Employer Scenarios — 11 Specific UK Cases

Scenario 1 — First-time sole trader hiring first employee

Priya, sole trader plumber, hires apprentice Sam (18) on £230/week. PAYE registration triggered (>LEL £123/week). Register via PAYE Online (5-30 days). Use HMRC Basic PAYE Tools (free, ≤9 employees). NMW apprentice rate £7.55/hour. AE assessment monthly (Sam under 22 = non-eligible jobholder; can opt in). Employers' Liability Insurance £5m mandatory.

Scenario 2 — Growing Ltd Co hires 2nd + 3rd employee

Beta Ltd has 1 director + hires 2 standard staff @ £30k each. Apprentice carve-out N/A. Each £30k employee: employer NI = 15% × (£30k − £5k) = £3,750. Two staff = £7,500 + director residual ~£1,135. Employment Allowance £10,500 → fully absorbs gross £8,635 employer NI in 2025/26. Net = £0 employer NI.

Scenario 3 — CIS subcontractor + PAYE dual operation

Building Ltd has 4 PAYE employees + pays 6 CIS subcontractors monthly. Run PAYE scheme + CIS scheme on same HMRC Accounts Office reference. RTI: FPS for PAYE employees; CIS300 by 19th for subcontractors. EPS to claim EA + reclaim any CIS suffered. VAT reverse charge applies to B2B subcontractor payments where customer reports under CIS.

Scenario 4 — Care provider with sleep-in workers

Care Ltd: 8 carers + 4 sleep-in night shifts/week. Royal Mencap [2021] UKSC 8 — sleep-in shifts NOT NMW-eligible time when worker is permitted to sleep + only required to work when called. Pay structure: flat sleep-in allowance + NMW for time actually worked + full NMW for awake night shifts. Document the policy referencing Mencap; train managers on call-out + log call-out time.

Scenario 5 — Hospitality tronc + Allocation of Tips Act 2023

Restaurant Ltd: 12 servers + tronc-master system. From 1 October 2024, Allocation of Tips Act 2023: 100% of tips / service charges flow to workers under written tips policy. Tips NEVER count towards NMW. Tronc-master arrangement: written + transparent + fair allocation. NIC: properly-run independent tronc = no employer NIC on tronc payments (Tronc Rule); if employer controls allocation = Class 1 NIC applies.

Scenario 6 — Medium-sized client engaging PSCs post-IR35

Tech Ltd (turnover £20m, BS £8m, 60 staff) is above 2 of 3 small thresholds → medium-sized → Chapter 10 ITEPA. Engages 3 PSC contractors. For each: assess status using CEST; issue SDS to PSC + agency; if inside, agency (fee-payer) deducts PAYE + NIC + employer NIC + Apprenticeship Levy from deemed direct payment. Liability returns to Tech Ltd if SDS not issued or unreasonable.

Scenario 7 — Care sector NMW historical exposure (post-Mencap)

Care Provider Ltd was previously paying flat sleep-in rate £30/shift. Pre-Mencap [2021], lower-court rulings suggested NMW applied to whole sleep-in shift. HMRC investigation 2019-2020 demanded £400k backpay. Post-Mencap SC ruling, exposure largely extinguished for shifts where worker permitted to sleep. Historic settlements (Voluntary Disclosure Scheme) closed pre-2021 may still bind. Documentation matters.

Scenario 8 — Tech startup with EMI option scheme

Startup Ltd: 8 employees + grants EMI options worth £150k total. EMI = qualifying tax-advantaged scheme (Sch 5 ITEPA). No income tax on grant; CGT on disposal (typically 14%/24% if eligibility maintained, Business Asset Disposal Relief at 14% on first £1m of qualifying gains from 6 April 2025, rising to 18% from 6 April 2026). Reporting via annual ERS return by 6 July. Salary side: standard PAYE + 15% employer NI + Employment Allowance.

Scenario 9 — Restaurant chain implementing Allocation of Tips Act

Chain (45 sites, 800 staff): from 1 October 2024 must implement Tips Act. Steps: (a) written tips policy covering distribution methodology + fairness + frequency; (b) brand-wide tronc structure; (c) train managers; (d) keep records for 3 years; (e) provide statement to workers on request. Tribunal route for breach + statutory uplift. Cannot use tips for NMW. Cannot withhold or charge admin fees on tips (some narrow exceptions for credit-card transaction costs).

Scenario 10 — Charity employer with £10,500 EA

Local Charity Ltd: 6 employees + pay bill £180k. Charity status confirmed (CC registration + HMRC charity recognition). Employment Allowance available £10,500 (charity-eligible; not subject to connected-companies test where charity is independent). Gross employer NI on £180k pay bill (after £5k thresholds × 6) ≈ £24,000. EA absorbs £10,500 → net employer NI £13,500.

Scenario 11 — Group of 4 connected Ltd Cos with shared family-member employees

Family group: 4 trading Ltd Cos, controlled by same family. Connected per CTA 2010 s.1122. Group rules: (a) one £15k Apprenticeship Levy allowance shared across group; (b) one £10,500 Employment Allowance shared across group (allocate at year-start). Connected-companies test for EA explicitly disallows multiplication of EA via group structure. Family members on payroll: must meet NMW + status tests (don't assume 'family discount' permissible — none exists in NMW or status law).

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