Hiring your first employee as a Financial Planner or Fiduciary Financial Advisor is a significant milestone for your firm.
However, it comes with various compliance obligations that you need to understand and fulfill to avoid legal pitfalls.
This guide will walk you through the key compliance requirements to ensure a smooth and lawful hiring process.
Understand Employment Laws
National and Local Laws
Familiarize yourself with national and local employment laws.
These regulations cover minimum wage, overtime pay, worker classification, anti-discrimination policies, and more.
The Employment Rights Act 1996 and the Equality Act 2010 are essential starting points.
Financial Sector-Specific Regulations
Understand industry-specific regulations that apply to financial planners, including those from the Financial Conduct Authority (FCA) and the Chartered Insurance Institute (CII).
Ensure your firm adheres to compliance standards set by these regulatory bodies.
Worker Classification
Correctly classify your worker as either an employee or a self-employed contractor.
Misclassification can lead to penalties and back taxes.
HM Revenue and Customs (HMRC) provides guidelines to help determine the appropriate classification.
Obtain an Employer PAYE Reference
Register for PAYE
Before hiring an employee, you need to register as an employer with HMRC and obtain a PAYE (Pay As You Earn) reference.
This unique number is used for tax reporting purposes.
You can register for PAYE online through the HMRC website.
Set Up Payroll System
Payroll Taxes
Set up a payroll system to manage employee wages, taxes, and deductions.
You are responsible for withholding income tax, National Insurance contributions, and other statutory deductions from your employee's paycheck.
Payroll Schedule
Establish a payroll schedule that complies with national regulations.
Ensure timely and accurate payment of wages to your employee.
Professional Payroll Services
Consider using professional payroll services tailored for financial firms to ensure accuracy and compliance.
Employee Forms and Documentation
P45 Form
Ensure your employee provides a P45 form from their previous employer. This form details their tax code and pay history.
Employment Agreement
Draft a comprehensive employment agreement that includes specific clauses related to confidentiality, non-compete, and compliance with FCA and CII regulations.
Right to Work
Check your employee’s right to work in the UK. Keep copies of relevant documents as proof.
Register for National Insurance
National Insurance Registration
Ensure your employee is registered for National Insurance and has a National Insurance number.
Employer Contributions
You will need to make National Insurance contributions on behalf of your employee.
Workplace Pension Scheme
Auto-Enrolment
Set up a workplace pension scheme and automatically enrol eligible employees.
Pension Provider
Choose a pension provider that meets regulatory standards and ensure compliance with The Pensions Regulator.
Post Required Notices
Labour Law Posters
Display required labour law posters in a visible location within your workplace.
These posters inform employees of their rights and protections under national laws.
Regular Updates
Keep these posters up-to-date with the latest regulations to remain compliant.
Develop Employee Handbook
Company Policies
Create an employee handbook outlining company policies, procedures, and expectations.
Include sections on workplace conduct, anti-discrimination, and harassment policies.
Compliance Policies
Incorporate compliance-related policies such as leave entitlements, health and safety guidelines, and reporting procedures for workplace issues.
Financial Planning-Specific Policies
Develop policies specific to the financial planning sector, such as ethics guidelines, continuing education requirements, and client confidentiality rules.
Report New Hires
HMRC Reporting
Report your new hire to HMRC. This information is used for tax purposes and ensures your compliance with employment regulations.
Pension Regulator Reporting
Ensure compliance with reporting requirements to The Pensions Regulator regarding auto-enrolment.
Provide Mandatory Benefits
Health Insurance
Consider offering private health insurance to your employees as an additional benefit to attract and retain top talent.
Retirement Plans
Ensure that your workplace pension scheme complies with auto-enrolment requirements and offers attractive retirement benefits.
Stay Updated on Compliance Changes
Continuous Education
Stay informed about changes in employment laws and compliance requirements.
Regularly review legal resources and consult with HR professionals or legal advisors.
Training
Provide ongoing training for yourself and your management team on compliance-related topics to ensure your firm remains up-to-date with current regulations.
Financial Planning-Specific Training
Ensure your staff receive training specific to financial planning, including updates on FCA and CII regulations, investment advice standards, and ethical practices.
Get Started Today
Ready to hire your first employee and ensure compliance with all regulations?
Contact us today to learn how we can help you navigate the complexities of hiring and compliance.
Whether you need assistance with payroll setup, employee documentation, or compliance training, we’re here to help you succeed.
See our membership pricing plan.
Let’s build a compliant and successful team that drives your firm’s growth!