How to employ someone

    how to employ someone

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    How to employ someone: step-by-step guide

    Employing someone is an exciting time for a business, but doing it correctly involves several different stages that an employer must follow before members of staff can be fully brought on board and start their employment.

    In this guide, we explain the key steps of how to employ someone to help employers avoid pitfalls and ensure a smooth start for your new joiner.

    How to employ someone step 1: Prepare your business for employment

    Before recruiting someone to work for you, you will need to prepare your business to take on members of staff. This, in itself, involves a number of steps, from making your workplace safe and accessible for staff, including any workers with a disability or health condition, to putting in place Employers’ Liability insurance with a minimum cover of £5 million.

    However, first and foremost, you must decide what type of workers you need and if the business can afford to employ someone, having regard to any rights and responsibilities that may arise in the context of the employment relationship.

    All employees are workers, but an employee has additional employment rights that do not apply to workers who are not employees. These include, for example, the right to statutory sick pay, the right to either maternity and paternity leave, minimum periods of notice on termination of employment and, subject to 2 years’ service, statutory redundancy pay and protection against unfair dismissal. However, all workers have the right to the National Minimum Wage and a statutory minimum level of paid holiday. They are also entitled to a statutory minimum length of rest breaks.

    Your responsibilities as an employer will depend on the nature of the contract used to hire someone and the employment status of the person hired. Contract types include full-time or part-time contracts, fixed-term contracts, term-time, zero-hours or casual contracts.

    When it comes to employment status, this will depend not only on how the contract is described, but the nature of the actual working arrangement in practice. For example, if you hire a freelancer or consultant on a self-employed basis, but they work only for you, and you control what work they do and when, they may be hired under a contract of service, or employment contract, rather than a contract for services. In circumstances where a working arrangement, in reality, amounts to an employment relationship, this can give rise to all sorts of additional responsibilities in the context of both employment law and tax law.

    How to employ someone step 2: Go through the recruitment process

    Having prepared your business to employ someone, you will need to advertise the job role(s) and interview candidates. You can do this yourself or use a recruitment agency.

    When hiring, it is obviously important to find the best person for the job, but you must ensure that you are following the law on discrimination during the recruitment process. This includes when you are selecting candidates for interview or making a final selection for the job, where job applicants have a right not to be unlawfully discriminated against because of a protected characteristic, including age, sex or disability.

    For example, you must only use phrases like ‘recent graduate’ or ‘highly experienced’ when these are actual requirements of the job, otherwise risk discrimination on grounds of age. Equally, you must not ask someone their date of birth, unless, for example, they must be over 18 for the requirements of the job, such as selling alcohol. You must also not ask someone about their marital status, or if they have children or plan to have children.

    In respect of disability, you can only ask someone about their health if either there are key requirements of the job that cannot be met with reasonable adjustments, if you need to ascertain if a candidate requires an adjustment to be made to take part in a selection test or attend an interview, or you are using positive action to recruit a disabled person.

    How to employ someone step 3: Agree the terms and conditions of the role

    When advertising a job role, this will typically indicate the likely salary, or salary bracket, which may vary based on the experience of the successful candidate. However, having made a final selection for the job role, you may then need to negotiate an exact figure.

    When it comes to salary, you must pay all workers at least the National Minimum Wage. The minimum wage rate will depend on the worker’s age and if they are an apprentice. From April 2022, the rates are £9.50 for workers aged 23 and over, £9.18 for those aged 21-22, £6.83 for those aged 18 to 20, and £4.81 for those aged 16-17. A rate of £4.81 also applies to apprentices aged under 19, or if they are 19 or over and in the first year of apprenticeship.

    Additionally, you will need to provide your proposed new recruit with a draft contract of employment. In short, you will need to set out in writing the terms and conditions under which that person will be working for your business, including their working hours, place of work and contractual rights, such as any enhanced rights to notice, holiday pay or sick pay.

    As an employer, you must give an employee or worker a written statement of employment. Ideally, this should be provided in advance of their start date, to avoid any confusion as to the basis upon which they will be working. However, by law, you must provide a written statement of employment particulars, setting out the main conditions of employment, when someone new starts work. This should comprise a principal statement on the first day of employment, including details such as their working hours, and how much and how often they will get paid, with a wider written statement within 2 months of their employment commencing.

    How to employ someone step 4: Conduct a right to work check

    You must conduct a prescribed right to work check on all prospective employees and workers. This is because employers are under a duty to prevent illegal working by ensuring that those that they recruit have the right to work in the UK and to undertake the work on offer.

