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How to employ someone

Employing staff for the first time is a big step for any growing business. If you have never been an employer before it can be a daunting process. This guide will give you a brief overview of the process.

Whether you just need an extra pair of hands or becoming an employer is part of your longer term plan for growth, it is important that you follow government employment guidelines.

You don’t have to be a limited company to take on employees, sole traders can also take on staff as well.

There are varying factors to be considered in order to avoid unanticipated problems and stress, with mistakes in this process costing time, resources and money.

Many new business owners struggle in undertaking employment because they don’t understand the full process of bringing their first employee on board.


1. Paying your staff wages

First decide on how much you are willing to pay your new employee – but remember that you are legally obliged to pay the National Minimum Wage to any employee.

The minimum wage depends on someone’s age and if they are an apprentice, but no matter how small the business, employers must meet the set wages.

There is a National Minimum Wage calculator to check that you are paying the right wages.


2. Carry Out Employment Checks

You will need to see if your new employee has the legal right to work in the UK.

Other specific employment checks could be required depending on the sector your business is in. For example, if you are employing a commercial vehicle driver you will need to carry out an eye test.

Some businesses may also find that insurers require them to carry out health checks on employees.

It’s important to note that it is illegal to discriminate against potential new employees based on a disability that does not prevent them from doing the job.


3. Do you need to DBS check potential employees?

Previously known as a CRB (Criminal Records Bureau) check, you will need to apply for this if you work in a field that requires safeguarding, e.g. care, security or teaching.

It generally takes around eight weeks to conduct a DBS (Disclosure and Barring Service) check, so consider this beforehand.


4. Get employer’s liability insurance

Your business will need employer’s liability insurance cover as soon as you become an employer.

Employer’s liability insurance will help you pay compensation if an employee is injured or becomes ill due
to the work they do for you.

Your policy must cover you for up to £5 million and come from an authorised insurance company.

The government can impose heavy fines if you do not have sufficient insurance when employing staff.

For further help and information on this topic, take a look at our blog on insurance for small businesses.


5. Statement of Employment

Your business will need to send a written statement of employment to your new staff member if you are employing them for over one month.

This should be a formal document that includes the job description, salary, the new employee’s expected start date, location the employee will be working at, any documentation you require from the employee, conditions to which the offer is subject to and a timescale for accepting the offer.

More information can be found on our blog on employment rights.

A written statement of employment can help avoid any future legal issues related to launching your business.


6. Registering status as an employer

Don’t forget to tell HM Revenue and Customs (HMRC) that you have become an employer.

This registration process must be done four weeks before you pay your employee for the first time.

Most new employers can register online and it can take up to two weeks to finalise.

Find out if you need to register a new employee.


7. Do you need to set up a workplace pension?

From 2018, employers will have to provide a workplace pension scheme for eligible staff.

Any employee between 22 and the State Pension Age, who earns over £10,000 per year and is eligible to work in the UK, will be automatically enrolled.

You may be fined if this is not done in time.


Learn with Start Up Loans and help get your business off the ground

Thinking of starting a business? Check out our free online courses in partnership with the Open University on being an entrepreneur.

Our free  Learn with Start Up Loans courses opens in new window include:

Plus free courses on finance and accounting, project management, and leadership.


Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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