The Rules on Employing People
Many photography businesses are established because the owner, previously a freelance photographer, has found that they cannot deal with the volume of work that they have on their own. Clearly, this is a pleasant position to be in.However, it poses some problems; if you are setting up a business for this reason, you will need to employ people – and this involves grabbling with UK employment law.
Enlisting the services of other people on an ad hoc basis is easy; they can invoice you for their time, perhaps as ‘consultancy’, and you simply count this as a deductible cost. However, entering into an employment contract that satisfies the demands of UK employment law is slightly more difficult. There are a number of important factors to consider, primary amongst which is pay.As an employer, you have a duty to adhere to the National Minimum Wage. The minimum amount that you are required to pay depends on the age of the employee. As of October 2011 the rates are as follows:
- £6.08 - the main rate for workers aged 21 and over
- £4.98 - the 18-20 rate
- £3.68 - the 16-17 rate for workers above school leaving age but under 18
As an employer, you also have a responsibility to abide by additional elements of UK tax law. In particular, may have an obligation to make Class 1 National Insurance Contributions (NICs), as well as deducting income tax and employee NICs from pay packets via the Pay As You Earn (PAYE) system. These deductions must then be passed to HMRC on a monthly or quarterly basis.It should be noted that you may also be required to make further deductions via PAYE; if an employee is repaying a student loan, for example, under the current tax law the employer should deduct this at source. PAYE can also present advantages, however. If you offer an employee pension scheme, for example, contributions to this scheme can be made via PAYE with the employee’s consent.
UK employment law also dictates that, as soon as an employee accepts an offer of work, an employment contract is said to exist between the two parties. This employment contract must be codified as a ‘written statement of employment particulars’, and should include details of work hours, pay, holiday and sickness arrangements, and so on. The government offer an online tool for employers to help them draw up this statement; the tool is available on the Business Link website.
It should also be remembered that there are limits on the amount of hours that you can contractually oblige your employees to work. Currently, the Working Time Regulations state that no employee can be made to work more than 48 hours per week, worked out on an average of 17 weeks. Employees can, however, choose to work for longer if they wish. The Regulations also make provision for minimum holiday requirements. As it stands, employees are entitled to a minimum of 5.6 weeks holiday per year, paid at their normal rate.
If you are considering employing someone, it is essential that you have a working knowledge of UK employment law and applicable tax law. HMRC run seminars and workshops for new employers; these are free, and can be invaluable.