    You can carry out a right to work check in one of three ways: by using the online Employer Checking Service, by conducting a manual document check or by using the services of an Identity Service Provider (IDSP). The way in which you conduct a right to work will depend on the nationality of the prospective recruit and the way in which any immigration status is held, for example, IDSPs can only be used to digitally verify the identity of British or Irish citizens, while an online check must be conducted for migrant workers with an eVisa. If you are employing migrant workers, you may need a Home Office approved sponsor licence.

    You could be liable to a civil penalty of up to £20,000 if you are found to be employing an illegal worker and have failed to carry out a right to work check, either correctly or at all. You can also be given a custodial sentence of up to 5 years and be ordered to pay an unlimited fine if you are found to be guilty of employing someone who either you knew or had reasonable cause to believe did not have the legal right to work in the UK.

    In addition to a right to work check, other pre-employment checks may need to be undertaken, for example, a Disclosure and Barring Service (DBS) check. A DBS check is a check of someone’s criminal record that is typically required if a person will be working in healthcare or with children. You can ask a prospective recruit to undergo a basic criminal record check, regardless of the role in which they will be working, but you must have in place a policy on employing ex-offenders. This is because employers must treat applicants with a criminal record fairly, and should not discriminate because of a conviction or information revealed by a DBS check. A basic check will show unspent convictions and conditional cautions.

    How to employ someone step 5: Set up a workplace pension scheme

    Every employer in the UK is legally required to put certain staff into a workplace pension scheme and contribute towards it, where you must set up a workplace pension scheme for eligible staff. You can use the online Pensions Regulator’s tool for employers to find out what you need to do in terms of workplace pensions and when you need to do it.

    In broad terms, employers have to provide a workplace pension scheme for eligible staff as soon as the first member of staff starts work. This is known as the ‘duties start date’. You must aromatically enrol and make an employer’s contribution for all staff aged between 22 years old and state pension age, who earn £10,000 or more a year and normally work in the UK. This includes anyone based in the UK but travelling abroad for work.

    You must pay a minimum of 3% of your employee’s ‘qualifying earnings’ into the pension scheme. Under most schemes, ‘qualifying earnings’ will be the employee’s total gross earnings between £6,240 and £50,270 a year. Total earnings will include salary or wages, bonuses and commission, overtime, statutory sick pay, and statutory maternity or paternity pay. The employee must also pay a minimum of 5% of earnings into the scheme.

    Once a member of staff has been taken on, you must deduct contributions from their pay each month. You will need to pay these into your staff’s pension scheme by the 22nd day, or the 19th day if paying by cheque, of the following month. You must pay your contributions for each employee by the date you have agreed with your provider every time you run payroll. You must also backdate any missed payments to ensure that you meet your responsibilities. Any failure to pay the minimum contribution for each member of staff could result in a fine.

    If a member of staff becomes eligible to be enrolled onto your workplace pension scheme, either because of a change in their earnings or age, you must put them into your pension scheme and notify them in writing within 6 weeks from the date when they meet the criteria.

    How to employ someone step 6: Notify HMRC of any new staff

    When you start employing staff, you normally need to register as an employer with HMRC and set up PAYE. This will allow you to deal with payroll, and pay tax and National Insurance Contributions (NICs) for your employees. This includes both employee NIC’s, which are deducted directly out of their pay packet, along with any tax due, and employer’s NICs based on how much the employee has earned in any given pay period. You will also need to have in place a system for providing staff with a payslip, showing all deductions.

    You must register for PAYE before the first payday falls due, where it can take up to 5 working days to be sent your employer PAYE reference number. However, you cannot register more than 2 months before you start paying people. Technically, you can run payroll and pay staff before you receive your reference number, but this means you will need to store your full payment submission and send a late submission to HMRC.

    You can operate PAYE by either paying a payroll provider to do this for you, or by doing it yourself using payroll software to calculate pay and deductions, and to report to HMRC. If you decide to pay a payroll provider to run payroll on your behalf, you will need to consider how much support you will need, for example, keeping employee records, providing payslips and making payments to HMRC. However, as an employer, you are legally responsible for completing all PAYE tasks, even if you pay someone else to do them for you. You must also notify HMRC each time you take on a new employee by submitting a full payment submission.

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    Legal disclaimer

    The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.

    Author

    Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.

    Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.

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