Complete Guide to Managing Employee Paperwork

Last updated May 10, 2023

The difference between a good business and a great business often comes down to the employees. Companies that are well-organised and transparent about their expectations tend to attract and keep quality workers.

Hiring employees and maintaining good relationships with them can be enhanced by something as simple as using the proper documents in the right situations. You can use them to outline everyone’s obligations and responsibilities and protect their interests.

Use this guide to ensure you always use the appropriate documents when hiring, onboarding, and managing your employees.

Necessary housekeeping before hiring employees

Before you get going and hire employees for your company, there are tasks you need to perform first.

As an employer, you must get Employers’ Liability (EL) insurance before any employees start working for you. Your policy needs to come from an authorised insurer and cover you for a minimum of £5 million. You can face a £2,500 fine for every day you’re not insured.

Before the company's first payday, you must also register as an employer with HM Revenue and Customs (HMRC). Doing so will give you an employer PAYE reference number that allows you to pay taxes and national insurance for your employees.

Documents for hiring new employees

Hiring new employees is important because they can bring unique ideas and perspectives to your company. It can also signify that the business is succeeding if you need to expand and hire additional workers.

After you’ve finished interviewing candidates, there are two key steps to bringing in a new employee. First, you need to make them a job offer, and then they need to sign a contract that outlines the terms of their employment.

You should use two documents for each step: An Employment Offer Letter and an Employment Contract.

Employment Offer Letter

As an employer, you can use an Employment Offer Letter to express your intent to hire a job candidate. The document briefly summarises the job position’s terms and conditions. The candidate can either accept or decline. In some situations, the candidate may even submit a counteroffer.

The Offer Letter should include details regarding:

• The job description
• Start date
• Wage or salary
• Benefits
• A probationary period
• Holiday time

You can also use the Offer Letter to describe any conditions of the offer. For example, you may require the candidate to pass a Disclosure and Barring Service (DBS) check (i.e., criminal check in Scotland and Northern Ireland) or drug screening test before hiring them.

Minimum wage

When you make an offer to a candidate, it’s also essential that you pay them at least the national minimum wage. The minimum wage will depend on factors such as:

• The employee’s age
• Whether they’re an apprentice
• Whether they’ve completed the first year of their apprenticeship 

You can use the UK government site to check how much an employee is entitled to make by law.

Employment Contract

Once the candidate has accepted your offer, you can use an Employment Contract to make their employment with the company official.

The Employment Rights Act 1996 requires employers to give workers a written statement of employment particulars on their first day of work and a more comprehensive written statement within the first two months of employment. You can use LawDepot’s Employment Contract to set out the particulars of employment.

The Employment Contract will include many of the details that are also in the Offer Letter, but go more in-depth about the employee’s responsibilities and your obligations to them. The most significant difference between the two documents is that the Offer Letter is a proposal, while the Employment Contract is a legally binding agreement both parties sign.

Employment Contracts should outline the following:

• Compensation
• Annual leave
• Sick pay
• Work hours and location
• Job responsibilities
• Probationary period
• Termination terms

Depending on the job position, you might also find it appropriate to include a Confidentiality Agreement, Non-Compete Agreement, or non-solicitation clause as part of the contract.

Hiring people from outside the United Kingdom

Job candidates from abroad, excluding Irish citizens, must meet specific requirements and apply for permission before entering the United Kingdom for work. The requirements will depend on their visa.

As an employer, you will also likely need to apply for a sponsor licence.  A sponsor licence allows you to hire employees from outside the UK who require a sponsored visa. You can also check if the worker has the proper documents for legally working in the UK before making their employment with your company official.  

Other factors to take into consideration when hiring employees

Hiring a new employee can be a complicated process, and there are factors you should consider before you bring a new person on board.

For instance, depending on the industry and job position, finding the right person to hire can take quite a while. If you’re hiring for an entry-level position, it may only take a couple of weeks. However, there could be up to two months between creating the job posting and the employee’s first day of work for more skilled positions. Creating a Business Plan can help you anticipate your company’s needs, so you aren’t rushing to fill a position on short notice.

It’s also critical that when you create a job posting and go through the hiring process, you don’t discriminate against possible candidates. You need to choose your words carefully and be sure not to ask about certain subjects, like marital status, disabilities, age, or criminal convictions.

When searching for a job candidate, many companies try to find someone with the following qualities in new employees:

• Adaptability: The ability to change as the company changes or adjust to unique situations.
• Analytical skills: The ability to recognize problems and determine effective and efficient solutions.
• Creativity: Demonstrating new ways of completing tasks and finding solutions to problems.
• Interpersonal skills: The ability to effectively communicate with many types of personalities.
• Leadership: Self-starters who can take charge or lead by example.
• Positive personality: Contribute to high morale in the workplace and fit in with the company culture.
• Team player: Strong collaboration skills when working towards a common goal.
• Work ethic: Willingness to make an honest effort every day.

