We are really pleased to bring you a guest blog by Sam Swinstead from vivoHR.
For most small business owners, if you’ve got it right and worked hard at it, there comes a point when you can’t do everything yourself anymore. Maybe you took on a sub-contractor or two, you’ve outsourced a few things and now you’ve reached that next step – time to take the plunge! You’ve decided taking on employees is the way forward.
Once you find your dream employee are you clear on what you need to do next to stay legally compliant and follow best employment practice?
There is much confusion about what is and isn’t required, what’s the law and what’s a suggestion for good practice. There are a lot of ‘armchair experts’ out there and they often throw around HR advice with abandon and simply add to the misunderstanding!
It is actually relatively simple to get the basics right when it comes to employing people and the requirements are not as onerous as you may have been led to believe. That said, a little bit of expert advice to get it spot-on from the start is a good thing!
Here are a few pointers to get you started – these are important whether you have a team of one employee or one hundred:
1. You need an Employment Contract (or a statement of terms and conditions):
- From 1 April 2020 this must be provided to your employees on or before their first day of employment
- There are terms that must be set out in this contract – these are changing in April 2020 so if you are using an old contract now is the time to get that updated
- There are additional terms you may want to set out in your contract that gives the business greater protection
2. You must comply with the requirements of the GDPR (General Data Protection Regulations) and the UK Data Protection legislation:
- Leaving the EU has not taken away this requirement! Certain elements may change after the transition period but until then it is business (well GDPR) as usual
- You should provide certain information about what employee data you process, how, who you share it with, data security and how long you keep it for – it is recommended you set all of this out in an Employee Privacy Notice
3. You must also check that your employees are legally entitled to live and work in the UK – the fines for not carrying out appropriate checks are significant.
4. You should ensure your employees are clear on the disciplinary and grievance procedures and rules – the simplest way to do this is to create a Disciplinary and Grievance Policy.
5. You have an obligation to manage the health, safety, and well-being of your employees and don’t forget to update your insurance regarding the number of employees as your business grows.
6. Perhaps most importantly to your employees, you must pay them correctly! Payroll can be a complex matter so we’d recommend chatting to our friends at Safe Hands Bookkeeping about how they can help you to get all of the following right:
- Producing payslips and ensuring the correct PAYE deductions are made for tax and national insurance – but also when other deductions are required by a court order or a child maintenance order
- Producing P60s at the end of each tax year
- Calculating the correct PAYE deductions for benefits in kind and producing P11Ds at the end of each tax year
- Ensuring employees receive these documents on time and confidentially – many employers are finding that cloud-based software provided by their payroll service which allows employees to log on and download their own information is a preferred method
- Complying with HMRC RTI (Real Time Information) payroll reporting each time you pay your employees
- Compliance with National Minimum Wage – relatively straightforward in most cases just so long you keep up with the current rate each year but more complex in situations where you have sleep-in shifts, on-call or unmeasured work time – this is an area that is often up for debate in legal proceedings so it can be tricky to keep up to date
- Calculating pay during an absence for sickness, maternity, paternity, adoption and shared parental leave
- Ensuring holiday pay is calculated correctly – fairly simple for salaried full-time employees but currently considerably trickier for part-time and casual workers and particularly for term-time workers where holiday pay is currently being considered in the Supreme Court
- Working out pro-rata pay for starters and leavers and of course registering them with HMRC when they join you and producing their P45 when they leave
- Managing your pension scheme – ensuring the right people are enrolled at the right time, that their contributions are paid and that all reporting is done to the Pensions Regulator
As HR professionals we are often asked about payroll matters; there is inevitably some overlap between our areas of expertise and those of a payroll expert but things tend to work best when the two teams collaborate to get the right answer and the best outcome for our business clients. Using our complementary skills and approaching payroll matters from both the people and the finance perspective really ensures the solutions are pragmatic and work for the business.
A significant cause of dissatisfaction for employees is payroll errors and the penalties for employers of not reporting pay data correctly are substantial so this is an important area to get right. Together we can create systems for collating the data needed to ensure all employees are paid the correct amounts and on time.
As HR professionals we want a quick efficient way to manage payroll for our clients and need confidence that it will be accurate. At vivoHR we outsource our own payroll as it requires that specific expertise so we, of course, suggest our clients do the same.
Do you have a question regarding payroll – please feel free to contact the team at Safe Hands on 01252 763123 or click here.