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When employing someone in the UK, there are five key legal issues employers must comply with. We explore what those are below. 

1. Check the employee has the legal right to work in the UK

Employers must ensure an employee has the legal right to work in the UK by checking their original identification documents, as prescribed in the Home Office guidance, and taking copies for record-keeping purposes. If the UK Border Agency investigate the employer and discover they have not properly completed the necessary checks, the employer can be fined up to £20,000 for each illegal worker.  

2. Provide a written statement of employment terms and basic policies

Employers must provide a written statement of terms and basic policies to an employee or worker no later than the first day of employment. The written statement must at the least contain certain particulars of employment set out in legislation, including the names of the parties, dates of employment, pay, hours, holiday entitlement, notice, benefits and training. However, it is also crucial to ensure that the terms of employment meet the necessary purpose for which the employee is being recruited, and also protect the commercial interests of the employer.

If an employer fails to provide this statement or the policies, the employer can be held liable for a penalty of up to four weeks’ gross pay per employee. 

3. Provide a data privacy notice 

All employers operating in the UK must comply with the Data Protection Act 2018, which sets rules concerning the collection, use and sharing of personal data belonging to individuals. This means that an employer must provide any employee with a privacy notice before they commence employment. The notice sets out what personal data belonging to the employee will be collected, what it will be used for and what lawful reason under the legislation they have for doing so. 

A failure to comply with the Data Protection Act 2018 can lead to fines of up to 4% of global annual turnover or £20, (whichever is greater) being imposed by the Information Commissioner’s Office.   

4. Comply with the national minimum wage

All employers must pay their UK based employees and workers at least the national minimum wage (NMW). However, paying the NMW is not just about paying the hourly rates set by Government – it is a calculation based on many factors. 

If HMRC inspects an employer for NMW compliance and it identifies any underpayments, it will issue a notice of underpayment requiring the employer to repay any underpayments for all current and ex workers for the last six years. The employer would also be issued with a financial penalty of up to 200% of the total underpayment and referred to the Department for Trade and Business for naming and shaming.  

5. Enrol eligible employees into a workplace pension scheme

All employers in the United Kingdom are required by law to automatically enrol eligible employees or workers in a pension scheme which meets certain statutory requirements. Enrolment can be paused by up to three months, subject to certain conditions being met. 

The minimum contributions which must be made are 5% of the employee’s earnings by the employee and 3% by the employer. However, these contribution levels can change depending on the auto-enrolment criteria the employer has selected. It is important to ensure that the contributions made match that criteria. If not, it can result in the employer underpaying pension contributions. 

The Pensions Regulator is responsible for ensuring employers' compliance with their pension auto-enrolment duties. Where employers have failed to comply, the Pensions Regulator has the power to issue fines of up to £10,000 per day. 

If you are considering to employ people in the UK, please contact Jennifer Mansoor or Charlie Barnes for more information.