Setting Up an Employee as a UK Business: Payroll, Pension, and HR Considerations
In an informative and practical session, Pay Check, Chase de Vere, and Pace HR joined forces to deliver a comprehensive webinar on setting up an employee as a UK business.
Hosted by Mark Sapsford, Senior Business Development Manager at Pay Check, the session focused on key operational pillars for new employers: payroll, pension, and HR compliance.
The panel featured:
- Mark Sapsford – Senior Business Development Manager, Pay Check
- Lee Baldwin – Head of Managed Services, Pay Check Ltd
- Rebecca Dorrian – Corporate Independent Financial Adviser, Chase de Vere
- Emma Dunning – Director, Pace HR
HR Considerations When Hiring in the UK
Presented by Emma Dunning, Pace HR
When hiring your first employee in the UK, employers need to address a range of legal and procedural requirements to ensure compliance and create a positive experience for new team members. According to Emma Dunning from Pace HR, one of the most critical requirements is issuing a contract of employment by the employee’s first day. Previously, there was some flexibility around this, but the rules now mandate that contracts must be provided on Day 1. The contract must include specific statutory elements such as the names of the employer and employee, the job title, start date, place of work, pay and its frequency, hours of work, and holiday entitlement. To avoid potential disputes, additional elements such as notice periods, probationary terms, confidentiality clauses, intellectual property rights, and restrictions following termination should also be clearly outlined.
Alongside the contract, Emma highlighted the importance of having an employee handbook. This document should go beyond legal necessities and serve as a vehicle to communicate the company’s identity, values, and culture. It should contain detailed policy groupings, including those related to pay and rewards, holiday and sickness procedures, disciplinary and grievance frameworks, and health and safety requirements. Employers must also include comprehensive GDPR and data protection policies explaining how employee data is collected, stored, and used. Other important inclusions are equal opportunities and diversity statements, codes of conduct (addressing topics such as social media use, bullying, and whistleblowing), and policies related to modern slavery, anti-bribery and corruption, and IT security. Family-friendly policies should also be included in the handbook and must address areas such as maternity, paternity, adoption, shared parental leave, flexible working, and the recently introduced neonatal leave provisions.
On the administrative side, Emma outlined several key HR setup requirements. Employers must conduct right-to-work checks to confirm the legal working status of employees in the UK and register as an employer with HMRC. Record-keeping is another legal obligation; businesses must maintain accurate and securely stored employee data in accordance with data protection regulations. In addition, employers should ensure that the correct payroll documentation is in place—this includes collecting either a P45 from the employee or, if unavailable, an HMRC starter checklist to set the correct tax code.
Emma also emphasised that onboarding is not just a procedural exercise but an opportunity to showcase company culture and values. A structured induction programme helps build alignment between individual and organisational goals from the outset. While many roles do not legally require references or DBS checks, requesting references remains a best practice to validate employment history. Finally, she encouraged employers to explore policy enhancements, such as offering improved sick pay or family leave entitlements, and benefits like private healthcare or long-term sickness insurance, all of which can support recruitment and retention efforts.
Workplace Pension Requirements
Presented by Rebecca Dorrian, Chase de Vere
Under UK law, employers are required to establish a qualifying workplace pension scheme and automatically enrol eligible employees. Rebecca Dorrian of Chase de Vere clarified the criteria: as of 2025, eligible employees are those aged 22 and over, earning £10,000 or more annually, under the state pension age, and working in the UK. Notably, the minimum age threshold is expected to be reduced to 18 in the near future, in line with recent legislative developments.
Rebecca stressed that auto-enrolment must take place regardless of an employee’s verbal request not to participate. Opting out is a post-enrolment process handled entirely by the employee. Once enrolled, the employee has a 30-day window to opt out and receive a refund of any contributions made. If they choose to remain in the scheme, contributions continue as normal. Employers also have an obligation to conduct re-enrolment every three years for employees who had previously opted out, repeating the enrolment and communication process.
To help employers remain compliant and competitive, Chase de Vere provides expert support with scheme setup, including advice on choosing between basic or enhanced schemes and benchmarking contribution levels against sector norms. They also assist with structuring contributions, including salary exchange (salary sacrifice) arrangements, which are increasingly popular due to the national insurance savings they offer employers.
