What is UK new hire paperwork?
UK new hire paperwork is the set of forms and registration that employers must complete when hiring a new employee. In the United Kingdom, these forms include the PAYE or P45 and copies of the new employee’s work permits. The forms collect information about the employee, their work eligibility, and other key information to inform agencies, such as the Her Majesty’s Revenue and Customs (HRMC), about new employees.
Properly onboarding a new employee is critical in the employee’s journey with the company. The onboarding process is where the company makes its first impression. It is also a key tool in helping set the expectations of the employee’s experience with the company. Hiring managers and leaders should ensure that their company’s onboarding process is smooth and sets the employee up for success.
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When does UK new hire paperwork need to be completed?
Employers must complete new hire paperwork for every employee. This should be done prior to the employee’s first payday. HR Managers can have employees fill out the necessary forms on their first day of work.
Getting set up – before hiring your first employee
As a new employer, there are three key areas that you will need to set up before hiring your first employee. These include registering as an employer with HMRC, understanding your pension duties, and obtaining liability insurance.
First, employers must register with HMRC as an employer and set up Pay As You Earn (PAYE). This must be done no earlier than two months before you begin paying your employees. As per the gov.uk website, it can take up to five working days to complete the registration for a PAYE reference number. Thus, employers should register for their PAYE reference number as soon as possible.
Employers will also need to understand their pension duties. The Pensions Act 2008 states that certain employees must be automatically enrolled into a workplace pension, and employers must contribute to the scheme. Employees between the age of 22 and the state pension age and who earn more than £10,000 per annum must be automatically enrolled. The Pensions Regulator website contains a guide for employers who are hiring new employees for the first time. Employers will also need to complete an online declaration stating that they have performed automatic enrolment.
Finally, employers need to obtain liability insurance for a minimum amount of £5 million. You should obtain insurance from an authorized insurer; you can contact use Financial Services Register to verify whether your insurance provider is authorized.
Verify a new employee’s legal status
Prior to making an offer, employers must verify the candidate’s legal work status for the UK. Employers can do this through the UK Government’s website, which provides a step-through quiz on eligibility.
New employees are to produce immigration documents demonstrating their right to work in the UK. Employers should make copies of these documents and note the date that these documents were verified. The copies should be stored with the other UK new hire paperwork.
If necessary, perform a background check
Depending on the employer and nature of employment, the new employee may have to undergo a DBS check, which is a criminal record check. This is applicable for new employees working with children in schools and nurseries. It is also applicable to all employees working at hospitals, clinics, financial services institutions, and or in law firms. Employers can request a DBS check online through the gov.uk website.
Provide employee with the written statement of employment
For employees who you will be employing for more than one month, you will need to provide them with a written statement of employment, or otherwise known as an employment contract. This written statement of employment helps set the employee’s expectations by outlining the details of the job and the terms and conditions. Learn more about creating a written statement of employment on Gov.uk’s website.
Inform HMRC about new employees
When hiring new employees, you will need to inform the HMRC. This is applicable for any employee earning more than £116 per week (or £503 per month). They need to register as for PAYE. Employers register their new employees through HMRC approved payroll software by submitting Full Payment Submission (FPS).
The HMRC will determine the amount of tax and National Insurance that they need to withhold for the employee. This can be done by using the employee’s P45, which is provided by their previous employer. If the employee does not have a P45, then they can follow the New Starters checklist on the Gov.uk website.
You will need to obtain the new employee’s information to determine their tax code. This can be done through their P45, which the employee’s previous employer provides.
Enroll into the workplace pension scheme
The last step in UK new hire paperwork is to verify whether or not you need to enroll the new employee into a pension scheme. Any new employees over the age of 22 but under the state pension age, and who is being paid more than £10,000 per year will need to be automatically enrolled into a pension. Employees can also request to participate in a pension scheme; employers cannot refuse.
From there, you will deduct pension contributions from the employee’s pay and deposit them into the scheme. Employers will also make contributions to the pension on behalf of their employees.
- Businesses planning to hire employees should register with Her Majesty’s Revenue and Customs (HMRC) for a Pay As You Earn (PAYE) reference number; this number is for informing HMRC about new employees.
- Employees earning over £116 per week must register with PAYE to have their income tax and insurance withheld.
- New employees also need to be enrolled into a pension scheme if they are over the age of 22 but under the state pension age and or if they request.
Professional Leadership Institute (PLI) is an educational website providing professionals from all types of businesses with practical education in human resources and leadership. To keep evolving your leadership toolkit, additional PLI resources below will be useful.