Getting started: becoming an employer
Becoming an employer can seem daunting but the key is to get the basics right. This guidance provides information to parishes on how to get started, including payroll and pension scheme obligations and HR policies and processes.
- You will need to tell HM Revenue & Customs (HMRC) if you are registering as an employer – you can do this up to 4 weeks before you pay your new staff. Alternatively, you may wish to use an outsourced payroll agency- further details about this can be found later on.
- Arrange insurance – you need employers’ liability insurance as soon as you become an employer.
- Decide how much you are going to pay people- you must pay your employees at least the National Minimum Wage, preferably you would pay them the London Living Wage
- Ensure that you know how to check if someone has the legal right to work in the UK
- If you are going to employ staff who will require a DBS check (e.g. If they are carrying out Regulated Activity with children or vulnerable adults), ensure that you are registered with the Diocese for this to happen.
- Have the details of the job ready to send in writing to your employee. You need to give your employee a written statement of employment if you’re employing someone for more than one month.
If you decide to run your own payroll function you will have a number of legal obligations to comply with:
Pay as You Earn (PAYE) and Real Time Information (RTI)
As an employer you are now required to register with the HMRC and inform them of the details of payments made to your employees at the time or before you pay them. HMRC are calling this Real Time Information (RTI). Reporting duties vary according to the level of earnings involved.
A comprehensive guide to what churches need to do is available on the Parish Resources website
Additional guidance is provided in a briefing note from Stewardship.
What else is involved in operating a PAYE system?
- calculating and deducting PAYE Income Tax from an employee’s pay
- deducting employee’s National Insurance Contributions (NICs) from payments of earnings you make to your employees
- paying employer’s NICs on those earnings to HMRC
- recording the above deductions on the employee’s P11 Deductions Working Sheet or equivalent record
- showing the deductions of tax and employee NICs as separate items on the employee’s payslip
- You have to pay all of these deductions to HMRC within set time limits.
Using a payroll agency
The PCC should consider using a payroll agency if it does not have personnel available to carry out the regular processing of information required by HMRC.
One agency familiar with churches and charities is Stewardship.
What do we need to pay?
National Minimum wage
You must ensure you pay your workers at least the national minimum wage (NMW). The rate of the NMW varies depending on the worker’s age and the amounts normally change each year. For the most up to date rates please visit the HMRC website.
Ideally, you should look to pay the London Living Wage, an hourly rate set independently and updated annually which is calculated according to the true basic cost of living in the UK. For further information please visit the Living Wage website or the Church of England website.
Statutory Sick Pay
Under certain conditions, you may have to pay an employee statutory sick pay (SSP). This is the minimum level of payment you should make to an employee who is off work through illness – however, you may entitle the employee to more than this.
You must pay SSP to employees who cannot work because of illness or disablement for four or more days in a row, including weekends and holidays.
It is payable for the days an employee normally works in a week – these are called qualifying days. An employee is entitled to receive SSP for a maximum of 28 weeks in any one period of sickness, or linked periods of sickness. A linked period of sickness is where the gap between individual periods of sickness is less than 8 weeks. You must deduct income tax and NICs where appropriate.
Statutory maternity, paternity and adoption pay
An individual who becomes a parent, including through adoption, may be entitled to statutory maternity, paternity or adoption pay.
To qualify for any of these payments, the individual must be employed by you. For further details see the Family Friendly knowledge base articles.
Benefits in Kind
Not all benefits are taxable, and some taxable benefits are treated differently from others.
- Some benefits, such as living accommodation, are taxable whenever they are provided to an employee.
- Other benefits, such as cars and medical insurance, are taxable only if they are provided to employees earning at a rate of £8,500 a year or more.
- Non-taxable benefits include drinks and refreshments at work
If you provide a taxable benefit to an employee there are ways to report it to the HMRC. For comprehensive information please see their website.
Pension scheme requirements
There is now a requirement for all UK employers to automatically enrol certain members of their workforce into a pension scheme and make a contribution towards it. Even if you already have a scheme, you will still have some new obligations to meet.