While pensions are the only mandatory benefit, Rebecca encouraged businesses to consider optional add-ons to improve employee satisfaction and retention. These could include group life insurance, private medical cover, or long-term disability insurance. For more comprehensive risk management, Rebecca also discussed business protection insurance, such as key person cover and shareholder protection, which provide financial safeguards to ensure the business can continue operating in the event of a critical illness or death of a key individual.
Payroll Implementation and Processing
Presented by Mark Sapsford and Lee Baldwin, Pay Check
For businesses unfamiliar with payroll administration, outsourcing to a specialist payroll bureau can streamline operations and ensure full compliance with legislation. Mark Sapsford and Lee Baldwin of Pay Check Ltd detailed their structured payroll implementation process, which is designed to get employers up and running quickly and securely. The process begins with an initial consultation to determine payroll frequency (e.g. monthly or weekly), payday schedules, and any third-party payment arrangements. Next, due to financial compliance requirements, Pay Check conducts anti-money laundering (AML) checks on directors or individuals with significant control.
Once the checks are complete, Pay Check provides access to a secure portal where employers upload employee data. A dedicated implementation manager oversees the process, which includes validation against the company’s last payroll run to ensure accuracy. If the client wishes Pay Check to make payments directly on their behalf, a BACS facility must be set up—a process that typically takes four weeks, though HMRC delays can occasionally extend this timeframe.
In terms of ongoing payroll processing, Pay Check operates on a 7-day turnaround. Employers submit their payroll data via a timesheet template or HR system extract. Pay Check then calculates the payroll and provides a report for client approval. Once approved, Pay Check handles the Real-Time Information (RTI) submissions to HMRC, including the Full Payment Submission (FPS) and Employer Payment Summary (EPS). If BACS is authorised, they also manage payment of salaries, HMRC liabilities, and any third-party deductions such as gym memberships or loan repayments.
Pay Check also offers an integrated service for managing pensions through its PC NEST offering. Once the pension scheme is registered with NEST and terms are approved, Pay Check handles all automatic assessments, joiner/leaver management, and contribution uploads. For businesses that choose pension providers other than NEST, Pay Check can still offer full support in collaboration with Chase de Vere. They also manage employer duties through the government gateway, ensuring tax code updates and correspondence from HMRC are actioned promptly.
For businesses with variable hours or hourly paid staff, Pay Check advises considering mid-month to mid-month payroll cycles to avoid complications with forecasting hours worked. This model allows more accurate and up-to-date payroll data to be processed, reducing the likelihood of post-payroll corrections. Pay Check’s approach, which avoids requiring clients to learn complex payroll software, is designed to be user-friendly, efficient, and fully compliant, making it especially well-suited for start-ups and growing SMEs.
Frequently Asked Questions
Q: Are short-term staff eligible for auto-enrolment?
Yes, if their monthly earnings exceed £833.33 (equivalent to £10,000/year), they must be automatically enrolled, though employers can use a three-month postponement period.
Q: What types of business protection insurance are available?
Options include key person insurance, shareholder protection, and loan protection which is vital for continuity in the event of death or critical illness.
Q: What if an employee doesn’t have a P45?
The HMRC starter checklist must be used to determine their correct tax code and student loan status.
Q: Can salary sacrifice be used for pensions?
Yes, it is a tax-efficient option available even to very small businesses. Chase de Vere assists with setup, communication, and compliance.
Q: Can employees log hours in Pay Check’s portal?
Yes basic functionality exists, with enhanced time and attendance integrations also available.
Conclusion
Setting up an employee in the UK involves more than just running payroll. From employment contracts to pensions and benefits, this webinar highlighted the interconnected components required to remain compliant, competitive, and supportive of employee well-being. Whether you are a startup or a scaling enterprise, expert guidance from payroll, HR, and financial professionals can ensure a strong foundation for your workforce.
For additional queries or to arrange a consultation, please click here to contact us directly.
Written by
Isabella Zermani
Pay Check
paycheck@paycheck.co.uk
+44 (0) 20 7866 4600