The prospect of taking on your first employee can seem overwhelming. Here are our top five tips:
1. Employment contracts
When taking on your first employee, it is essential to ensure that you properly protect you and your business by agreeing an employment contract with your new employee.
Employment contracts must cover certain legal requirements, but can also be customised to suit your particular business needs. You can instruct a solicitor to create your contract, or use the handy template from ACAS which can be found here.
2. Employer Liability Insurance
Often overlooked by new employers is the fact that there is a legal requirement for employers to obtain insurance to cover their employees. For small businesses, cover tends to be very affordable starting from as low as around £100 per annum.
Failure to obtain Employer’s liability insurance is an offence, with penalties of up to £2,500 per day.
3. Pay Rates
Your new employee will be entitled to either National Minimum Wage (for those under 25yo) or National Living Wage (25yo and over). You will need to ensure that the proper pay rate is applied, and keep this under review regularly.
At present, the living wage rate is set at £7.20 per hour, with the national minimum wage being between £3.87 and £6.70 depending on the employee’s age.
We offer a complete payroll service to our clients, all at very reasonable rates. Why not contact Clair Coburn today to see how we can help?
4. Employers National Insurance
Employers are required to make National Insurance payments at 13.8% on behalf of their employees, once earnings exceed the basic threshold (currently £676pm).
It is important to note that two reliefs are available that can greatly reduce this cost to your business. Firstly, employers are able to claim an annual allowance of £3,000 against their Employer NIC costs. Secondly, with effect from 6 April 2016 there is a new “0% rate” for employees under 21, or those under 25 who are employed as apprentices.
5. Auto Enrolment
All employers are now required to create a pension scheme for their eligible employees, and to make contributions on behalf of them.
Currently employer contributions are set at 1% of eligible pay, but this will rise to 3% over the coming years. Auto-enrolment is a complicated matter, with countless requirements placed on the Employer including enrolling eligible staff, assessing staff (every pay period), sending statutory communications to Employees and much more.
We offer a full auto-enrolment service to remove this burden from you and your team. Why not contact Clair Coburn today to see how we can help you?