Taking on a new employee
When you take on a new employee you will need to gather some information from them and record it somewhere safe. You will also need to decide how often to pay them.
What is an employee record?
Where do I get the information about my employee?
What is a payroll number or identifier?
Where should I keep my employee records?
Do I need to give a copy of the record to my employee?
How often should I pay my new employee?
An employee record is where you will keep all important information relating to an employee. It will include your employee's:
- start date
- forename(s) and surname
- date of birth
- National Insurance number (NINO)
- payroll number or identifier (ID), if you use one
- tax code
- Student Loan details, if applicable.
You may decide to hold other details in a file too, such as details of any known disability or emergency contact details. Follow this link to GOV.UK for more information about the data an employer can keep about an employee.
There is some information about your employee that you must keep by law for a certain amount of time – for example specific payroll records for HM Revenue & Customs (HMRC). There is a further, more detailed, section on such record keeping obligations in our website here.
It is vital that you make sure your employee’s forename and surname are spelt correctly in your records. You should also never make up a date of birth or National Insurance number (NINO). Therefore to make sure that your records are accurate, wherever possible verify your employee’s personal details from an official source such as birth certificate, passport or official documentation.
We look at two very important aspects of this employee information in this section of the site. Click the links below to find out more:
A lot of the information will be on the P45 that your personal assistant should bring with them from their previous job. This is a form that is given to an employee when they leave a job.
If they do not have one or did not work before starting with you, then you will have to collect the details separately and ask them about their employment situation before they joined you – this may be their first job since leaving school or they may have another job which they plan on keeping at the same time as working for you.
If you have more than one employee, it may be useful for your records to use some kind of numbering system – such as your first employee would be “1” and a second one “2” and so on. This may help to assist with identifying your employee.
You will need to ensure you keep the employee records you are required to hold by law, somewhere safe for a specific period of time. See our record keeping section for more on this. You must also meet requirements under the Data Protection Act to keep all data held about your employee up to date and secure.
You do not have to give them a copy of the records initially, however your personal assistant may have the right to ask for copies of certain data you hold about them under the Data Protection Act. You will have 40 days to comply with a request like this. You can find out more in our record keeping section.
There are no hard and fast rules on choosing a pay period. Employers can essentially choose which pay period is most suitable for them.
Here are some options and associated considerations:
- Weekly. Many employees prefer getting paid weekly because it is the best alignment of work and earnings and can best match an employee’s cash flow needs. It is quite usual to find hourly workers paid weekly – usually on a Friday. On the other hand, as you may have to submit information to HMRC every time you pay your employee, it could mean you spend a lot of time on payroll administration.
- Monthly. A monthly pay period means that you only have to run payroll and submit information to HMRC once per month. It is a simple system which helps everybody involved avoid problems with things like ‘week 53’ payments – see below. However, it can put a financial strain on employees, as they only get paid once per month (this will usually be on the last working day of the month).
- 4-weekly. As many direct payments are received on a 4 weekly basis, a 4 weekly pay period can help care and support employers manage their budget more easily. However it does not coincide with a calendar month, which can confuse employees.
Week 53 payments
If you pay your employees weekly or every 4 weeks, the way dates fall mean that sometimes you will end up making one more payment than usual to your employees towards the end of the tax year. If you pay your employees weekly this would be a 53rd weekly payment, if you pay them four-weekly it would be a 14th four-weekly payment.
These extra payments are known as 'week 53 payments' (or week 56 for four-weekly paid employees).
If you use payroll software, such as HMRC’s Basic PAYE Tools, week 53 payments are handled automatically. Otherwise, guidance is available in the CWG2 Employer Further Guide to PAYE and NICs, under ‘Week 53 payments’.
On these ‘week 53’ type occasions HMRC allow employers to give the employee an extra proportion of personal allowance so that the employees take home pay is not adversely affected. This means that over the tax year, the employee receives more than the personal allowance for the year. Once the tax year ends, HMRC will take steps to recover the extra personal allowance given to the employee and will send them a P800 calculation. The resulting underpayment of tax is then collected through an adjustment in the following year’s tax code allowing the underpayment to be collected in smaller, more manageable instalments across the tax year.
When this happens employees often complain to HMRC and the employer is accused of failing to operate PAYE correctly even though they have deducted tax in accordance with the PAYE regulations.
HMRC are working to come up with a solution to this long standing problem. In the meantime, if you expect that you will be making an extra ‘week 53’ type payment in the tax year it may be helpful if you explain the situation to your employees.