Taking on an Employee
What You Need to Do:
Check if someone can legally work for you
Before you offer someone a job you need to check that they have the legal right to work in the UK. You need to check and keep copies of certain documents before your worker starts. The documents you need to check will depend on the type of worker you are employing. If you unknowingly employ someone who does not have the right to work in the UK, you can face a fine of up to £20,000 per worker. If you knowingly employ someone who does not have the right to work in the UK you could face a more severe penalty such as a prison sentence.
Get Employment Insurance
When you become an employer you must take out an employers liability insurance policy. Your policy must be with an authorised insurer and must cover all your employees in England, Scotland, Ireland and Wales. You must display your employers liability insurance certificate or make it available to Health & Safety Executive inspectors when they ask. Under the law, you are responsible for having the right insurance and for checking that your insurer is authorised or you could risk fines. Check that your insurer is authorised by consulting the Financial Services Authority (FSA) register.
Decide how much you should pay your employee
You need to make sure you pay at least the National Minimum Wage. The rate will depend on the age of your worker and the type of work they do. If you pay less than the National Minimum Wage you will be required to make up the shortfall and pay a fine. If you purposely don’t pay the National Minimum Wage you may be prosecuted, resulting in a criminal conviction and penalty. Find the current National Minimum Wage on our Tax Facts page.
Register and pay your employee for the first time
When you take on an employee for the first time, you will probably need to register as an employer with HMRC to ensure you deduct the right amount for PAYE and National Insurance. You will need to make PAYE payments when you pay your workers more than a certain amount (see our Payroll Facts page for current limits and bands). Once you have done this, you must provide your employee with a list of the deductions you have made from their pay in writing. If you do not provide your employee with a written statement of employment, you may be taken to a tribunal.
Send details of the job in writing to your employee
If you are paying someone for more than a month, you need to provide them with a written statement of employment within their first 2 months. Failure to provide a written statement of employment could result in being taken to an employment tribunal.