Are you a startup in the process of taking on your first employees? Well, this’ll be of interest then - we asked Serena Manzoli entrepreneur and founder at Wildcat a free legal database for creatives and freelancers, to give us her Employment 101 for startups...
“Your startup is doing well, there’s a lot of work to do and you have thought of hiring someone. You always dreamed to be your own boss, and being someone else’s boss is even better.
As a founder, I guess you find normal to working 24/7 if you need to, skip holidays and even pay time (I do): that’s fine, that’s your company. But when you hire an employee, there are a few things you should keep in mind.
First, you need a contract, that is, terms and conditions of employment. Once you’ve chosen the right person (and within two months from when the work starts) you need to make her sign a contract listing what the job is about, the premises, the pay, the duration...and all the things we’re going to mention now. See also Contract types on Gov.UK
Minimum wage There’s a minimum you must pay your employees, and in the UK is £ 6.50 per hour for the ones aged more than 21 years old. Some perks can be considered into the minimum wage, but with limits. For instance: free accomodation can be included when calculating the minimum wage up to 35.56 £ per week. See also The National Minimum Wage on Gov.UK
Working hours You can work day and night, but your employees can’t. Working hours must be stated into the contract and can’t be more than average of 48 hours a week over a 17-week period. Employee can give this up, but in writing. See also Maximum weekly working hours on Gov.UK
Payroll You have to pay your employee a salary, ok. But you also need to pay income taxes and National Insurance contributions, that you’ll need to pay through a system called PAYE, run by the HM Revenue and Customs (HRMC). Also, you need to provide your employees with a written statement (payslip) where you mention how much you’ve paid him, and the amount of paid taxes and contributions. On the Gov.UK website there is clear information on how to manage the payroll; plus, there are softwares which can help with the calculations and producing the payslip. But it can be quite time consuming, so you may think of paying an accountant for taking care of the payroll. If you can afford it! See also PAYE and Payroll on Gov.UK
You have to pay sick pay to your employees, if they are sick for 4 days in a row (including non working days). Sick pay is 87.55 a week and can be paid up to 28 weeks. Employees need to inform you on the first day of sick leave, fill in a self-certification if they are off sick for less than seven days and send a doctor certificate in case they are off sick for longer.
Holidays You could work non stop, but your employees will also need holidays.They have the right to at least one full day off during every seven, generally on Sunday. Plus, full-time employees are entitled to 5.6 weeks’ paid annual leave per year. If they work on 5 days per week, they are entitled to 28 days per year. If they work part-time, you need to calculate their paid annual leave by multiplying their days of work per 5.6 (example: if they work 3 days a week, you need to multiply 3 per 5.6 = 16.8 days of paid annual leave). See also Holiday Entitlement on Gov.UK
Insurance You must have an employer’s liability insurance with a minimum coverage of 5 millions £ in place: that is, an insurance that covers you in case your employees get injured or ill because of the work they do for you. For instance, if your employee gets electrocuted while plugging in the laptop. I know, it sounds weird but you never know. It’s not important if it was your fault or not, as long as the injury happened because of the work. But make sure that health and safety rules are respected, or your insurer may ask you pay him back. See also Employer’s Liability Insurance on Gov.UK and Employer’s Liability on the Hse.gov.uk
Mothers have right to 52 weeks of leave and 39 of statutory maternity pay if they’ve worked for you at least 26 weeks. It’s up to you to pay SMP (which amounts to 90% of the pay), but you can recover up to 92% of it from the HRMC. Dads have right to one or two week of Ordinary paternity leave (90% of their pay) and can take off up to 26 weeks’ paid Additional Paternity Leave - but only if the mother returns to work. From April 2015 the shared parental leave scheme will also be eligible. See also Shared parental leave on Gov.UK
Something else? Yes. You need to know a couple of things on Health and Safety at work, Dismissing people (you’ll need to, one day), Trade Unions, Pensions, and other things you would never have thought about. There’s a whole section on Gov.UK titled Employing people, have a look!”