Employing a New Member of Staff

Hiring a new employee involves more than just offering a contract — there are specific legal and administrative requirements you must meet before making their first payment.

What is an Employee?

Under UK law, an employee is someone who works for your company under an employment contract. Any individual contracted to work for your business for more than one month must receive either a written contract or written particulars of employment.

This means that anyone performing work for your company is legally considered an employee, and you are required to pay them at least the National Minimum or Living Wage for their age.

Step 1 - Collect Essential Employee Information

Before adding a new hire to your payroll, you must gather certain key details. At Kennedys Accounting, we provide a New Starter Checklist to make this process straightforward. Each new employee should complete this form in full.

The checklist collects the following information:

Full name
Date of birth
Gender
Full address
Start date with your company
Leaving date from previous employment
Total pay and tax paid to date for the current tax year
Student loan deduction status
National Insurance number
Existing tax code

Most of these details can be obtained from the employee’s P45 from their previous role if they were employed previously.

Step 2 – Confirm Student Loan Obligations

As an employer, you are responsible for deducting student loan or postgraduate loan repayments from an employee’s wages if:

Their P45 indicates that deductions should continue
They confirm they are repaying a student or postgraduate loan
HMRC issues Form SL1 or PGL1, and their earnings exceed the repayment threshold

Once this information is collected, it should be added to the New Starter Checklist and forwarded to Kennedys Accounting.

Step 3 – Register the Employee with HMRC

After completing the checklist, Kennedys Accounting will register the new employee with HMRC. Their details will be included in a Full Payment Submission (FPS) when they are paid for the first time.

Each employee must be assigned a unique payroll ID, even if they have worked for your company previously or hold multiple positions under the same PAYE scheme.