Hiring Your First Employee? Here’s What You NEED To Know!

15 Nov 2023

Published in: Member News

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Hiring your first employee can feel a bit scary. But it also means your business is growing, which is great news! Follow these top tips to make hiring your first employee smooth sailing.

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Hiring your first employee can feel a bit scary – it’s risky because you want to make sure you’re doing everything right. And at the same time you’re taking someone’s livelihood into your hands, so it’s a big responsibility!

But it also means your business is growing, which is great news!

So, try not to worry about the things you might get wrong – we’re here to guide you through all of the tricky stuff.

Follow these top tips to make hiring your first employee smooth sailing.

• Check your insurance

Sounds completely irrelevant, doesn’t it!? But actually, checking you have the right insurance is one of the most fundamental things you can do.

If you’ve been flying solo, chances are you don’t have employer’s liability insurance. Why would you? You’ve never needed it!

Well you do now, so get onto your insurer and get it sorted ASAP. You can be fined £2,500 for each day that you aren’t correctly insured. And another £1,000 if you don’t display your insurance certificate, or produce a copy if asked to by an inspector.

• Tell HMRC you are becoming an employer

You need to notify HMRC that you will be employing someone and ideally, with a month to spare.

You won’t be able to run a payroll for your new employee without a PAYE (pay as you earn) reference number. HMRC issues this when you tell them you will be an employer, and it can take a few weeks for it to come through.

• Know what checks you are legally required to make

There are several checks that you are required to make by law.

For every employee you hire, you must check they have the right to work in the UK. Your new employee needs to be able to prove this before their first day of employment.

It’s usually easy if your new hire is a British citizen, as you can take a copy of their passport for your records. If you are recruiting someone from overseas, you need to ensure they have the correct documentation. Fortunately, there is a handy government portal that walks you through the process.

Does your business involve risk or working with vulnerable people? If so, you may need to apply for a DBS (criminal background) check for your new starter and in some cases, this will need to be complete before they start working for you – for example, if you are regulated by the CQC.

You can be overcautious here, and you need to have a valid reason for applying for a DBS check. You have a legal responsibility to ensure that the role is eligible for a DBS check.

You’ll also need to check if your new employee needs to be enrolled into a pension scheme. If your employee is aged between 22 and state pension age, earns at least £10k a year, and normally works in the UK, you’ll need to enrol them into a pension scheme.

You can defer this for up to three months, which can be helpful if you are hiring people on a very short-term basis.

Fail to get your pension scheme sorted and you could face fines of up to £10,000.

• Provide a written contract

Gone are the days where you can offer a job to someone and they turn up, all on good faith.

Since April 2020, there is a legal obligation to provide what is known as a written statement of employment particulars to all employees.

This is split into a ‘principal statement’ and by law, you must make sure your new employee has this on or before their first day. It must detail the following:

• the employer’s name
• the employee’s or worker’s name, job title or a description of work and start date
• how much and how often an employee or worker will get paid (and making sure it is at least National Minimum Wage!)
• hours and days of work and if and how they may vary (also if employees or workers will have to work Sundays, nights or overtime)
• holiday entitlement (and if that includes public holidays)
• where an employee or worker will be working and whether they might have to relocate
• if an employee or worker works in different places, where these will be and what the employer’s address is
• how long a job is expected to last (and what the end date is if it’s a fixed-term contract)
• how long any probation period is and what its conditions are
• any other benefits (for example, childcare vouchers and lunch)
• obligatory training, whether or not this is paid for by the employer

You then need to ensure that you provide a ‘wider written statement’ within two months. This must give details on pension schemes, collective agreements, discipline and grievance procedures, and training.

It all sounds a bit complex, doesn’t it?

I usually recommend a written employment contract, which includes all of the listed elements. This can then be sent to your new employee before they even start, so you can rest assured that all bases are covered. I can also explain any scary terms, like ‘collective agreement’ and add in anything else you might need to protect your business, such as post-employment restrictions and non-compete clauses.

Feeling prepared?

Good! It can seem daunting at first, but once you know what you need to do, and you get into a regular routine of making sure your payroll commitments are up to date, pension contributions are paid, etc., you’ll be away.

And one last top tip – keep an eye out if you pay minimum wage or close to it. The government dictates the rates on an annual basis and they are updated in April each year. Make sure you check so that you don’t accidentally let your employees fall below the threshold.

Not feeling quite so prepared? Or perhaps you’re worried you’re falling short of some of these requirements? Get in touch and let’s get you sorted!

And for more expert tips and advice, visit Fox HR and sign up for our quarterly newsletter.