Avoid hefty fines by meeting the four legal requirements outlined here


It’s an exciting time when your business gets to the stage of employing additional staff; as your success grows, so must your business.

However, there are lots of things to consider when taking on an extra person in your business – and not just whether they are the right person for the job. There are lots of legal implications of employing staff and it’s important to educate yourself to avoid any hefty fines.

1. Don’t discriminate

Your duty as an employer comes into play as soon as you decide to interview people for a position. You must advertise the interview conditions if they could affect someone’s ability to attend – for example, is the building wheelchair-accessible? Other than in exceptional circumstances, the law forbids you from discriminating on gender, race or age and you must treat all candidates equally.

During the interview you should not ask any non-relevant personal questions, such as whether they have, or plan to have children, and the role must be described accurately to avoid any allegations of misleading information. This will also help you find the right candidate for the job and one who is happy working with you.

2. Check applicants are legally entitled to take the job

At this stage, you must also check whether your desired employee is legally allowed to work in the UK; failure to check this vital information could leave you with a £10,000 fine per employee, whilst wilfully employing illegal workers can land you with a two-year jail sentence.

A Disclosure and Barring Service Check (formerly a Criminal Records Bureau Check) must also be carried out if the role involves working with children, young people, or vulnerable people in a position of trust. This check is often required for insurance purposes, so you may not be covered if you fail to complete this action.

3. Have a legal contract drawn up for you

Once you have chosen your new employee, you should arrange for a contract to be drawn up detailing their job title, working location, salary and working hours as well as any holiday or sick pay policies.

This should be done by a professional outside of your business. You must also register with HMRC as an employer and arrange for PAYE deductions to be made from the payroll as appropriate. Failure to do so can cause problems later down the line.

4. Take out the necessary insurance

Another legal requirement for employing staff is that you must hold employer liability insurance worth at least £5m for each worker. Without this you can face large fines of up to £2,500 for every day that you are not covered.

Employment Law Protection is also worth considering; although it is not a legal requirement, it is strongly recommended as any employment disputes that you may potentially enter into with your new employee could end up costing you a significant amount of money should you end up in court. Additionally professional indemnity insurance may also be a business requisite. This form of insurance covers your legal costs and expenses if you are accused of providing inadequate advice or services that result in lost income for your client.

As an employer, it is important to be aware of the legal implications of employing staff and the different responsibilities that you have throughout the whole process from recruitment to termination of employment, and you should seek advice if you are unsure at any stage – it is better to be safe than sorry.