We are employing someone for the first time what do we need to do?

There are 7 things you need to do when employing staff for the first time.

  1. Decide how much to pay someone – you must pay your employee at least the National Minimum Wage.
  2. Check if someone has the legal right to work in the UK. You may have to do other employment checks as well.
  3. Check if you need to apply for a DBS check (formerly known as a CRB check) if you work in a field that requires one, eg with vulnerable people or security.
  4. Get employment insurance – you need employers’ liability insurance as soon as you become an employer.
  5. Send details of the job (including terms and conditions) in writing to your employee. You need to give your employee a written statement of employment if you’re employing someone for more than 1 month.
  6. Tell HM Revenue and Customs (HMRC) by registering as an employer – you can do this up to 4 weeks before you pay your new staff.
  7. Check if you need to automatically enrol your staff into a workplace pension scheme.

(July 2016 Question 1)

I've just taken on my first employee do I need to give them a contract?

As soon as someone accepts you job offer they have a contract with you. An employment contract doesn’t have to be written down, but it makes sense to record what was agreed. It should set out the employment conditions and the employee’s rights, responsibilities and duties.

Employees and employers must stick to a contract until it ends (e.g. by an employer or employee giving notice or an employee being dismissed) or until the terms are changed (usually by agreement between the employee and employer).
If you have an employment contract in place we can look at it and tell you if it is legally compliant and robust enough to protect your business. >Simply get in touch to find out more…

What can we do to make sure that our affiliates, subcontractors, etc operate in a way that maintains and enhances our brand reputation?

It is crucial to carry out appropriate due diligence. Ask questions that will uncover things that may pose a risk to your reputation. For example, how do they handle client complaints?

You could oblige them to comply with a code of conduct. In this way you can ensure that your standards are upheld and you could include a clause on dispute resolution.

You could include specific clauses in a set of terms and conditions. However you must beware of ‘liquidated damages provisions’, where a penalty is payable for example for late completion. These should only be used as a genuine pre-estimate of losses which will be suffered by a breach of the contract and not used as a penalty clause, otherwise the provisions may be held to be unenforceable.

From the last Crab Insight I understand that from 6 April 2016 there is a requirement for companies to keep a register of people who have significant control over the company?

  1. Does that mean registered companies and therefore exclude Sole Traders, even those with employees?

  2. There’s also a reference to trusts, I would expect any trustees to be people with significant control – is that correct?

  3. Would senior managers within trusts also be deemed as having significant control?

This question refers to the Small Business, Enterprise and Employment Act 2015 and the amendments it makes to the Companies Act 2006.

In answer to part 1 a company means a company formed and registered under the Companies Act so would exclude sole traders.

In answer to part 2 in terms of trustees within a trust, it very much depends on their role and the extent of their control as defined under the Act. The Department for Business, Innovation & Skills has published draft statutory guidance on determining whether a person is a person with significant control. Essentially if a person has significant control of the activities of a trust, they have the power to direct its policies and activities and that influence enables them to ensure that the trust adopts those policies or activities that they desire.

In answer to part 3 from the draft guidance and regulations it would seem that senior managers would only be caught if they were deemed to be trustees.

In the last Crab Insight there was an article on Auto Enrolment by Reputation Advocate Jane Holland of Total Bookkeeping Services which stated that a qualifying scheme may be required even if there are no eligible workers. Could you give a little more information and explain the circumstances in which this may occur?

Reply from Reputation Advocate Jane Holland
The words used in last month’s article were chosen very carefully. In Automatic Enrolment terms there are three categories of employee;

  • Eligible Jobholder (EJ),

  • Non-Eligible Jobholder (NEJ) and

  • Entitled Worker (EW).

EJs are the only category of employee who will be automatically enrolled at the Employer’s staging date so, if an Employer has any EJs, a qualifying pension scheme MUST be in place.

My article stated that without any EJs, a ‘qualifying scheme may still be required’. An Employer is obliged to provide a qualifying pension scheme, that can be used for automatic enrolment, and pay regular contributions, for NEJs, if they wish to ‘opt in’.

EWs also have a right to join a pension scheme, so the employer must provide one for them if needed, but the employer doesn’t have to pay contributions into it for them.
For full details please go the
Pension Regulator website