So, you’ve successfully brought a new business into the world, and it’s growing up – now you could be getting to the stage where you can’t do it alone and need to bring in help. This may be on a full time or part time basis, on a permanent contract or just temporarily during a busy period. But whether you have one right-hand person or an army of minions, becoming an employer gives you a whole host of new and scary responsibilities. Here’s a handy checklist of things you need to be on top of before you take the plunge and try for an employee of your own!
Employees need to be paid! Whether this is by the hour, day, week or month is up to you, but the minimum you must pay them is £4.92 per hour for 18-21 year olds, and £5.93 an hour for over 21s. You’re also responsible for making deductions for their tax and National Insurance, and paying this directly to HMRC (this is the Pay As You Earn – PAYE – tax system.) So you need to register as an employer on HMRC’s website first.
From day 1, employees are entitled to paid holidays – 28 days a year for full-time staff (this can include Bank Holidays). Part-time staff and those who start part way through the year will have a pro-rata’d amount, i.e. proportionately reduced. Make sure you decide what date your holiday year starts (most companies go for 1 January or 1 April) so that you can keep track of entitlements.
An area where people often get flummoxed! The ‘contract’ is actually the arrangement that you have with someone – they work for you, you pay them. This can be a verbal agreement, so there is a contract in place even if nothing is written down yet. ‘Terms and conditions’ (T&Cs) are the specific nuts and bolts of the arrangement – start date, pay dates, job title, rate of pay, benefits, notice period, holiday entitlements, disciplinary and grievance procedures etc. Employees are entitled to these T&Cs in writing within 2 months of starting the job – this is the ‘written statement of terms and conditions of employment’. But that’s more of a mouthful than a Magnum ice-cream, so it’s often referred to as the contract. You can do this as a separate document, but offer letters, staff handbooks etc. can also be part of the written statement if they specify contractual terms.
You don’t need to involve a solicitor to draw up a basic contract, but it’s strongly advisable that you get someone who knows about employment law to help you – particularly if you want to include any complex clauses.
Health and Safety
Under the Health and Safety at Work Act 1974, as an employer you have a duty of care towards your employees. Group hugs are not compulsory, but you have to look after them and keep them safe – including their mental and emotional wellbeing (stress etc.) So make sure that the environment, equipment, materials, working practices etc. are all safe and risks are minimized. Offices may not be as much of a potential deathtrap as a construction site, but there are still plenty of legal considerations! The HASAW Act has various requirements covering everything from toilet facilities to drinking water to training staff in health and safety issues, so be sure to check what you need to do.
You may already have public/professional liability insurance, but if you have staff you will need employer’s liability insurance – and also to display the certificate where your staff can see it.
Be aware that people are covered by discrimination legislation even before you employ them – so be careful that your recruitment decisions are not unfairly based on age, sex, race, disability or religion! Also make sure that you aren’t treating employees less favourably on any of these grounds. This can include less obvious things such as selection for training, promotion, benefits etc. If you have part time or temporary staff, again be sure that you treat them the same as full time or permanent staff, unless you have a good business reason not too – as there are legal regulations in place to protect them too!
Finally, remember the 3 D’s of employing staff – Document, Document, Document! Keep records of everything, including for ex-employees, as you may need to produce these for any number of reasons – payroll, claims, formfilling, reports, Office of National Statistics etc. To ease the administrative burden there are plenty of off-the-shelf computerised personnel database systems available, and you can keep scanned versions of hard copy documents if you’re short of space.
Most employers, particularly for micro businesses, are experts in their day job – not in employment law! But messing up can lead to disputes, tribunal claims, financial penalties, sleepless nights and general misery – so as your business gets bigger, it may well be worth your while getting in professional HR help, outsourcing your HR needs, and generally letting someone else take the strain. This way you can focus on what you do best – your business!