Key Steps in Preparing Your Business for Employing Staff in the UK

Deciding that your business is at the stage where you need to employ staff is an exciting and huge step. However, there are government guidelines you need to be aware of and follow. If you are not aware of these, you may make mistakes and find the task of employing staff a stressful one. Mistakes can cost time and money, so you should avoid these where you can. You may also receive a fine if you do not carry out requirements such as not setting up your employees’ workplace pension in time or not having employers’ liability insurance in place. This article will explain the key steps in preparing your business for employing staff in England and Wales to help you ensure you do it correctly and avoid unnecessary mistakes.

Think About What Sort of Employees You Need

When considering taking on new employees, you need to decide what type of employees you are looking for. This requires you to think about their hours and employment status. Not all staff are employees – you may choose workers or self-contractors. Their status will determine their rights and responsibilities. You may require a few staff members to begin with, or you may need an entire team from the outset.

Can You Afford to Take on Employees?

As part of preparing your business for employing staff, you need to decide if you can afford to. Employing staff means committing to wages, so you need to be sure you are in a position to commit. Paying employees’ wages is not just about the salary you pay but the legal entitlements that come with it, so you need to be aware of:

• the minimum wage, as you are legally obliged to pay your employees this;
• the national insurance you will be required to pay on behalf of your employees;
• what sick pay your employees will be due;
• the amount you will need to contribute towards their pensions; and 
• the maternity and paternity leave pay you will need to pay your employees.

Prepare Your Workplace

As an employer, you need to welcome staff into a safe and accessible environment. Consequently, you should:

• assure staff that discrimination does not occur in your workplace as it is illegal to discriminate against a member of staff based on particular protected characteristics such as, for example, race or disability;
• ensure that staff can access your workplace, which requires you to think about how they could if they have a disability or a health condition;
• think about health and safety as you have a legal duty to ensure the health and safety of your staff;
• ensure fire safety in your workplace; and 
• think about how you will store your employees’ information and data as there are legal requirements under data protection law.

Register Yourself as an Employer

As an employer, you will need to pay tax and national insurance on your employees’ behalf. Therefore, HMRC needs to be aware that you are now an employer. This requires you to register with them to set up PAYE, which you use when paying your staff. This means that you will need to think about whether you will run your payroll yourself or if someone will work on your behalf. If you are running it yourself, you will need to choose payroll software. 

Additionally, you will need to give yourself four weeks for the registration process with HMRC before you are due to pay your first wage payment. If your employees earn £112 per week or less, you are not required to register with HMRC.

Understand Workplace Pensions

As an employer, you have pension responsibilities towards your staff, and you should understand what these are when preparing your business to employ staff. Some of your staff may need to have a workplace pension set up by you, which you will have to pay into. This applies where your employee is eligible to work in the UK, aged between 22 years to the State Pension Age, and earns over £10,000 per annum. 

Consider Employer’s Liability Insurance

As soon as you employ staff, you must ensure you have employers’ liability insurance. This will allow you to pay compensation should one of your employees suffer an injury or an illness due to their work with you. The minimum amount on your policy must be £5 million, and you must get your insurance from an authorised insurer.

Recruit and Employ Staff

Once you have prepared your business to employ staff, you are ready to recruit staff to work for you. Aside from the actual recruitment process, this involves, for example:

• checking eligibility to work in the UK;
• carrying out a Disclosure and Barring Service check if necessary, which will depend on the nature of your business;
• creating an employment contract;
• passing your employees a written statement of employment if the employee will be with you for more than one month as this is a legal requirement; and 
• deciding upon a salary.

Key Takeaways

If you are ready to become an employer, you need to take specific steps as preparation for this. Certain steps are legally necessary, such as registering with HMRC and the requirement to obtain employers’ liability insurance. Other steps you need to take will inform you of your legal requirements concerning your staff, such as the minimum wage and other responsibilities associated with employing staff, like national insurance contributions and sick pay. Not carrying out the correct steps can cause problems for you in the overall process. For example, registering with HMRC late and not paying your staff on time can lead to a hefty fine.

If you need help understanding how to prepare your business for employing staff in the UK, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.

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