Small employers – are you aware of the risks?

People who employ domestic staff such as nannies, housekeepers or gardeners often do not consider themselves as employers and may be unaware of their minimum obligations towards their staff.

Recent media coverage relating to auto enrolment pensions has highlighted the lack of understanding by small employers. The Department of Work and Pensions has stated that all employers, regardless of their size must register with them even if their staff do not meet the eligibility criteria for pension payments. Fines of up to £400 will be issued to employers who do not comply.

There are many other factors that small employers must consider when employing staff.

Contract: it is a legal requirement that employers put in place a written document setting out the core terms of employment such as rate of pay, working hours and holiday entitlement.

National minimum wage: employees must be paid at the correct rate, the current minimum hourly rate for employees over the age of 21 is currently £6.70 but the rates change regularly.

Working time: employees must be given adequate rest breaks and will have the right to 5.6 weeks paid holiday a year (currently 28 days including bank holidays for full time staff). The issue of working time can be complicated where staff live on site or spend time “on call” as this can be considered working time.

Statutory sick pay and maternity pay: will be payable to qualifying employees.

Right to work in the UK: employers face fines of up to £20,000 if they employ somebody illegally. Fraudulent passport and visa documentation is on the rise.

Insurance: if you employ somebody to work in your home, you need to ensure that you have adequate insurance to cover illness or injury suffered by the employee whilst at work.

Payroll: you will need to ensure you are deducting tax and National Insurance contributions from the employee and accounting to HMRC.

Termination: perhaps the greatest risk occurs when employers seek to end the employment relationship. Termination will need to occur in line with the employee’s contract and their right not to be unfairly dismissed, particularly if they have been employed for over two years.

If you already employ staff or are considering doing so, then it is important that you seek legal advice to ensure that you are treating your staff fairly and not exposing yourself to the risk of costly claims.