Thinking of Hiring? 3 Legal Obligations You Need to Know About
It’s a sign that business is going well if you are in the position of needing an extra pair of hands to help your business run smoothly and perform to full capacity. However, becoming an employer is more than paying someone a regular wage, and any mistakes that you make early in the process can cause long-lasting or even terminal damage to your business.
|Hiring someone to work in your business gives you more responsibilities, so before you take steps to recruit the ideal candidate, you must be aware of your legal obligations.
- Liability Insurance
As an employer, you are required to have liability coverage. If you are unsure as to why a business requires employers liability cover, Hiscox explains how it can protect your business, from the cost of defending your business to compensation. Protect your business from any claims that employees could make against you for any workplace injuries or health issue that they acquire as a result of the work that they do for you.
The law requires that your cover is for £5 million, however, there are policies such as the one provided by Hiscox, that extend the standard cover to £10 million. If you fail to take out employer’s liability cover, you risk being given a heavy fine, and in the worst-case scenario, being unable to honour a compensation claim.
A contract confirms the terms and conditions of the employment. Not only do they define what your employee must do to fulfil the role, but they also contain your obligations to them: salary, sick pay, annual leave, probationary periods and hours to be worked. The law in England and Wales states that a 'statement of certain specified terms’ should be given within two months of starting a role.
By providing a contract, you are minimising the risk of future disputes, but it also gives a substantial framework for the employee to work within. Here are key pieces of information that the contract should include:
· Start date
· Outline of job description (a more detailed document should accompany the contract).
· The workplace address
· The contracted hours
· Salary – How and when it will be paid.
· Annual leave – Concerning whether bank holidays are included.
· Probation and notice periods – Plus any restrictive covenants that may apply.
Payroll and Pensions
As an employer, you must make sure that you comply with the strict regulations concerning payroll and pensions. You must register your employee with HM Revenue and Customs and obtain a PAYE reference number. This means that you can then pay tax and national insurance for the employee.
If your employee is over the age of 22 and will earn £10k per annum, you also have duties to pay into a workplace pension scheme for them. Automatic enrolment is your duty, and failing to comply can mean that you are fined and ordered to back pay any contributions.
It can feel overwhelming when you consider the legal obligations that you have as an employer, but the laws are there to protect you, just as much as your staff. By being compliant with government guidance and laws, you will be able to attract the right candidate to help grow and expand your business.