Employees and the law: What you need to know about hiring extra workers

If your company needs to hire staff, that’s usually a good sign: it means your business is growing and you are in a position to expand.

But taking on an employee for the first time brings a number of obligations: these include initial steps such as drawing up a job spec and agreeing a contract of employment, as well as ongoing issues like running a staff payroll.

The recruitment process and the job

The first step is finding the right employee: you may already know who you want to take on, but if you don’t you will have to create a job description and advertise for candidates.
Whoever you end up employing, lay down a clear job specification.
You also need to decide on salary, hours and benefits such as holidays. Employees must be paid at least the minimum wage, currently £6.50 an hour for those aged 21 and above, and get at least 28 days’ holiday a year (although this can include bank holidays).

Legal obligations as an employer

There are certain things you must do when you employ someone for the first time.
• Provide a written contract of employment, which should include the name of your firm and the worker, their job title and a description of their duties, their start date, annual salary, hours and place of work, paid holiday entitlement as well as other aspects such as pension if applicable.
• Make background checks. It is up to you to make sure the person you hire has the right to work in the UK: you can check online to find out what documentation you should ask for.
In some types of work, for example involving children or security, you may need to make a Disclosure and Barring Service (DBS) check (formerly known as a Criminal Record Bureau (CRB) check).
• Register as an employer with HM Revenue & Customs.
This can be done online here and the process – which can take a couple of weeks – should be completed before the first payday.
• Get employers’ liability insurance. This covers you for any accidents at work, or any illness that results from the work your employee carries out.

Paying your employee

The biggest ongoing headache of being an employer is likely to be running your staff payroll.
Provided your worker or workers earn more than a certain minimum level, you will have to register for the Pay As You Earn (PAYE) system, which allows tax and national insurance to be collected by HMRC.
Employers must now report pay and tax details to tax officials every month, although this requirement is relaxed for smaller employers.
You can use a payroll software package or outsource your payroll requirements to a third party provider if they are particularly onerous.

Alternatives to employment

Taking on staff isn’t the only way to get outside help.
Tony Harrison runs his own recruitment consultancy from home in Brighton, and last year wanted to expand the business.
“I needed someone to help me in the day-to-day running of the firm, but I wasn’t in a position to employ someone full-time,” he says.
“Becoming an employer is a big step in terms of the responsibilities you have – not just in terms of red tape but also on a personal level. It would also mean getting an office, for example.”
Harrison instead found a contractor to work remotely for a fixed period. He also outsources his IT systems.
“At some point in the near future I will want to take the next step and start employing staff in earnest,” he says. “But I am not quite ready to do that at the moment.”

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