Employing your first member of staff is an exciting experience. It signals that your start-up is ready to scale up and that your turnover is high enough and reliable enough to support another person. Growing your team will bring a wealth of benefits, but it also adds to your responsibility as a business owner – you now have another person’s livelihood in your hands.
Whilst you may be focused on finding your superstar, it’s also crucial that you have a series of employment practices in place to ensure you’re legally compliant and protecting both your business and your employees.
Make sure you stay compliant with these 7 simple steps:
1. Ensure you’re offering at least the National Minimum Wage
The National Minimum Wage is the minimum amount of pay per hour that workers in the UK are entitled to; it differs from the National Living Wage because it’s available to workers under the age of 25. The National Living Wage was introduced on 1 April 2016 for all working people aged 25 and over, and is currently set at £7.20 per hour. The National Minimum Wage varies slightly, depending on your employee’s ages and whether they are working as an apprentice, but the average rate is £6.70. You may need to factor these conditions into your recruitment strategy.
2. Check if your applicant has the legal right to work in the UK
As an employer it’s your responsibility to make sure your employees have the right to work in the UK. This should be clearly specified in the job description and checked before the applicant begins employment. You can assess this yourself by asking them to provide you with some specific documents. Don’t be afraid to turn down an applicant because they cannot provide you with evidence of their right to work, it is a legal requirement and could put you in seriously hot water if you don’t comply. To find out what documents you will need to assess or to do an initial check, use this easy online tool.
3. Apply for a DBS check
If your employee will be working with children or vulnerable people, or your business is in the healthcare sector you will need to conduct a Disclosure and Barring Service (DBS) check. This check used to be called a Criminal Records Bureau (CRB) check and is essentially the same service. A DBS check helps you to make smarter recruitment decisions and helps to prevent unsuitable people working with vulnerable groups. To determine whether you need to, or can, conduct a DBS check, use this simple step-by-step tool.
4. Take out employers’ liability insurance
One of the biggest responsibilities that you will face when you take on your first employee, aside from their livelihood, is their safety. You will need to provide a safe working environment for your employees but you will also need to ensure you have the minimum required level of insurance in case an accident does happen. Employers’ insurance will cover you if an employee becomes injured or sick while they’re working for you.
It is important that you take out this insurance as soon as you register as an employer and that it covers you for at least £5m. You will also need to make sure you purchase the insurance from an authorised insurer. Once you receive your insurance certificate put it on display in your workplace or make sure you have a copy handy to present to an inspector. There are hefty fines if you’re uninsured, so don’t forget!
5. Send a written statement of employment to your employee
Once you’ve decided who you want to recruit, you need to send them the details of the role. This isn’t an employment contract, but will spell out the main terms and conditions of employment, including things such as your business name, their holiday entitlement and their hours of work. You have two months to provide this from the day your employee starts work.
6. Register as an employer with HM Revenue and Customs (HMRC)
It can take up to two weeks for you to register as an employer with HMRC and you need to register before your employee’s first pay day. This ensures that HMRC is aware that you are no longer a sole trader and now have people on your payroll; your tax will need to be adjusted accordingly. It doesn’t take long to register and the majority of businesses will be able to do it online.
7. Automatically enrol your employee into a workplace pension scheme
The new automatic enrolment means that all employers will have to provide a workplace pension by 2018. Depending on how many people you’re planning to employ will depend on when you need to enrol them in the scheme. You can find out your staging date here. You don’t need to provide a workplace pension for all employees, but for those who are eligible, you will need to pay 1% of their salary before tax into a pension scheme. You are responsible for taking the deductions and making the contributions to the pension fund, so make sure you keep on top of it, otherwise you can hire a bookkeeper to do so.
There is a lot to think about when taking on your first member of staff and a considerable amount of additional responsibility. But don’t let this put you off. It may seem overwhelming in the beginning but once you’ve got your head around it, it will be easier for every future hire. As an employer you need to have a basic understanding of employment law and what is required of you, but no one expects every start-up business owner to have a master’s degree in human resources management. If you need additional assistance, contact GOV.UK or outsource the work to a specialist. As the saying goes: do what you do best and outsource the rest.
Scaling up your business and employing staff is a huge stepping stone for your start-up. In and amongst all of the paperwork and legalities make sure you find time to enjoy the experience and congratulate yourself. Someone has turned down other job offers to work for your business; you must be doing something right!
Receive a 1-2-1 assessment with an experienced, independent business adviser who’ll review your business and formulate your next steps for employing your first member of staff. You will also receive three years of on-going business support, free Chamber of Commerce membership and support with any funding that you may require. Find out more.
7 essential tips provided by GOV.UK