Hiring Your First Employee in the UK: A Comprehensive Checklist 

Hiring your first employee in the UK is an exciting step in growing your business. However, it also comes with a range of legal and administrative responsibilities that you must adhere to. To ensure a smooth onboarding process for both you and your new employee, it’s crucial to follow a comprehensive checklist that covers payroll, pensions, legal requirements, and more. In this article, we will walk you through the essential steps you should take when hiring your first employee in the UK. 

Legal Considerations: 

1. Register your company: If you haven’t already, register your company with Companies House. You’ll need a unique company name and registered office address.
2. Obtain an employer identification number (EIN): If you’re not a UK resident, you may need an EIN to hire employees. Check with HM Revenue & Customs (HMRC) for guidance.
3. Verify eligibility to work: Ensure your employee has the right to work in the UK by checking their eligibility documents, such as a passport or visa.
4. Employment contracts: Draft an employment contract outlining terms and conditions, including salary, working hours, holidays, and notice periods. Provide this to the employee for review and signature.

Payroll and Taxation: 

1. Register with HMRC: As an employer, you must register with HMRC for Pay As You Earn (PAYE) within four weeks of paying your first employee.
2. Determine tax codes: Each employee is assigned a tax code by HMRC. Ensure you have the correct code for each employee to deduct the right amount of income tax and National Insurance contributions (NICs).
3. Payroll software: Invest in reliable payroll software or consider outsourcing your payroll to a professional service to ensure accurate and timely payments.
4. Set up PAYE: Deduct income tax and NICs from your employee’s salary each month and report this to HMRC through the PAYE system.
5. Payslips and reporting: Produce payslips and send them to your employees the day you pay their salaries. Make sure you have enough reporting setup.

Pensions:

1. Automatic Enrolment: Your pension scheme must be up and running within six weeks of the company’s duties start date. Yes, you heard it right: Within six weeks from their start date. Enrol your eligible employees into a workplace pension scheme and make contributions in line with the auto-enrolment requirements. Check the minimum contribution rates set by the government.
2. Choose a Pension Provider: Select a suitable pension provider or scheme and set up the necessary arrangements for contributions and record-keeping
3. Communicate with Employees: Inform your employees about the pension scheme and their rights and obligations under auto-enrolment. Even if your employee doesn´t want to contribute into a workplace pension, as an employer you have the duty to set up a scheme and enrol your employee.
4. Complete the Declaration of Compliance: The declaration of compliance is one of the most important documents that you need to complete for TPR. It shows the steps you’ve taken to be compliant with the automatic enrolment of your employees in a workplace pension.
5. Ensure compliance moving forward: Establish a cost-effective pension plan tailored to your company’s needs. Ensure compliance with all auto-enrolment requirements, resolve any existing issues, and consistently maintain employer compliance.

Record Keeping: 

1. Maintain accurate records of employee details, pay, and deductions for at least three years, as required by HMRC.
2. Keep records of employee contracts, amendments, and any disciplinary or performance-related matters.
3. Keep records of your pension contributions and the Auto-Enrolment statutory communications you have sent to your employees for at least 6 years, as required by TPR.

Employee Training:

Provide any necessary training to ensure your employees are equipped to perform their roles safely and efficiently.

Employee Handbook:

Develop an employee handbook that outlines company policies and procedures, including disciplinary and grievance procedures.

Conclusion 

Hiring your first employee in the UK is a significant milestone for your business, in the dynamic landscape of business, staying ahead of the curve is not just an advantage—it’s a necessity. That’s why you should consider Husky. 

Husky has consolidated payroll, workplace pensions, and flexible benefit schemes under one umbrella, offering a comprehensive solution. 

Here’s a brief overview of what Husky offers: 

1. Pension choice and setup: Use Husky’s comparator tool to get preferential rates from various pension providers. They handle the setup and can also facilitate the transfer of your existing pension scheme.

2. Running your pension: Once set up, Husky’s end-to-end management service ensures precise handling of every aspect of your workplace pension.

3. Compliance and support: Husky becomes your pension administrators, reducing compliance liability by auditing the scheme’s compliance at every payroll run. They provide ongoing pension support and liaise with the Pensions Regulator on your behalf.

4. Employee engagement: Help employees engage with their pension through the Huskyapp and make pensions a stand-out employee benefit.

5. Salary Exchange: In 2024, Salary Exchange isn’t just a buzzword; it’s a fundamental shift in how businesses manage their finances. Implement the no-cost, high-value employee benefit with full support from Husky. Their automated process simplifies the implementation, providing savings for both employees and the company.

6. Payroll: Payroll processes have remained largely unchanged over the past decade, but it’s time for an upgrade. Monthly processing of any changes (including new joiners, leavers, commissions, expenses, benefits, etc.)