New Employer Guide: Essential UK Responsibilities for Hiring Staff

As a new employer, it's essential to understand your responsibilities to ensure compliance with UK employment laws and create a positive working environment. This guide covers the key areas you need to know when you start hiring staff.

Employment Contracts

Every employee must have a written employment contract outlining their terms and conditions of employment. This document protects both you and your employees by clearly defining expectations, rights, and responsibilities, including:

• The employer's name
• The employee or worker's name
• The start date (the day the employee or worker starts work)
• The date that 'continuous employment' (working for the same employer without a significant break) started for an employee
• Job title or a brief description of the job
• The employer's address
• The places or addresses where the employee or worker will work
• Pay, including how often and when (for example, £1,000 per month, paid on the last Friday of the calendar month)
• Working hours, including which days the employee or worker must work and if and how their hours or days can change
• Holiday and holiday pay, including an explanation of how it's calculated if the employee or worker leaves
• The amount of sick leave and pay (if this information is not included in the document, the employer must state where to find it)
• Any other paid leave (if this information is not included in the document, the employer must state where to find it)
• Any contractual benefits – these are benefits the employer must provide
• Any non-contractual benefits – these are benefits the employer may provide but can choose not to
• The notice period either side must give when employment ends
• How long the job is expected to last (if it's temporary or fixed term)
• Any probation period, including its conditions and how long it is
• If the employee will work abroad, and any terms that apply
• Training that must be completed by the employee or worker, including training the employer does not pay for

You can find helpful templates for employment contracts on the ACAS website.

Holiday Pay

Employees are entitled to 5.6 weeks of paid holiday per year, which includes bank holidays. Holiday pay must reflect the employee's normal earnings, including overtime and commission where applicable.

Where we manage your payroll, we will handle your employees' holiday entitlement and payments. We have a guide outlining the available methods of holiday pay calculation here. Don't forget to let us know if any of an employee's pay is Holiday Pay each pay period.

For detailed guidance on calculating holiday pay, visit ACAS or GOV.UK.

Auto-Enrolment Pensions

Under the Pensions Act 2008, employers must automatically enrol eligible employees into a workplace pension scheme (Auto-Enrolment). Eligibility criteria typically include:

• Aged between 22 and the State Pension age
• Earnings of at least £10,000 annually (for the 2024/25 tax year, always check current thresholds)
• Work in the UK

Employers must contribute a minimum of 3% of the employee's qualifying earnings, while employees contribute a minimum of 5%.

We will assess your workforce each pay period and enrol any eligible employees into your pension scheme. Employee pension contributions are withheld from their wages and held by the employer. The employer then pays this onto the Pensions Provider, along with the employer's contribution, each pay period.

Employee Opt-Out

Employees can choose to opt out after being enrolled. They must not be coerced or advised to do so, and should only opt out if they genuinely wish to. Anyone that opts out via the NEST website will typically have their contributions refunded, but this opt-out needs to be done as soon as possible after enrolment.

For more information on opting out, you can visit NEST Pensions.

Learn more about auto-enrolment on GOV.UK.

Right to Work Checks

Before hiring, you must verify that your employees have the legal right to work in the UK. This involves checking their identification documents and maintaining records. For comprehensive guidance, refer to the GOV.UK Employer's Guide.

Payroll Taxes (PAYE & National Insurance)

Each pay period, you will deduct taxes owed by your employees from their pay, including National Insurance and PAYE.

You need to hold onto these taxes and pay them to HMRC each quarter.

Along with the taxes you hold for your employees, you may also have to pay Employer's National Insurance at the same time.

For every pay period we process, we send you an Employer's Summary, which details the amount of deductions you need to set aside. Each quarter, we will send you a P30, which outlines how much you need to pay to HMRC, the reference to use, and when it needs to reach HMRC by.

Please see our Running Your Business guide for further explanation on tax payments.