Taking on your first employee is a big step for any business. It can bring exciting opportunities for growth, but it also comes with important legal and administrative responsibilities. Getting things right at the start will save time, reduce risk and help you build a strong foundation as an employer.
Registering as an employer
Before you pay your first member of staff, you need to register with HM Revenue and Customs as an employer. This ensures that you can operate PAYE, which is the system used to collect Income Tax and National Insurance from your employees' pay. Registration is usually completed online, and it is best to allow time for HMRC to set up your details before your first payday.
Checking the right to work
You must confirm that your new employee has the legal right to work in the UK. This usually means checking original documents such as a passport or using the government’s online service. Failing to carry out the proper checks can lead to penalties, so make sure this step is completed before employment begins.
Setting up payroll
Once registered, you need to put in place a system to calculate pay, deduct tax and National Insurance, and report these details to HMRC. Many small businesses use payroll software, and some prefer to outsource the process to their accountant. Whichever route you choose, make sure your system is accurate and compliant.
Employment contracts and policies
An employee must be given a written statement of employment terms, covering pay, working hours, holidays and other rights. You may also want to establish policies for absence, health and safety, and grievance procedures. Clear documentation reduces misunderstandings and protects both employer and employee.
Pension responsibilities
Most employers must set up a workplace pension and automatically enrol eligible staff. Even if your first employee does not qualify, you still have reporting duties with The Pensions Regulator. Ignoring pension rules can lead to significant fines, so it is important to understand your obligations from the outset.
Keeping records
Employers are required to keep records of pay, tax, National Insurance and pension contributions. These records must be accurate and retained for several years. Good record keeping will also help you manage your business finances more effectively.
Health and safety duties
You have a duty of care to provide a safe working environment. Depending on the nature of your business, this may involve risk assessments, provide training, or supply protective equipment. Even in a low-risk office environment, you must still ensure staff safety and wellbeing.
Summary
Employing staff for the first time can feel like a steep learning curve, but the process is manageable when broken down into clear steps. Register as an employer, check the right to work, set up payroll, issue contracts, comply with pension rules, keep proper records and look after health and safety. By taking each stage seriously, you will build a reputation as a responsible and fair employer.
If this process seems a little forbidding, please call, we can help.