In this month’s blog, Annie is discussing new organisations taking on employees for the first time and some of the key legal responsibilities you have as an employer.
When starting up and developing a third sector organisation, employing staff is likely something that you will be considering. Taking on staff can help your business to grow by increasing productivity or increasing the scope of services that can provided, but is accompanied with a new set of legal duties that you must prepare yourself for. If you are at the stage in your journey where you are considering employing staff, these are some of the key legal responsibilities you have as an employer:
It is essential to the success of your organisation that you bring on board people with the correct skills. You should ensure your recruitment process is free from discrimination, giving every candidate a fair chance. It is unlawful to discriminate on the basis of a number of “protected characteristics”, which include age, gender, race, religious belief or sexual orientation.
You should carry out employment checks to ensure employees have the legal right to work in the UK. Guidance on acceptable right to work documents can be found here.
Contracts and Policies
Once candidates have been selected, you should then provide them with a written job offer. Employees are entitled to receive a statement of their employment particulars within two months of commencing employment, which details the main terms and conditions of their employment.
You should also provide a written employment contract. You must consider what type of contract you wish to engage the employee under, for example permanent or fixed term. The key pieces of information a contract will contain include:
- Start date and duration if fixed term;
- Job role (a job description may be outlined in a contract but is often provided as a separate document);
- Normal place where they will work;
- Hours of work;
- Salary and when it will be paid;
- Holiday entitlement; and
- Any probationary and notice periods.
Contracts should be revisited from time to time to ensure they are up to date with current legislation.
It is good practice to create a staff handbook detailing company policies and procedures so that you are able to deal
with any issues that arise. This is important even if you only have one employee. These can include policies such as sickness and absence, grievance and disciplinary, equality and diversity, maternity and paternity, flexible working, health and safety and data protection.
PAYE and Registering as an Employer
You must inform HMRC of your status as an employer. This can be done on the government web portal. To register an employee, you must complete a Full Payment Submission. This will require a P45 from the employee’s previous employer if this is possible.
A payroll system must be set up to operate PAYE. As an employer, you must deduct Income Tax, National Insurance and Student Loan Contributions from each employee’s final take home pay, which is paid to HMRC on their behalf. You may also be liable for employer National Insurance Contributions. Employees must be provided with wage slips with details of all deductions.
You must be aware of pay and statutory leave entitlements, such as sick pay, holiday pay and maternity/paternity pay.
You are required to pay all employees at least the National Minimum Wage. This is the minimum pay per hour almost all workers are entitled to. If employees are over 25, they are entitled to The National Living Wage. The current rates can be found here. You are also required to automatically enrol employees in a workplace pension scheme. Employers’ minimum contributions rose to 3% in April 2019.
All employees are entitled to at least 28 days of paid holiday leave each year, which should be pro-rata for part-time employees.
You also need to consider the regulations around certain groups of workers, such as young or part-time workers.
Providing a safe working environment
Under Health & Safety law, organisations have a duty of care for their employees. You must assess the risks the organisation faces and execute good health and safety practices. A health and safety policy must also be in place, which needs to be in writing if you employ 5 or more people.
Be properly insured
You should have employer’s liability insurance in place under the Employers’ Liability (Compulsory Insurance) Act 1969, or you could face steep fines. This will protect you in case employees are injured or fall ill through the job and claim compensation. The Health and Safety Executive have produced a handy guide to the Act.
Employment law is a complex area full of potential pitfalls. It is therefore essential to keep up with developments in the law and have the correct policies and procedures in place in order to avoid disputes arising, which could be very costly to your organisation. We can prepare bespoke employment contracts and policies tailored to your organisation that comply with current employment legislation. Get in touch with us to arrange a free initial consultation.