How to employ someone in a limited company

how to employ someone in a limited company

Congratulations first of all! If you are researching guidance on employing a member of staff, your business must be growing and/or you are investing in future growth.

It can be very daunting employing your first employee, as you need to make sure you are fully compliant and up to date with your duties and obligations as an employer.

Here at Ascott Blake, we have an HR arm to the business which can assist you with employment contracts, employment law, and advice on what you need to know and do when looking to employ someone.

We can also offer assistance when it comes to paying your permanent employees and the regulations around this.

To find out more about the services we offer, take a look at our informative article below.

Taking on staff in your limited company? Follow our guide for advice:

We have put together a top level guide which you can use as a checklist once you have made the financial decision to employ your first member of staff.

Our top tips:

  1. Take time to decide what type of skills you are looking for. What is really going to add value to your business. We always recommend writing a job description as job descriptions help to set clear guidelines of what is expected from the person carrying out the role and provides full details of the job title and responsibilities.
  2. Decide on the basic pay your small business can afford as an annual salary. You must ensure that it meets the national minimum wage.
  3. Make sure your workplace or office space is safe and accessible for employees.
  4. Get employer’s liability insurance in place just incase someone becomes injured or ill whilst at work.
  5. Ensure you are aware of the applicable legislation around employee and employment rights. This includes: holiday; minimum wage; national insurance contributions; statutory sick pay; maternity and paternity pay.
  6. Make sure that you plan your hiring process. Advertise your role to attract your new employee with an employee’s salary and benefits. There are many low cost options you can use for your recruitment process, including: free job sites; social media channels; trade magazines and recommendations. If it is a specialised role, then you may want to invest in hiring a recruitment agency. It is important that you review their terms and conditions as well as their fees, before you go ahead and instruct them.
  7. Research guides can assist you with the selection and planning your interview process.  Remember the interview process is where the employment relationship starts. It worth spending time on this process as it will save you time, money and stress in the future if you get it right at the start.
  8. When you make an offer, ensure you are in a position to provide an employment contract to your permanent employee or written statement, and carry out any other relevant checks, including criminal record checks. The contract should state any probationary periods as well as a notice period for both parties when terminating employment.
  9. Check the chosen applicant has the right to work in the UK as part of your job offer.
  10. Carry out employment reference checks for all new employees.
  11. Speak to an accountant to set up a PAYE, payroll software and workplace pension scheme and make sure that you have a full understanding of your legal requirements as an employer.
  12. We always recommend that you contact an accountant if you would like advice on hiring contractors or self-employed staff.

What payroll software do I need when hiring staff in a limited company?

When limited companies become an employer, they have many options when it comes to selecting payroll software.

Most accountants, such as Ascott Blake, run an outsourced payroll service, so it is worth speaking to your accountant to understand their charges and how they might manage this process for you.

If you are looking to manage this internally, it is recommended that you research systems and invest in book demonstrations.

If you are looking to run your own payroll, it is essential that you understand what HMRC require for both set up and on a monthly basis, so that you are fully compliant.

Ascott Blake can set up and register your PAYE scheme for you. We manage your weekly, bi-weekly and monthly payroll and ensure you are HM revenue compliant.

Do I have to give my employee a pension?

All employers must offer a workplace pension. This is required by law, and both you as the employer and the employee must make contributions.

At Ascott Blake we can help you set up a pension scheme and ensure you send the correct communication to your employee.

Can I be an employee and have a limited company?

Yes, you can be an employee and have a limited company at the same time although you have to be paid in through an appropriate method.

A Director can either be paid by PAYE (Pay as You Earn) or through Dividends.

When it comes to making this decision, we recommend that you speak to an accountant.

Do you have to be a limited company to employ someone?

You do not have to have a limited company to employ someone.

Sole traders can also recruit employees. Sole traders are always self employed workers, although they can employ other people, they cannot employ themselves. This is because a limited company is classed as a separate legal entity.

So, a limited company can have an employment contract with its own company director.

If you are a sole trader looking to employ someone, you still need to follow the steps outlined above in order to understand your responsibilities and the employment laws surrounding employing someone else.

What type of employment contract should I use?

There are several types of employment contracts you might want to consider using when you employ a member of staff.

Once you have reviewed your requirements and know what you are looking for, you have several options available to you.

The main types of contracts are:

  • Permanent contracts for full time or part time employees
  • Fixed term contract
  • Zero hours contract
  • Apprenticeship contracts

At Ascott Blake we offer a fully outsourced HR service and can help you decide what contract may be best for your business, and can even assist in producing bespoke contracts especially for your needs.

What holiday are employees entitled to?

There are statutory annual leave requirements which state the legal minimum amount of paid leave that employees are entitled to, which are in line with The Working Time Regulations 1998. These regulations also cover working hours and rest breaks.

Employees are entitled to 5.6 weeks’ paid annual leave per year. This will be pro rata for part time employees. You can either clarify this entitlement in days or hours. As this can sometimes be complex, at Ascott Blake we can help you with this to ensure you are compliant.

It is important to track your staff holiday via an internal process.

It is also good practice to detail any set rules about the length of holiday employees are entitled to take in one instance; times of the year it might not be suitable to take leave due to the nature of the business; times of the year holiday is mandatory ie. Christmas shutdowns, etc.

There are HR systems which can be used to track and manage holiday, sickness and keep confidential HR files all in one place.

At Ascott Blake we can advise you on internal processes and recommend systems which make this whole process easier to manage.

What employment checks should I carry out?

It is essential that prior to making any potential employee a job offer, that you check to ensure that they are eligible to work for you in the UK.

This will require you to check the applicants original documents. You will need to take a copy and record the date you made the check. An example of employee identification would be a valid passport.

Our HR specialists at Ascott Blake can go over this with you to ensure you are fully compliant.

Once an offer of employment is made, and you have the employees written authorisation, employment references can be sought.

Depending on what role the employee will be carrying out, may require you to also undertake DBS checks.

Why choose Ascott Blake?

At Ascott Blake we are on hand to help you through the recruitment process. From assessing your accounts to check that you afford a new hire, to running your employee payroll and making sure that you are fully compliant throughout the recruitment and onboard process, our qualified accounting team can provide you with everything your business needs.

For more information on our HR services and solutions, contact Ascott Blake today.


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