Hiring your first employee (a UK guide)
Here at Crispy Fried Software, we’ve just hired our first employee, Hannah, to help out with customer support, really to try and take some of the load off me.
During the process I’ve had lots of help from Williams Lester (my accountants), and I felt it would be useful to try and get all this information in one place for others who might be in a similiar position.
Finding the right person is, of course, the first step, but that’s a topic for a blog post in its own right.
1.) PAYE (Pay as your earn). If you’re not already signed up for PAYE with HMRC, you’ll probably need to sign up. You don’t have to if they your employee has no other employment, is not receiving a pension and you are paying them below the NI Lower Earnings Limit (£442 a month for 2011/12). If your accountant deals with these matters for you, then all the better. Otherwise you can sign up here: http://www.hmrc.gov.uk/paye/intro/register-email.htm .
2.) Minimum wage. Make sure you are paying your employee at least the minimum wage or you’re breaking the law.The minimum wage is currently £6.08 if your employee is 21 or over. Rates for other ages can be found here: Business Link
3.) Employment contract. You don’t have to get a written version of this signed and ready before your employee starts, but it is a legal obligation to have one written and signed within two months of the employee starting. Don’t try and write your own. I’ve attached a simple template contract which should serve as a good starting point. At a minimum this needs to contain: job title, place of work, start date, any probationary period, duration of employement, salary and holiday.
4.) Employer’s liability insurance. As long as your new employee is UK based you MUST have at least £5 million!! worth of employer’s liability insurance. It seems crazy to me, especially given my new employee will be working from her house, but its the law. The only get outs on this one are if you are a sole-trader employing only family members. The fine for not having this is up to £2,500 a day- so its really worth doing. Mine cost just under £70 for the year, so its not going to break the bank.
5.) Payroll. When it comes to time to pay your new joiner you’ll need to work out how much you send to them, and how much goes to HMRC. Again- if you’ve got a good accountant/bookkeeper they will handle all of this. If not there are a good few software packages which will do the calculations for you.
6.) Holiday/Annual leave. Even if you are employing someone part time, or on a casual/irregular basis, you must still offer them paid annual leave. The minimum annual leave for a full time employee is 28 days, though this includes bank holidays. For a part time worker, you can pro-rata this if they are working a set number of days a week. If they will work irregular hours, then you can work it out as 12.07 percent of the hours worked (so if they do 12 hours a month = 144 hours a year = 17.4 hours holiday a year.
