Overwhelmed trying to figure out where to begin to become an employer, specifically for domestic staff? Fortunately, you can follow this helpful employer’s guide to know how the whole process works. It will save you loads of time and ensure you are fully prepared to know what to do when becoming an employer.

Employment Contracts

A full-time/ part-time contract is your primary type when becoming an employer. A contract should consist of four pillar terms. For example, these are:

• Employment conditions
• Rights
• Responsibilities
• Duties

When drafting an employment contract, it is best to have it written down and verbally agreed upon between the employer and employee. The terms should also be in an employee handbook and an offer letter from the employer. Additionally, it is essential to state that the employee is paid at least the minimum wage. 

Furthermore, for more information on what makes a good contract, please visit: https://www.gov.uk/employment-contracts-and-conditions/contract-terms 

You must include a written statement in your contract. The written statement consists of two parts: the principal statement, the main part, and the wider statement.

You need to issue the principal statement on the first day. For instance, it should consist of:

• Names
• Location(s)
• Terms
• Work hours
• Sick days
• Conditions
• Obligatory training
• Benefits 

You must issue the wider statement in the first two weeks. For example, it should consist of:

• Pension
• Collective agreements
• Other training
• Disciplinary/grievance procedures  

If you need more information regarding employment contracts, please visit: https://www.gov.uk/employment-contracts-and-conditions

In addition, for more information regarding the different types of contracts, please visit: https://www.gov.uk/contract-types-and-employer-responsibilities 

Payslips

An employer must provide their employee(s) with payslips. You can use payslips as proof/records of your earnings, tax paid, and any pension contributions you have made. 

Employers can also choose whether they give their employee(s) printed or online payslips. You must provide payslips for the employee(s) before or on the day they get paid.

Your payslip must show:

• How much you earned, both before and after deductions are made
• The amount of any deductions that may change each time your pay, tax and national insurance are good examples
• If your pay varies based on your work hours, show the number of hours you work.

If you need more information regarding payslips, please visit: https://www.gov.uk/payslips 

Maximum work hours per week

 You cannot legally make an employee work more than 48 hours a week as an employer. This amount goes down to 40 hours if the employee is under 18. Employees may work more than 48 hours a week as long as their weekly average is 48 hours per week in 17 weeks. For more information regarding the maximum amount of working hours per week, please visit: https://www.gov.uk/maximum-weekly-working-hours 

For instance, some jobs have exceptions and may have to work more on average. This includes the position as a caretaker. Employees may also choose to work more than 48 hours per week by signing an opt-out form. As an employer, you should include the number of hours to be worked; if it is over the 48-hour limit, it is up to the employee to accept or deny the contract. However, if the employer does not have the employee(s) hours over 48 or specific hours worked in the contract, and the contract has begun, the employee is not required to sign an opt-out agreement. These terms should be set in the employment contract. Moreover, for more information regarding opt-out forms, please visit: https://www.gov.uk/maximum-weekly-working-hours/weekly-maximum-working-hours-and-opting-out 

You need to remember that every employee is entitled to one day of uninterrupted rest every seven days or two days of rest for 14 days. As a result, an employee can only work 12 days consecutively. Another important fact is that employees can work no more than 12 hours daily. We understand this could be a confusing concept, so below, you will find two examples regarding how you can structure your employee(s) work hours.

Example One

The first example is under the assumption each employee will work a 10-hour day

Chart Key: Top row represents the week (out of the above-mentioned 17-week period)

Chart Key: The bottom row is the hours worked  

Employee one:

1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17
70	50	x	70	20	x	70	50	x	70	20	x	70	50	x	70	20

Employee two:

1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17
x	20	70	x	50	70	x	20	70	x	50	70	x	20	70	x	50

Total hours worked:

Employee one: 630 hrs

Employee two: 560 hrs

In this first example, we see that the client has full coverage while satisfying the legal requirements of the employee’s rest. As you can see in the second week, the first employee only works 50 hours due to their required two-day rest period. However, the second employee will pick up those days to ensure that the client is attended to. 

Example Two

For this second example, we have a situation where maybe you need an employee to be at your house 24/7. In this instance, an employee would be living at the residence while working (maximum) 12 hours daily.

Employee one:

1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17
84	x	84	x	84	x	84	x	84	x	84	x	84	x	84	x	84

Employee two:

1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17
x	84	x	84	x	84	x	84	x	84	x	84	x	84	x	84	x

Total hours worked:

Employee one: 756 hrs

Employee two: 672 hrs

As you can see, the employee works 12 hours daily and then sleeps at the employer’s residence. Then, the next week they will switch off with another employee. Furthermore, this continues with the workers alternating every week.

