Time To Grow: what to know when employing people

Business is booming. The customers keep rolling in. You have more work than you can manage.

So, what does this mean for you? Well, it’s time to think about expanding your team.

However, while taking on more employees enables you to grow your business, it simultaneously adds a vast amount of additional responsibilities.

Do you know the legal implications of employing people?

In the last blog of our Time To Grow series, we examine employment in greater detail so you can hire staff in confidence.

What does employment mean?

Essentially, employment is when you hire someone to work for you, forming an agreement defined by their employment contract.

The four different types of employment

While a person is defined as an employee when operating under an employment contract, there are varying types of employment:

• Full-time employee – someone typically averaging 35 hours
• Part-time employee – a person working less than 35 hours
• Seasonal employee – a worker hired for a short period during busy seasons, i.e. Christmas
• Temporary employee – an employee hired for a set period, such as six months

HMRC: the seven aspects of employment

HMRC states that there are seven things you need to do when employing someone for the first time:

1. Determine the worker’s pay
2. Check the worker’s legal right to work in the UK
3. Verify if a DBS check is needed
4. Get employment insurance
5. Send the employee their terms & conditions, job details and a written statement of employment
6. Inform HMRC by registering as an employer
7. Verify if your employee requires auto-enrolment

You can find the full HMRC article here for more details on these seven points.

What employment issues are businesses currently facing?

Employment can be complicated – as outlined by HMRC’s seven steps – with various issues further magnifying the difficulties you’ll face.

To support, below we’ve outlined the three biggest challenges businesses are currently facing, helping you to prepare for this and ensure hiring is smooth sailing.

Determining your remuneration package

A remuneration package is the total compensation you offer employees for their service, including the base salary in addition to other incentives such as bonuses, flexible working or company cars.

Determining a remuneration package often proves challenging for new employers because if you pay employees too much, the costs could outweigh the benefits.

But if you pay too little, you risk hindering your recruitment and will most likely struggle to attract the right calibre of candidates.

With headlines trumpeting £150,000 starting salaries for graduate lawyers, understandably, it may appear that you need very deep pockets to win the talent war.

Don’t panic – salary isn’t everything.

Providing flexible working, an opportunity for development and roles with purpose all make you a highly sought-after employer without increasing your costs.

Check out our recent blog here that delves further into how you can win the talent war without simply relying on outbidding the competition.

Conducting employment checks

As an employer, you must check if someone has the legal right to work in the UK and determine whether Disclosure and Barring Service (DBS) are needed.  

During the pandemic, the requirements for these checks changed slightly to accommodate those working from home, enabling new starters to present ID via a video call.

But from 6 April 2022, it will no longer be sufficient to conduct virtual ID checks over video calls; instead, employers have to use approved third-party software to verify digital identities.

PAYE and National Insurance obligations

As an employer, you have PAYE obligations to deduct income tax and national insurance (NI) from your employees’ salary each pay period, along with managing your own employer’s NICs.

Bear in mind, while National Insurance is currently levied at a rate of 13.8% on employee earnings above the NI Secondary Threshold, from 6 April 2022, it will increase by 1.25%, raising the total rate to 15.05%.

The NI change equates to a 9% increase in the employer’s wage bill per employee.

Factor in the planned increases to the National Minimum Wage (NMW) and National Living Wages (NLW), and employer costs will escalate significantly.

Business owners are urged to assess their financial position and start planning now to work out how they will be affected by these increases.

It’s Time To Grow

Our various HR and payroll solutions can enable you to tackle recruitment obligations head-on with confidence.

What’s more, for a limited time, as part of our Time To Grow initiative, we’re offering up to 50% off all IRIS software – find out more.

*Employment rules can be complicated, so please only treat this blog as a guide, and speak to a professional advisor for legal advice.