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Being a good employer

Updated 11 April 2022

3min read

Nick Green
Financial Journalist

Being a good employer

Your business is only as good as its people. So if you can’t run it all by yourself, you’ll need the right staff to help you. What’s more, you’ll need to keep them happy. Taking good care of your employees isn’t just the law – it’s essentially if you want to build the best possible team to deliver your goals.

Here’s a summary of your main duties as an employer, covering both your legal obligations and also those that are just good practice.

  1. How should I pay my employees?
  2. Do I need to contribute to my employees' pensions?
  3. What happens if an employee is injured at work?
  4. How can I attract and retain the best people?

How should I pay my employees?

First, make sure you’re offering the right rates for the jobs you need to fill. Do this by looking at similar jobs on the market. You have a degree of flexibility here, but you do need to be up to date with current national minimum wage and living wage rates.

Handling the payroll

You can either process payroll in-house using software, or outsource it to a payroll service or accountant. Outsourcing payroll gives you more time to focus on your core business, and can save money by avoiding fines and not overpaying employees. If you outsource your payroll to a payroll service provider, you need to tell HMRC. Here are some tips on managing PAYE

Do I need to contribute to my employees’ pensions?

All employers with at least one member of staff are required by law to provide and contribute to a workplace pension for their employees. Your employees can choose to opt out, but you have a duty to organise their automatic enrolment onto a workplace pension scheme.

You can use the duties checker tool from the Pensions Regulator to work out what you need to do.

What happens if an employee is injured at work?

As soon as you become an employer (i.e. as soon as you hire your first member of staff) you need to have employer’s liability insurance. This covers the compensation you might need to pay if one of your employees becomes ill or injured as a result of the work they do for you. You can be fined up to £2,500 per day that you are not insured.

Your insurance provider should be authorised by the Financial Conduct Authority (FCA) and your policy should cover you for at least £5 million. A financial adviser will help you get the best price and make sure your policy is appropriate for your business.

How can I attract and retain the best people?

Aside from meeting legal obligations, many employers choose to provide extra benefits to attract, motivate and reward their employees. Although you don’t have to provide these extra perks, you may find that they help improve staff retention and boost productivity.

From practical considerations such as flexi-time, childcare, health insurance or additional pension contributions, to fun extras such as social events and away-days, there are many benefits you could offer.

Many employee benefits are taxable, however, so you need to report them to HMRC. A financial adviser who specialises in this area can help you decide which types of employee benefits are the most cost-effective and useful to your business. Regular staff appraisals are also important to keep you in tune with your employees' progress and morale.

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About the author
Nick Green is a financial journalist writing for Unbiased.co.uk, the site that has helped over 10 million people find financial, business and legal advice. Nick has been writing professionally on money and business topics for over 15 years, and has previously written for leading accountancy firms PKF and BDO.