National Minimum wage 

Minimum wage: depends on age, must at least be school leaving age, fluctuates frequently

As of April 2023:

23+: 10.42 pounds

21-22: 10.18 pounds

18-20: 7.49 pounds

Apprentice: 5.28 pounds (entitled to wage if it is their first year or are under 19, after a year, they get the usual minimum wage)

Moreover, if you need information regarding the national minimum wage requirements, please visit: https://www.gov.uk/national-minimum-wage-rates 

Live-In Accommodations: benefits in kind 

If the employee lives with the employer, they gain an offset rate of 8.70 pounds daily on top of their usual pay. Some of this may be deducted to cover accommodation costs. Furthermore, if the deduction is large enough to make the employees pay below the minimum wage, the hourly rate must be increased to meet this.

Accommodation charges can include: 

• Rent
• Electricity
• Gas
• Furniture
• laundry

Moreover, if you need more information regarding living wage/ accommodations, please visit: https://www.gov.uk/national-minimum-wage-accommodation 

Checking your employee(s) ability to work in the UK

You must make sure an applicant can legally work in the UK. To do this, you can:

• Get their share code and check their right to work online
• Check the original documents of the applicant

Consequently, you could face a civil penalty if you employ a worker illegally and fail to check their approved working status. For more information regarding how to complete your work check, please visit: https://www.gov.uk/check-job-applicant-right-to-work 

Employers Liability Insurance

Employers must get employers liability insurance as soon as they become legal employers. Otherwise, you will be fined 2,500 pounds daily if you don’t have EL insurance. Moreover, your policy must cover at least 5 million pounds and come from an authorized insurer. You must display a license upon request from an inspector. As a result, you may want to use an insurance broker to help find the right policy. If you need more information regarding employer’s liability insurance, please visit: https://www.gov.uk/employers-liability-insurance 

Register as an employer

You have to register as an employer before your first payday. For instance, most employers will register with HM revenue and customs (HMRC). You can expect it to take up to five working days to get your employer’s PAYE reference number. It is also important to note you can’t register more than two months before you start paying people. Therefore, if you need more information regarding how to register as an employer, visit: https://www.gov.uk/register-employer  

Payroll

As the employer, you have two options when it comes to payroll:

• Paying a payroll provider to run it for you
• Doing it yourself using payroll software

If you decide to pay a payroll provider, you will still need to keep and record all records regarding your employee(s). Furthermore, for more information regarding what records you need to hold as an employer, please visit: https://www.gov.uk/paye-for-employers/keeping-records 

It is also important to note that as an employer, you are legally responsible for completing all PAYE tasks, even if you pay someone. For more information regarding PAYE, please visit: https://www.gov.uk/paye-for-employers 

If you decide to run payroll yourself, you will need to complete tasks to set up payroll software. You must also be registered as an employer through HM revenue and customs. Moreover, for more information regarding what tasks you will need to complete to run your payroll, please visit: https://www.gov.uk/paye-for-employers/setting-up-payroll 

See an example below:

HMRC

HMRC has free software to use for payroll; find out more in the following link: 

HMRC payroll

When hiring a new employee, you need to tell HMRC by including their details on a Full Payment Submission when you pay them for the first time.

A good payroll document when hiring someone should consist of the following:

• Date of birth
• Gender / Sex
• Address
• Start date
• Name 
• Date they left their last job
• Total pay and tax that current tax year
• Student loan deduction status
• National insurance number
• Tax code
• Starter declaration
• Payroll ID

You can gain this info by asking them or viewing their latest P45 form.

In addition, you must know if you need to pay them through PAYE. 

Consequently, this will be different if they are working only a one-time job or they are from abroad.

Pensions

Setting up your employee(s) pension plan is essential during the payroll process. However, how do you know if you should put an employee into a pension scheme?

Firstly to understand this, you must share information on the pensions act. The pensions act of 2008 requires that every employer put specific staff in a pension scheme and pay into it. This is called automatic enrollment. Despite your job, automatic enrollment applies as long as you meet particular criteria. 

The following criteria are used to determine if your employee(s) should be enrolled on a pension scheme:

• Age 16-21, no matter how much income made, does not have to be enrolled on a pension scheme.
• Age greater than 22- state pension age; if your employee(s) make more than 833 pounds per month (192 pounds per week), you are required to enroll and pay into a pension scheme for your employees.
• State pension age greater than 74- no matter how much income is made does not have to be enrolled into a pension scheme. 

*The current state pension age in the United Kingdom is 66 years old; however, this changes frequently. Furthermore, if you need more information regarding the current state pension age, please visit:https://www.gov.uk/state-pension-age 

Moreover, if you need more information regarding if your employee(s) qualifies to be in a pension scheme, please visit: https://www.thepensionsregulator.gov.uk/en/employers/new-employers/im-an-employer-who-has-to-provide-a-pension 

Annual Leave

Almost every worker in the United Kingdom is entitled to 5.6 weeks of paid holiday yearly. This is also called statutory leave entitlement or annual leave. Most workers who work at least five days per week are entitled to 28 days of paid annual leave yearly. This is the equivalent of 5.6 weeks. However, there are some differences depending on the type of worker you are.

