Tax Reviews | Employee

Taking on your first member of staff

So you are thinking of taking on an employee for the first time? Well first things first, there are some big considerations that you have to think of. Drawing up a job description before you start recruiting can be a good idea, so that you know exactly what qualities you are looking for when interviewing candidates.

Salary, holiday and other benefits will also be an important consideration to anyone applying for the job, so expect it to come up in the job interview if you haven’t advertised it already.

Obviously the minimum wage is a figure you can get from the website (8.21 per hour for over 25’s at the time of writing) , but minimum wage isn’t always likely to attract the best talent. It can be a good idea to use bench marked data for your industry in order to decided on salary, holiday, sick pay and parental pay (maternity and paternity). People don’t tend to stay with one employer out of loyalty now, due to low job security, so a nice work environment and realising staff achievement is a must. You can even consider things like flexible working or other employee benefits if appropriate.

When it comes to looking at CV’s and interviewing candidates, don’t forget that under the Equality Act 2010, it is illegal discriminate against any employee or prospective employee on the grounds of sex, gender identity, race, disability, religious beliefs, sexual orientation, age, marital status or pregnancy or maternity status.

Once you have selected your new employee it is time to create a contract of employment, and this is a must as it can be used in case of disagreements later on. If you need HR advice in making the contract, I would reccommend HR Department or Peninsula as we have existing clients that use these two companies and are very happy with them.

Contract done, it is time to make sure you are registered as an employer, that you know your duties in regards to pensions under auto enrolment, and you know what software you will use to run payroll. HMRC offer a free software for companies with less than 10 employees, but it has a lot of limitations, and you can not produce payslips with this, so these would have to be done manually. There are a lot of cheap solutions on the market now to run payroll, and many cloud accounting software have their own version. The other alternative is to contract a Bookkeeper or Accountant to run your payroll on your behalf.

So that is it, make sure your employee is settled in, they know what they are expected to do, and you know what they expect of you, and that’s it, you are an employer.

The legal bit

Minimum Wage:

Apprentice* £3.90 p/h

Under 18: £4.35 p/h

18-20: £6.15 p/h

21-24: £7.70 p/h

25+: £8.21 p/h

*Apprentices are entitled to the apprentice rate if they are either under 19, or over 19 and in the first year of their apprenticeship.


Full time employees are entitled to 28 days holiday a year inclusive of UK bank holidays. This is the equivalent to 5.6 weeks. Part time employees are entitled to pro rata of this. For example if they work 3 x 8 hour days a week (24 hours a week) they will be entitled to 134.4 hours holiday per year, or 16.8 days (inclusive of bank holidays).

Sick Pay

Subject to eligibility, once an employee is off for 4 working days, they become eligible for statutory sick pay. The first three days absence is unpaid (these are called waiting days). They are then entitled to £94.25 per week (or pro rata if they have part of a week off) . This continues for 28 weeks. You used to be able to claim this SSP back from HMRC by deducting it from NI contributions on payroll (in case Jimmy down the pub tells you that you still can), but unfortunately that stopped some years ago now.

Statutory Maternity/adoption/Parental Pay and Leave

Subject to eligibility there is certain leave and pay required to employees on maternity leave.

Employees are eligible for 26 weeks ordinary maternity leave and 26 weeks additional maternity leave.

Statutory maternity pay is paid for up to 39 weeks and is 90% of their average weekly earning for the first 6 weeks, and £148.68, or 90% of their average weekly earnings (whichever is lower) forthe remaining 33 weeks.

Statutory adoption leave and pay is the same as the above.

If your employee decided to take shared parental leave and pay, they can end their statutory maternity or adoption leave early and switch to this. It is paid at £148.68, or 90% of their average weekly earnings (whichever is lower). Parents can share up to 50 weeks of leave and 37 weeks of pay.

Statutory Paternity Pay

If an employees partner is having a baby or adopting a baby, they may be eligible for statutory paternity pay. This is 1 or 2 weeks paid leave at £148.68, or 90% of their average weekly earnings (whichever is lower).

These payments are reimbursable via your payroll scheme (via national insurance contribution deductions) unlike statutory sick pay above.


By law, employers have to find and register for a pension scheme if any of their staff are aged between 22 and state pension age, and any of those employees earn over £10,000 per year. Anyone in the pension has to pay 5% of their pensionable earnings, plus the employers must pay 3% from the company. The duties are different depending on if you also have other staff, but the first thing will be to find and decide on a pension scheme and then declare your compliance to the pension regulator. You can find out more here