of this process.
Failure to check whether a person is legally allowed to work in the UK can result in hefty fines of up to £20,000 per employee. Along with this, there is the risk of tarnishing your reputation as an employer. For an employer’s guide to right-to-work checks click here.
Setting up payroll
As an employer, you are responsible for paying employees and making any necessary PAYE deductions. To do so, you must obtain information such as their commencement date, date of departure from their previous job, any student loan deductions, and their current tax code. Running a payroll can be done by yourself or by a company should you choose to pay for their services.
Payroll software is required to set up payroll on your own. The software will assist you in calculating any deductions for your employees and, depending on the software you select, will generate payslips and pay different people at different times. To find a payroll software that best works for you, click here.
You must use a unique identification when giving your employee a payroll ID. Also, it is important to remember that as of April 1, 2022, you must pay all adult workers aged 23 and over at least £9.50 per hour, also known as the National Living Wage. The NLW is subject to change from April 2023 to £10.42.
Notify HMRC of your new employee
You must notify HMRC that you have a new employee before they start receiving regular pay. This can be done by registering their details on a Full Payment Submission (FPS) on their first payday. This form should contain how much they have been paid since they started working for you and any deductions as well as the employee tax code. You can find out more about running payroll and FPS here.
Details of the new role
Sending a statement and a contract of employment to the person you've offered the job to is a legal and necessary requirement during the hiring process. It is important that the employer and employee know what is required of themselves in the formation of a new contract, but it is also equally as important to have a document to refer to that states details such as employee’s rights.
A statement of employment outlines the main roles and responsibilities that an employee will be expected to fulfil. It must be given to the employee within two months of their first day on the job. The statement must include details such as their holiday entitlement, salary, working hours, notice periods, and collective agreements.
A contract of employment, on the other hand, is simply a document that outlines the employee's employment rights, responsibilities, and duties, and is issued immediately after the employee accepts the job offer. There is also a section devoted to the legal terms and conditions of the employment contract, which both the employee and the employer must be aware of. These terms may be agreed upon verbally or written in the contract. There are also implied terms, such as the employer providing a certain level of workplace health and safety. For more information on employment contracts click here.
Hiring an employee is not as straightforward as interviewing and paying them. There are various considerations to keep in mind, some of which we have discussed above. We hope this article has provided you with helpful insight into the topic. Stay tuned as we will be publishing further articles on employment considerations.
Author: Rita Almazuri -
Author: Rita Almazuri -
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DISCLAIMER
This article has been written by law students for the sole purpose of providing informative insight. The information in this article is intended for educational purposes only and does not constitute legal advice, nor should the information be used for the purpose of advising clients. You should seek independent legal advice before relying on any of the information provided in this article.
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