Your business is expanding and you’re ready to hire new employees – sounds great! Many small companies begin hiring employees before they fully understand the laws and regulations for employment, and that can cause headaches (and fines) down the road.
Before you begin hiring employees, here are some common pitfalls to avoid:
Failing to provide a written statement of employment: all employees in the UK must be presented with a written statement of employment within the first 2 months. The written statement must include the main conditions of employment, job title, how much the employee will be paid, hours of work, holiday time, collective agreement and pension information. In Northern Ireland, disciplinary rules must also be included in the written statement.
Not paying employees the required National Minimum Wage: Minimum wage requirements are based on age group, and failure to pay the appropriate minimum wage can lead to fines for employers. In April 2018 the minimum wage was increased to £4.20 for the youngest age group (16-17 years), up to £7.83 for the oldest age group (25+ years). Employers need to be aware of changes to avoid penalties.
Neglect to inform HMRC of new employee: Every employer must tell HMRC about a new employee or face fines. The employer must submit a Full Payment Submission (FPS) report to HMRC to remain compliant. The FPS contains information you’ve collected for each employee, the tax code, pay and deductions for the employee, and the unique payroll ID for each employee. Incorrect payroll IDs lead to incorrect payroll, so ensuring these documents are accurate is vital to the organisation.
Incorrect Auto-enrolment payments: Every employer must pay 2% of the employees qualifying earnings into a workplace pension scheme. The employer contribution is increasing to 3% in 2019, so it’s important to understand the changes and when they take effect. Employers must deduct pension payments from employee pay each month and add to the pension scheme by the 22nd day of the following month. The Pensions Regulator will charge fines if an employer doesn’t pay on time or pays incorrectly.
To avoid these pitfalls when hiring new employees, you need a payroll partner you can rely on to ensure compliance. Payroll experts ensure compliance, keep track of new regulations, and make sure your employee payroll and pension payments are accurate and on time. Payescape has web-based technology and a CIPP-certified team to ensure your payroll runs smoothly each month. Contact us today to help with your employee payroll, HMRC filing, and auto-enrolment!
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