Hiring your first employee is a huge step for a company.  You are not only sharing the responsibility of your business with another person, but you need to be aware of your duties and legal obligations as an employer.

Here is a checklist to follow throughout the process:

  1. Applicant checks
  • Does your new employee have the right to work in the UK?
  • If your employee will handle sensitive information, or work with children and/or vulnerable adults, you must arrange the relative criminal background checks, (Disclosure Scotland).
  • Be sure to follow up references provided by the employee to ensure they are qualified/experienced for the post.
  1. Statement of employment/contract of employment
  • Any employee working for you for a month or more must receive a written statement of employment. This document provides the person with the conditions of employment, and must be provided to them within the first two months.
  • You must provide all employees with a contract outlining the employee’s rights, responsibilities, and working conditions. This will contain both explicit and implied terms of employment.
  1. Employers Liability Insurance
  • As an employer, you must make sure your insurance protects your business from claims made by employees who have been injured or fallen ill in the workplace.  You must take out adequate EL insurance cover due to the terms of the Employers’ Liability (Compulsory Insurance) Act 1969.
  • If you are a limited company and your first employee is a close family member working for you, either a spouse, brother or sister, then you won’t need EL insurance for them.  Unless they are a company Director, then under the Employers Liability (Compulsory Insurance) Act 1969 they must also be covered.
  1. Register with HMRC
  • Within four weeks of your employee starting work you must register as an employer with HMRC.  As an employer, you will be responsible for paying your staff a pre-agreed salary, and deducting any PAYE (income tax) and National Insurance Contributions from staff salaries.
  1. Payroll Data & payslips
  • You must provide employees with a payslip detailing their gross and net pay, income tax and NICs deducted, and any other deductions (such as pensions contributions).
  • Each time you pay your staff, you must submit payroll data to HMRC.  This rule came about with the introduction of RTI (Real Time Information) in 2013.  Previously, you would provide this information at the end of the tax year.
  • Staff wages must comply with the National Minimum Wage legislation.
  1. Health & Safety
  • As an employer, you will be responsible for providing your employees with a safe and secure work environment.
  • You only require a formal written H&S policy when you have five or more employees, however you should take time to assess the risks your staff face in the workplace.
  1. Pension scheme auto-enrolment
  • Employers must now follow legislation stipulating that staff members of a certain age, and pay grade, be auto-enrolled on a pension scheme.
  • For more information, check the pension regulator site.
  1. Holiday, sick pay, maternity/paternity pay rules
  • Employees have protective legislation allowing them paid leave for a variety of reasons.  If you are unsure of the rules regarding any of the above, please check HMRC website.
  1. When things don’t work out…
  • If things don’t work out with your employee you must handle their dismissal with care to avoid your company being taken to a tribunal.
  • An employee could also resign if you have breached their contract with them.
  • If you have read up on employment legislation and you are still unsure of how to navigate through the dismissal/resignation process, then it is best to seek legal advice on the matter in-hand.