The main things you must do are:
- provide a qualifying scheme for your workers
- automatically enrol all eligible jobholders into the scheme
- pay employer contributions for eligible jobholders in the scheme
- tell all eligible jobholders that they have been automatically enrolled and they have the right to opt out if they want to.
- register with the Pensions Regulator and provide details of the scheme and the number of people enrolled
There are phasing in dates so you may not have to act straight away, however you should find out your staging date now and prepare.
For full information please visit the Pensions Regulator website or call their helpline on 0845 600 1011.
Prevention of Illegal working
You will have an obligation to ensure that any new employees, as well as your existing ones, have the right to work in the UK.
In order for you to verify the candidate’s identity, the Home Office has produced a list of suitable documents as well as guidance on what copies to keep and how long for. This can be found here.
Job offers should not be confirmed until you have seen documentation that proves to your satisfaction the applicant’s right to work in the UK.
If you do have any existing employees you should ensure that you have copies of their documents on file.
You should do this even if you have known the individual personally for a long time. It is surprising how many people think they are eligible to work in the UK when they are not! If any irregularities are found with your existing employees then we suggest that you contact the HR department at the Diocese immediately. You may need to terminate employment.
Sponsoring an individual under the Home Office Points Based System
Your parish should only seek to employ someone who does not have the right to work (and therefore sponsor them under the Home Office points based system) if it can be shown that there are no suitable applicants who already have the right to work in the UK. If you wish to employ someone from outside the EU who currently has no right to work in the UK, please contact LDF HR to discuss the “points based” sponsorship process.
It is the PCC’s responsibility to ensure that it has appropriate insurance in place.
Employer’s Liability Insurance covers a parish for any accident that happens to an employee or authorised volunteer (not automatically) whilst working at the church, which proves to be due to the negligence of the Parish. All employers are normally required to have this cover.
There are also other insurance policies which you may need to consider having including Public Liability Insurance.
It is important that you know what you are and are not covered for and when you are required to inform your insurer of any changes in circumstances, for example, some insurers will ask you to inform them of any pending redundancy situations, as failure to do so could invalidate any claim the PCC make.
Safer Recruitment’ practices are those which ensure reasonable care and caution are exercised to minimise future risks.
Parishes should develop and apply robust recruitment procedures, including checking identity and right to work in the UK, conducting a DBS check, confirming qualifications and references and enquiring into career history.
Please see the Safer Recruitment section of the Diocese’s Safeguarding policy and the Recruitment article.
There are several documents and policies which you should have written down not only to ensure that legal obligations are met, but also to ensure best practice.
The main documents and/or policies which you may need to have are:
Do we have to have a full Health and Safety policy?
A health and safety policy sets out your general approach, objectives and the arrangements you have put in place for managing health and safety in your Parish. It is a unique document that does not have to be complicated or time consuming. It says who does what, when and how and informs staff of your commitment to implementing and monitoring your health and safety controls. If you have five or more employees, you must write your Health and Safety policy down.
As well as a policy, there are also other steps that you may be required to undertake according to the Health and Safety Executive body (HSE). The HSE have produced this helpful Health and Safety Guide, which includes a template policy.
What should we ask our employees to do if they are off sick?
It is important to give written instructions as to what employees should do if they are ill or late for work. You should detail the name and contact number of the person who they should inform in the event of not being able to attend work and by which time on the day in question they need to inform them by.
You need to state whether you require them to complete a self certification form on their return (normally for the first seven calendar days) and when you require them to have a Statement of Fitness for Work (Fit Note) (normally if the employee is absent for an eighth day and beyond).
If you plan to write an absence and sickness policy, there is further information available from the government website.
You also need to make clear what your sickness remuneration policy is- will you just pay statutory sick pay or will you supplement this so that the employee receives full pay? If you choose to pay full pay for a certain period of the absence you must think carefully as to whether your Parish budget can actually afford this. Details of sick pay entitlements should be included in the written Contract of Employment.