Steps you must take when you hire your first employee

Hiring your first employee can feel like a strange and daunting task for any small company owner, particularly as it means handing over a great deal of responsibility to another person.

As a business owner, you will have a new level of responsibility to ensure your staff members are paid properly, are treated correctly, and that you abide by the prevailing employment-related rules and regulations.

Here is a list of some of the main steps you should follow when hiring a member of staff for the very first time.

Check the prospective employee is allowed to work in the UK

Before confirming employment, it is imperative that employers ensure a new worker has the right to work in the country. Use this online Government tool to help establish an employee’s rights to work in the UK. The penalties for employing someone illegally are very severe – up to £20,000 per infringement.

Does the applicant have a criminal record?

Depending on the type of work your business conducts, you may need to carry out further eligibility checks, such as a DBS check to find out if an applicant has a criminal record. There are restrictions on who can apply for a criminal record check – find out more here.

Employment contracts

Once an employee agrees to start a job, a contract exists between employee and employer. Importantly, there doesn’t need to be a written contract for a contract to exist.

However, within two months from a worker’s start date, you (as the employer) must provide a ‘written statement of employment particulars’ if an employee has a contracting lasting a month or more.

You can download a written statement template here.

We strongly advise you to seek professional advice in drafting formal employment contracts, as employment law can be a minefield if you get things wrong.

Registered your company as an employer

As soon as you take on any staff, you must register as an employer with HMRC before the first payroll is run.

If you are running a limited company, this is often a task your accountant will carry out early on – so that the company’s directors themselves can be paid their salaries… even before you take on any employees.

You have 30 days from a job start date to register each new employee with HMRC. Make sure you ask for a copy of their P45 form (from the previous employer).

Make sure your business is adequately insured

Many types of business insurance are optional, but if you take on any staff, you must take out an Employers’ Liability Insurance policy.

Make sure employees are paid correctly

As an employer, you must ensure that you are aware of the current National Minimum Wage rates.

You must provide all employees with payslips each time they are paid, detailing their net and gross pay, and any income tax payments, National Insurance, and any other deductions including pension contributions.

Be aware of your pension obligations

Most employers are now obliged to enrol workers in a pension scheme – this is known as auto enrolment. Read this dedicated article to find out if your company is covered by these rules.

Holiday, sick pay or maternity/paternity leave entitlements

There are a wide range of rules employers must comply with in relation to allowing workers time off. You must provide all employees with the statutory minimum level of paid holiday, Statutory Sick Pay , and maternity / paternity / adoption pay and leave.

Find out more on the HMRC site here.

Rules and regulations you should be aware of

Some of the main regulations employers need to be aware of include:

  • You must avoid workplace discrimination of any kind.
  • Take into account any flexible working requests by employees.
  • Don’t force employees to work longer hours than has been agreed at the employment contract.
  • You must provide a safe and secure working environment.
  • You must make ‘reasonable adjustments’ to your workplace if you have any disabled staff.

Have a plan for if things go wrong

Occasionally, employer/employee relationships do not work out and you may decide to let a member of staff go. However, you must handle redundancy procedures with the utmost care.

Tax-efficient protection for directors

  • limited company life cover