Employing new staff

So, you have found an employee and now need to handle the administration.

What are the important considerations to keep at the forefront? In this blog I will cover some of these and provide some hints for further reading and research such as this step by step guide produced by the government.

Employment contracts

Firstly, consider the terms of the employment, document the key terms and draft a contract. I recommend online lawyers who have templates ready to be populated with the key information, for instance this one here.

Key points to consider are as follow:

• Pay rates: Negotiated with the employee and these need to be above to the National Minimum Wage (NMW).
• Holiday entitlement: How many days (subject to the legal minimum), what is the holiday year, what is the holiday approval process?
• Sick pay: Minimum legal requirement, company sick pay (offered by employer).
• Maternity oand paternity leave/pay, notice period.
• Pension contributions: Must be above the prescribed level for qualifying staff - know your responsibilities to auto-enrol staff (see below about pension schemes).
• Probation and notice periods.
• Other key policies: Client confidentiality, safeguarding the company assets, and others.

Employee's right to work in the UK

The employer is legally responsible for checking work entitlement documents and keeping copies of the documents. You can find detailed guidance by HMRC here.

Register as an employer

Make sure you are registered as an employer with HM Revenue and Customs. You can find out the key process online here.

Make sure you allow time for HMRC to post you various registration details and it will also take time for your HMRC Portal access for PAYE to be authorised as an activation code will need to be posted to you.

Regular payroll filings

You need to file to HM Revenue and Customs before paying staff. File Real Time Information ("RTI") via commercial software. There are many providers of payroll software which you can find here. You could also track some other helpful human resource information, such as holiday days taken, on these softwares.

You will also have to consider how you will you supply employees with their payslips, either via email or by choosing a software provider supplying access to a portal for your employees.

When new staff join the payroll have them complete the HMRC New Starter form found here which will allow you to work out the PAYE tax code for the employee.

The PAYE you deduct from staff will generally require paying to HM Revenue and Customs each month. Smaller payrolls can pay quarterly. If you don't want to run the payroll via software you can outsource this to an accountant or payroll bureau.

Pensions for staff

You are required to enrol eligible jobholders into a workplace pension scheme. This is often referred to as 'Auto-Enrolment'. You need to check the criteria and have the pension scheme available for the employee to be enrolled and contributing to.

The employee criteria are:

• aged 22 to retirement age
• earning more than £10,000 per annum.

You have six weeks to enrol the employee from the start date or date they become eligible. There are pension schemes available that do not cost the employer in management fees.

The current Auto-Enrolment Pension Scheme contribution rates are minimum 3% from the employer and 5% from the employee. Employees can opt-out but cannot be forced to opt-out. They should be re-enrolled every three years. Include the employee pension deduction details in the actual payslips.

Here is a good write-up on workplace pensions.

Other planning points

There are many other things to consider when hiring new staff members. Some of the other important specifics to go into in the early hiring stages of new recruits are as follow.

• How often will you do face-to-face staff reviews?
• What is the induction plan for the team member?
• What ongoing training will be provided?

Can you think of any more important ones?

Please have a think and if you'd like to discuss in more detail with me I am available to meet with you for a 30-minute free tax and finance business advice session locally, available to all residents and businesses in Hammersmith & Fulham.

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