There have been a lot of rule changes recently on what to do when a new employee starts so here is an update on important issues.
You are now obliged to collect the following information for ALL new employees – even casual workers; if this information if not on payroll submissions to HMRC then the forms will bounce:-
- Full legal name – letter & punctuation perfect
- Address including postcode
- Date of Birth
- National Insurance number (there is a service we can use to trace this if unknown, and if they have not got one then they will need to register with HMRC in order to get one, this will attending a face to face meeting, with their passport)
- Current Gender
There is an obligation on employers to check the ID of all new employees. It is a good idea to take copies of 2 documents that you have checked as proof you have done this e.g. Passport, driving licence, birth certificate, marriage certificate, utility bill, letter from tax man.
Entitlement to Work in the UK
There are now big £10,000 fines for employing illegal workers so make sure you have checked your new employee’s status e.g. work permits, Visas, etc. if they are not UK citizens
You are obliged to pay at least the minimum wage for expected hours of work with up to £20,000 fine per breach. Rates change on the 1st October annually but are currently:-
- £6.31 – the main rate for workers aged 21 and over
- £5.03 – the 18-20 rate
- £3.72 – the 16-17 rate for workers above school leaving age but under 18
- £2.68 for apprentices under 19 or over 19 and in first year of apprenticeship
This is for cash wages – none of this can be as benefits in kind e.g. accommodation must be on top.
All students and Saturday staff must be treated as ordinary workers, even if they are just working for school holidays or a few hours a week. The separate student category ceased on 5th April 2013.
There is an obligation to give all employees paid holiday – 28 days per annum if the employee works 5 days a week; approx. 1 hour for every 8 hours worked if employee is a casual worker. This is holiday that must be paid and taken – there is no option for pay in lieu of holiday except on leaving employment.
The EU have just clarified that holiday pay must be based on actual wages paid – not contracted rates i.e. to all staff and including bonus and overtime payments.
There is no reason why an employee cannot have two jobs. Each gets a separate allowance for National insurance, but you only get one income tax allowance. This may be split between jobs, but the employee must ask HMRC for this, otherwise the second job will get no allowances.
Wages must be adviced to HMRC on or before payday – so make sure you set up a system that will allow this e.g. overtime up to 20th will be adviced to the payroll department so that reporting and payment can occur at the end of the month.
Tax and national insurance due on the wages is also based on payday not date work was done.
Within 2 months of starting an employee must receive a contract of employment detailing terms – there are a few compulsory items to include in this “principal statement”– do visit the Gov.UK website for current details.