Part-Time Workers: Part-time workers’ annual leave is calculated similarly to full-time workers. The number of days worked per week is taken and multiplied by 5.6. The result is the number of days they are allowed off while paid. Due to the fact they work less, that means they get fewer days off. If you need more information regarding how to calculate part-time employees’ hours, please visit:https://www.gov.uk/calculate-your-holiday-entitlement 

Irregular Hour Workers: These workers get time off for every hour they work. However, this can be a little complicated to calculate. Therefore, there is a tool to help: https://www.gov.uk/calculate-your-holiday-entitlement 

Holiday Entitlement for Employees

Below you will find a simplified table showing what holiday entitlements employees are allowed:

Worker Type                     Minimum Holidays

Most workers that work five days per week	28 days or 5.6 weeks
Part-Time	Multiply work days per week with 5.6Ex: 3 days x 5.6 = 16.8
Irregular Hours	Get time off for every hour they work

It is important to note that the 28 days of paid annual leave is the limit set by the United Kingdom government. Employers are not required to grant you more than 28 days per year. Employers are also not required to give bank or public holidays as paid leave; however, employee(s) could choose to include these holidays in their annual paid leave time for the year. Additionally, if you need more information regarding Annual leave/ holiday entitlement, please visit: 

Annual Leave 

Regarding holiday pay, each employee is entitled to a week’s pay for each week of leave they take. Moreover, a week’s payment is calculated based on the hours someone works and how much they are typically paid for those hours. For example, in the chart below, you will find a chart showing how you should calculate pay for different types of employees:

Type of Work       Pay

Full time/ Part-time	Normal weekly pay
Shift work, fixed hours	Average number of hours worked in a 52-week time span at an average hourly rate
No fixed hours, such as casual work, zero hours contract	Average pay in 52-week time span, only of weeks they were paid

In addition, for more information regarding holiday pay, please visit: https://www.gov.uk/holiday-entitlement-rights/holiday-pay-the-basics   

Sick leaves

In the United Kingdom, sick leave policies are designed to provide employees with time off and financial support when they are unable to work due to illness or incapacity. The primary framework for sick leave in the UK includes Statutory Sick Pay (SSP) and additional sick leave policies that employers may offer. Here’s how sick leave works with some examples:

In the United Kingdom, sick leave policies are designed to provide employees with time off and financial support when they are unable to work due to illness or incapacity. The primary framework for sick leave in the UK includes Statutory Sick Pay (SSP) and additional sick leave policies that employers may offer. Here’s how sick leave works in the UK with some examples:

Statutory Sick Pay (SSP):

• Eligibility: To be eligible for SSP, an employee must meet certain criteria, including earning at least the Lower Earnings Limit (LEL) and providing the necessary medical evidence when required.
• Duration: SSP is typically paid for up to 28 weeks for the same illness or incapacity. It begins after the employee has been off work due to illness for at least four consecutive days, including weekends and holidays. The first three days are known as “waiting days” and are not paid.
• Rate: The rate of SSP is subject to change and is set by the government. As of my last knowledge update in September 2021, the weekly rate was £96.35 (for up-to-date rates, check official government sources).

Example 1: If an employee earns above the LEL and is off work due to illness for 10 consecutive days, they would receive SSP for the remaining 7 days (excluding the initial 3 waiting days) at the applicable SSP rate.

Example 2: An employee earns below the LEL, so they are not eligible for SSP. They may still be entitled to other forms of support, such as Universal Credit or Employment and Support Allowance (ESA), depending on their circumstances.

Employer Sick Leave Policies:

• Some employers offer sick leave policies that go beyond the statutory requirements. These policies may include:
• A higher rate of sick pay than SSP.
• A longer duration of full or partial sick pay.
• Additional benefits or support, such as access to an Employee Assistance Program (EAP) or health insurance.

Example: An employer might offer full pay for the first six weeks of sick leave, followed by SSP for the remainder of the 28-week period.

Reporting and Medical Evidence:
Employees are typically required to inform their employer as soon as possible about their illness and expected return to work date.
Employers may request medical evidence (such as a doctor’s note or fit note) if the absence exceeds seven consecutive calendar days.

Return to Work:
Employees are expected to return to work once they are medically fit to do so. Employers may conduct return-to-work interviews or assessments to ensure a safe and supportive return.

It’s important to note that employment contracts and company policies can vary, so employees should familiarize themselves with their employer’s specific sick leave policy. Additionally, UK employment laws and regulations can change, so it’s advisable for both employers and employees to consult official government sources.