Employing staff for the first time.
Setting up a new business is an exciting prospect, but it can also be very confusing if you don’t know the steps you need to take before you can get going. If you’ve recently become an employer, there are a few things you will need to keep in mind before you start hiring people.
One of the first things you need to decide on is how much you’re going to pay your employees. This variable can depend on many things, such as:
- How much money can you reasonably afford to pay your staff?
- How many people are you employing?
- What sort of position are you hiring for?
- How much experience is required for the role?
- What qualifications are required to do the job?
- How much are other companies paying for similar roles?
- How old are the people you are employing?
You need to think all these things through before you set a wage for your staff. Paying them too much may leave you with less money for other aspects of your business but paying them too little would be unfair to the employees, or they may just find a similar position that pays considerably better. You need to strike the right balance so that both parties are happy. You must also be aware of the minimum wage for the age group of those you are employing, as this is the bare minimum you need to pay your staff. If you want to offer a “competitive salary” then you would need to offer more than the minimum wage, and similar to, if not slightly more than the salaries of similar, local companies.
There are a couple of legal checks you will need to take out on potential employees before you hire anyone. Most importantly is that everyone you employ must have the right to work in the UK. After all, you can’t employ someone in the UK if they can’t legally work here.
Depending on the type of work, you may also have to do a DBS check (Formally known as a CRB check) on new employees. These checks are usually reserved for if the field of work includes working with vulnerable people, such as the unwell, the elderly or children. Alternatively, security related work will also require these checks to be done. This is just to ensure that you’re not employing anyone who could be potentially dangerous to the vulnerable.
These are both legal requirements and must be undertaken before employing any new staff if the nature of work requires it, so it is incredibly important that you perform these checks before you decide on who you hire, should you be hiring for work that involves the vulnerable/security risks. You may have found the perfect candidate, but you still need to make sure they pass the checks they’re required to before you can offer them the job.
It is essential that you get employment insurance before you start employing staff. For example, you will need employer’s liability insurance as soon as you become an employer. It is extremely important that your business and employees are insured. Employer’s liability insurance helps cover the cost of compensation if an employee is injured as a result of the work they do for you. You must be covered for at least £5 million by an authorised insurer and could be charged up to £2,500 for every day that your business isn’t covered, so it’s very important that you get all of this set up before you start.
Once you’ve completed all of the preparation and have started hiring, you must send details of the job (including terms and conditions) in writing to your employee. You need to give your employee a written statement of employment if you’re employing someone for more than 1 month, after which a legal, formal contract must be signed by both parties. This acts as a contract until a signed formal contract can be agreed on and makes sure that both employer and employee know exactly what the terms of the employment are, such as work hours, job title, pay, dress code etc. This should ensure that both employer and employee are on the same page.
Not only will this put the new employees at ease but will also give them a great first impression of you as an employer. It shows that you are organised and that you understand clearly what is to be expected of your staff.
Before your newly hired employees start, you must first tell HM Revenue and Customs (HMRC) by registering as an employer – you can do this up to 4 weeks before you pay your new staff but you cannot register more than 2 months in advance. It can take up to 5 working days to get your employer PAYE reference number. This is a legal requirement and must be completed before you start paying your staff.
Before your newly hired staff members start work, you must check to see if you need to automatically enrol them into a workplace pension scheme. This has been in place since October 2012. While this is usually the case, this isn’t necessary in a few situations. For example, if you pay your employees less than £10,000 a year, they are under the age of 22, or if they are above retirement age already. However, assuming the employee does not meet these criteria, the only scenario in which you legally can pay them less than that if they are working full time is if they are employed through an apprenticeship scheme. This means that in most cases, you are legally required to set up an automatic enrolment pension scheme for all new full-time employees.
We hope this guide has been useful. However, if you feel as though you need more help setting up your new business and laying down the groundwork for your new staff, there are multiple options available to you. There are many services dedicated to guidance and advice such as the Pension Advice Service. Why not get in touch with us here at Chilvester Financial. Our expertly trained financial advisers will be able to offer you just the advice you need when setting up your new business and preparing for new employees. So, if you need a helping hand, get in touch today for your free, no obligation consultation.