Hiring your first employee
Tools & Resources
Key learnings
- Hiring your first employee is an exciting step in growing your business, but it’s important that you do it correctly.
- There are fundamental things you need to consider when taking on a new employee, like how much you’re going to pay them, registering them with HMRC and enrolling them in a pension scheme.
- Before you hire anybody to work in your business, you must check that they have the legal right to work in the UK.
When you’re employing staff for the first time, there are seven essential steps you must take. There is a lot to think about when hiring your first member of staff, and it’s important that you’re meeting the legal requirements.
Click below to find out more.
1
How much will you pay them?
When you’ve found the applicant you’re going to employ, you need to work out how much you are going to pay them.
You might have already specified this in the job application, or it could be dependent on the experience of the individual you are employing.
What is essential is that you are paying them no less than the minimum wage they are legally entitled to.
Minimum wage depends on the age of the worker and whether or not they are an apprentice.
Regardless of the size of your business, you must pay the correct minimum wage to your employees. The National Minimum Wage is the hourly rate all workers are entitled to. Employees over the age of 23 are entitled to the National Living Wage, which is higher.
You can use the government’s minimum wage calculator to see how much you need to be paying your employee.
In order to pay your employees, you must set up a Pay As You Earn (PAYE) scheme. You can find out more about PAYE here.
2
Do they have the right to work in the UK?
Before you employ somebody, you must ensure they have the legal right to work in the UK. This is an official check, and you must be able to evidence that it has been carried out.
If you are found to have employed an illegal worker without carrying out the proper right to work checks, you could face significant fines and even a prison sentence.
Applicants must provide original documentation, which is checked by the employer while the applicant is present. Copies must then be made of all the documents, with the check date recorded.
See GOV.UK for more information on what documents are required and the procedure employers must follow.
3
Do you need to apply for a DBS check?
If the job role you are hiring for involves working with children or vulnerable adults, your candidate will need to have a DBS check. This may also be required for certain jobs within finance, law and security.
A DBS (formerly known as a CRB) allows employers to check the criminal record of their potential employees.
There are different levels of DBS checks that can be carried out. The level you’ll need will depend on the nature of the job role you are filling.
You can find more information about carrying out a DBS check here.
4
Make sure you are insured
Regardless of the size of your business, as soon as you become an employer you must get Employers’ Liability (EL) insurance. The policy you take out must cover you for a minimum of £5m.
If one of your employees is injured or becomes unwell because of their work, EL insurance will pay out any compensation they are entitled to.
Your insurance must come from an authorised insurer and be valid and sustainable to cover the staff you have working for you.
You can be fined £2,500 for everyday you are not properly insured.
Find an authorised insurer at the British Insurance Brokers’ Association.
5
Send your employee the details of their job
As an employer, you need to send a job offer letter to any new employee. This should outline the specifics of the job being offered.
Acas states that a job offer letter should include:
- the job title
- confirmation you've offered them the job
- any conditions, for example that the offer depends on suitable references or a health check
- the terms – including salary, hours, benefits, pension arrangements, holiday entitlement and the location of work
- start date and any probationary period
- what they need to do to accept the offer or to decline it
- the name of the person to contact, with their contact details, in case of any questions
When an employee accepts your offer of employment, a contract of employment is automatically established between you. If you are employing somebody for more than one month, you must issue them with a written statement of employment.
You can find more information on employment contracts here.
6
Register your new employee with HMRC
You must register any new staff with HMRC before their first payday, you can do this up to 2 months before. It can take up to 15 days, so it's worth planning ahead.
You can start the process here.
7
Set up a pension scheme for your staff
As soon as you employ your first member of staff, if they are eligible you must provide them with a workplace pension scheme.
Employers must automatically enrol new employees over the age of 22, who earn at least £10,000 into a pension scheme and make monthly contributions towards it.
Find out how to set up a workplace pension at GOV.UK.
You can find more information about auto-enrolment pension schemes here: https://www.weareumi.co.uk/webapp/tools-resources/navigating-pension-auto-enrolment/
Next steps...
- Use the government’s minimum wage calculator to make sure you are paying your new employee the correct legal amount.
- Check to ensure your new employee has the legal right to work in the UK.
- Take a look at the British Insurance Brokers’ Association and secure Employee’s Liability insurance.
- Send your employee the details of their job.
- Register for PAYE through the HMRC and register your new employee.