Onboarding new employees

After the Employment Contract is signed and the job candidate is ready to start their new position, it’s time to focus on getting them set up within the company.

Induction plan

Having a written step-by-step induction plan for onboarding new employees is a good idea.

Induction plans can take many forms. They can focus on communicating crucial information to the employee about the company and their position. They can also be an informal event that helps them socialise and get to know their new co-workers. Ideally, it will be a mix of both.

Having a plan not only helps to ensure the new member of your team has everything they need to hit the ground running but it can also help the company make a good first impression by providing a positive experience.

Part of your plan should also include being mindful not to overwhelm the new employee with too much too fast, especially in the first couple of days when they’re as focused on learning everyone’s names as they are on their role. Giving them new information at an easily digestible pace is ideal.

Paying the new employee

There are specific procedures you need to follow in order to pay your employees.

First, check to see if you need to pay them through PAYE (Pay As You Earn). If the employee makes £123 or more a week (£533 a month or £6,396 a year), you’ll usually need to pay them through PAYE. However, you only need to pay your employees through PAYE. If the person is self-employed (i.e., a contractor or freelancer), you don’t need to pay them through PAYE.

Next, you need to gather information about the employee to determine their tax code. You can usually get this information from their P45. If they don’t have their P45, you can ask them to fill in a starter checklist so you can complete your payroll.

After that, you’ll need to know if they have student loan repayments. If they do, you have to make student loan deductions from their pay.

The final step is registering the employee with HMRC for tax purposes.

Onboarding virtually

With remote work becoming more common, it’s increasingly more likely that you’ll never meet a new employee face to face because they live in a different city. If this is the case for your company, there are practices you can implement for onboarding virtually.

One way to make someone feel part of the team quickly is to send them a welcome package before their first day. The package can include everything from a company handbook and HR documents that need signing to company swag and a small gift for their home office.

Giving the new employee an onboarding schedule can go a long way as well. It will help them anticipate and visualise how their first couple of weeks with your company will go. This can include online training videos or courses they need to take to familiarise themselves with the company and the role.

When their first day arrives, schedule multiple introduction meetings with key co-workers that they should become familiar with in their position. It can be difficult to socialise with co-workers as a remote employee, so informal meetings can get the new employee off to a great start.

You can also pair the new employee with another co-worker who can answer any questions they have or guide them through their first couple weeks. Reaching out when you don’t know anyone can be a little awkward for some people. Having someone already designated to help them can make them more comfortable asking questions.

Documents for managing employees

Once the onboarding process is finished and the new employee is in the swing of things, you can begin focusing on managing them to maximise their potential. There are multiple documents you can use to communicate to the employee how they’re performing through feedback, wage increases, discipline, or termination.

Employee Evaluation form

You can use an Employee Evaluation form to measure an employee’s performance. Using the same form for each employee ensures there’s parity and everyone is evaluated on the same scale.

The evaluation allows you to maintain a record of each employee’s performance over the years and track their development. It can also be a great way to communicate positive or negative feedback.

LawDepot’s template allows you to evaluate your employees in the following areas:

• Adaptability
• Communication
• Career development
• Decision-making
• Interpersonal skills
• Knowledge and practical skills
• Leadership
• Management
• Motivation

Pay Rise Agreement

A Pay Rise Agreement records a change in an employee’s remuneration or earning potential. They’re typically used after a new employee finishes a probationary period or when hard work and time served are rewarded with a raise.

The agreement is also a convenient way to change someone’s pay without creating an Amending Agreement or a new Employment Contract.

Employment Termination Letter

On the other hand, the working relationship with an employee sometimes needs to end. In this case, you can use an Employment Termination Letter to let the employee go.

The letter is a formal way of giving the employee notice that they’re no longer employed by the company. It typically outlines why they’re being terminated, any compensation they’re entitled to, and the company property they need to return.

Some reasons for terminating an employee include:

• Absenteeism
• Damaging company property
• Falsifying company records
• Incompetence
• Insubordination
• Misconduct
• Stealing

An Employment Termination Letter also isn’t required if the employee has been with the company for less than a month, committed gross misconduct, or their contract states they can be dismissed without notice.

Keep a record of employee documents

Keeping a well-organised record of your employee documents can help a company run smoothly. They act as a written history of your company. Whether it’s a rejected offer letter or crucial payroll data, you can never have too much information at your disposal.