Employing New Staff

What should you do when taking on an employee

Have you got questions about the correct procedures for employing a new member of staff? We can help you through this process and have put together some frequently asked questions to eliminate any queries you may have

Can they legally work for you?

When you take on a new employee there are important checks you have to make. You need to decide what their correct employment status is and check if they can legally work in the UK. If you employ them, you must check whether you need to operate PAYE (Pay As You Earn) on their earnings.

You need to get certain information from your employee and send it to HM Revenue & Customs (HMRC) on or before the employee’s first payday.

If this is your first employee, you may need to register with HMRC as an employer and set up a PAYE scheme. The UK Border Agency recommends that employers conduct checks on entitlement to work for all new employees to prevent illegal migrant working. If you don’t complete these checks, you could be charged a civil penalty of up to £60,000 or 5 years in jail per illegal worker.

Have you registered as an employer?

If this is your first employee and any of the following apply:

• their earnings meet certain thresholds
• you provide them with employee benefits
• they have another job or a pension

You need to register with HMRC as an employer and operate PAYE. To find out more and how to do this, read HMRC’s guide ‘How to register as an employer’ or contact one of our team.

Do you have Employment Insurance?

When you take on employees you must take out an employers liability insurance policy. The policy must be with an authorised insurer. Your employers liabilty insurance certificate should be displayed and made available to Health & Safety Executive inspectors.

It is your responsibility to have the correct insurance, without it you could be fined. Your insurer should be authorised by the Financial Services Authority (FSA).

Reporting new employees to HMRC

When you take on a new employee, you don’t need to tell HMRC straight away – but you do need to send a report on or before the employee’s first payday.

You can take on an employee at any point during a pay period, but whenever you take on an employee you should record their start date and report it to HMRC in the first FPS for that employee.

It’s a good idea to set up your new employee’s details on your payroll as soon as you receive them, so you have their details ready for your first FPS.

Download an employee starter form