Taking on Employees? What You Need to Know

If you run your own business, it’s possible that you’ve been working alone as you navigate the early stages of set up and becoming established. However, as your business grows, you may be starting to consider taking on employees to support the increased workload that comes with business growth.

If you find yourself in this position and are currently recruiting, while this is obviously great news, there are some steps you need to take to ensure you stay on the right side of the law.

Let’s take a look at what these steps are.

If you’re taking on employees there are some actions you need to take

What you need to do for your new employee

Agree a salary

You will need to decide how much you are going to pay your new employee. It’s likely this will depend on a number of factors, such as the job they will be doing, their relevant experience, how valuable you expect them to be to your business and the market rate for their job. Legally, you must pay your employee at least the national minimum wage.

Provide a written statement of employment

If you are employing someone for longer than a month you will need to give them a written statement of employment, including details of the job and any terms and conditions.

Confirm they can work in the UK

You will need to undertake some checks to ensure that your new employee is legally allowed to work in the UK. Don’t forget that the end of the transition period means that new rules will apply if you’re hiring someone from the EU after 1 January 2021.

Undertake a Disclosure and Barring Service (DBS) check

Check if the work your new employee will be doing will require you to undertake a DBS check. For example, this will be needed if your business works with vulnerable people.

Enrol them in a workplace pension scheme

Check if your new employee is eligible for a workplace pension. If they are, you will need to set one up.  You can find out more details and what you can and can’t do here.

What you need to do as a new employer

Tell HMRC and get an ERN

You will need to register as an employer with HM Revenue & Customs as soon as you employ someone. You will be sent a letter confirming your registration and supplying you with an employer reference number or ERN. This is a unique set of letters and numbers used to identify your company. You may also see it referred to on forms as an employer PAYE reference.

Get Employers’ Liability insurance

As soon as you have at least one employee or two directors you are legally obliged to take out Employers’ Liability insurance. This protects your employees if they are hurt or injured during the course of carrying out their work for you.

The Employers’ Liability Act 1969 specifies a minimum requirement of £5 million cover, however most insurers provide £10 million in their Employers’ Liability products. The difference in cost between £5 million and £10 million cover is negligible so it’s worth investing in the higher amount even if you are a small business and only have a few employees.

When you take out Employers’ Liability insurance your insurer will ask you for your employer reference number or ERN number. They ask for this because they are legally required to make a return to the Employers’ Liability Tracing Office (ELTO), where a central log of all the Employers’ Liability records are held.

ELTO is there to protect both the employer and the employed. When an Employers’ Liability claim is made, a check of the records held by ELTO is made to make sure that insurance was in place at the time the incident took place. It identifies the insurer who is then responsible for settling the claim.

Employers’ Liability insurance from Tapoly

If you are taking on employees for the first time and need Employers’ Liability insurance, why not get a quote from Tapoly? If you can’t find what you need or need help to choose your cover, contact us at info@tapoly.com or call 020 7846 0108.