Payroll
6 min read
Hiring your first employee without breaking payroll
The hiring part is the fun bit. The month around it has four dates and three registrations, and missing any of them is more annoying to fix than to get right.
Register before the first payday
You need to be registered as an employer before the first payment, not after it. The registration itself is quick, but the reference you need in order to file can take up to two weeks to arrive. Start it the day you agree on a start date.
If the reference has not turned up by payday, you still pay your employee on time. You file late with an explanation, which is fine once and awkward twice.
The four dates in month one
Payday is the one everyone knows. The other three are the filing on or before payday, the payment of tax and National Insurance by the 22nd of the following month, and the pension assessment in the first pay period. None of them are hard. They are just easy to forget while you are busy actually onboarding someone.
“Nobody has ever been fined for hiring someone. They get fined for filing after they paid them.”
Pensions, sooner than you think
Automatic enrolment duties start with your first employee, not once you have a few. You assess whether they qualify, enrol them if they do, write to them either way, and set up contributions from the first pay period.
Duties begin on the employee's start date, not later
You must write to them within six weeks, even if they do not qualify
You cannot encourage anyone to opt out, in writing or otherwise
A declaration of compliance is due within five months
Contracts and the paperwork
Written terms are due on or before day one. Keep a copy of their right to work check, their start date and their National Insurance number, and give them a payslip every single time you pay them, including the first one.
A payslip is not optional, and it is not the same as a bank transfer reference.
Employee or contractor
If someone works set hours, uses your equipment, and cannot send a substitute, they are almost certainly an employee, whatever the invoice says. Getting this wrong is the expensive version of this mistake, because the tax and National Insurance get reclaimed from you, not from them.
If you are not sure, ask before the first payment rather than after the first year. It is a ten-minute conversation, and it is much cheaper than the alternative.
