If you are considering employing staff, this section of the toolkit outlines the steps involved and highlights where to find further information. You may also refer to the Becoming an Employer Checklist alongside this section to support you in completing all required steps.
Jump to: HMRC | Employers liability insurance | Pay and benefits | Payroll | Pension | Legislation | Equality Act 2010 | Sexual harrassment | Health and safety | Employment status | Employment records | Whistleblowing | Policies | Employer-provided living accomodation
HMRC
You will need to register with HM Revenue & Customs (HMRC) as an employer and can do this up to four weeks before you pay your new staff.
Employer's liability insurance
Employer’s liability insurance will need to be arranged as soon as you become an employer.
This type of insurance covers compensation costs, medical bills and legal fees if an employee suffers injury or illness due to their work.
Government advice is available on employer's liability insurance.
Pay and benefits
By law, employers must pay at least a minimum hourly wage on average for the hours worked. This is called the National Living Wage (NLW) for those aged 21 and over and the National Minimum Wage (NMW) for those of at least school leaving age. Wage rates are updated annually on 1 April, including rates for under-18s and apprentices. You can find the latest rates online.
The diocese promotes the Real Living Wage, which increased on 22 October 2025 to £13.45 per hour in the UK (and an enhanced rate of £14.80 per hour in London). Real living wage employers have until 1 May 2026 to implement the new rates. Unlike the legally mandated National Living Wage (NLW) and National Minimum Wage (NMW), the Real Living Wage is a voluntary benchmark based on the actual cost of living. Read more on becoming a real living wage employer.
The period that an employer must retain records sufficient to prove it is paying a worker the correct rate is six years (this became effective from 1 April 2021).
You must ensure pay remains consistent amongst employees doing a job of the same, similar, or equal value. If you offer additional benefits, you must clarify whether they are part of the employment contract, as this may make them difficult to change or remove. Generous benefits could also have tax implications. Further guidance can be found here.
Payroll
Each PCC as an employer must ensure that it complies with not only statutory requirements but also its own financial management procedures and arrangements. The diocese does not provide a payroll service to PCCs. Many parishes use an organisation called Stewardship, and you may wish to approach them if you don’t have anything set up. The Parish Resources site also has advice on paying people.
The ACAS guide to pay and wages is available on their website.
There is a Special Religious Centre exemption scheme that allows organists and other church employees to be paid gross pay without having PAYE deducted (as long as the parish do not employ anyone else by PAYE and the individual sum does not exceed the PAYE threshold). More information can be found on gov.uk.
Pension
There is a requirement for all employers to automatically enrol certain members of their workforce into a pension scheme and contribute towards it. You will need to:
- Provide a qualifying scheme for your employees
- Automatically enrol all eligible employees into the scheme
- Pay employer contributions for eligible employees in the scheme
- Tell all eligible employees that they have been automatically enrolled and they have the right to opt-out if they wish to
- Register with the Pensions Regulator and provide details of the scheme and the number of people enrolled.
You are an eligible job holder if you meet all of these conditions;
- You are classed as a “worker” (more information on employment status can be found later in this section of the toolkit)
- You are aged between 22 and state pension age
- You earn at least £10,000 per annum
- You usually work in the UK
Further information is available regarding workplace pensions for church employees and from gov.uk.
Legislation
Employees have a number of statutory rights:
- 5.6 weeks annual leave (pro-rata for those working part-time)
- A maximum working week of no more than 48 hours on average
- Receive at least the National Minimum Wage (NMW) or National Living Wage (NLW) dependent on their age
- Protection against unlawful deductions from wages
- SSP (Statutory Sick Pay)
- Fair treatment and a ‘reasonable period of notice’ if dismissed
- An ability to raise complaints and have these treated fairly
- Family leave i.e. maternity, paternity, adoption leave etc.
- A safe and healthy workplace
- To not be discriminated against
The employee’s length of service determines their statutory rights. Guidance on these requirements can be found on the government website.
Equality Act 2010
Under the Equality Act, it is unlawful to discriminate against people at work because of nine areas termed in the legislation as protected characteristics.
- This Act states that you should not be discriminated against because you are (or are not) a certain age or in a certain age group. This Act protects employees of all ages but remains the only protected characteristic that allows employers to justify direct discrimination i.e. if an employer can demonstrate that to apply different treatment because of someone’s age constitutes a proportionate means of meeting a legitimate aim, then no discrimination will have taken place.
- This Act states that it is unfair to treat a disabled person unfavourably because of something connected with their disability. An example of this would be a tendency to make spelling mistakes arising from dyslexia.
- This Act states it is discriminatory to treat people who propose to start or have completed a process to change their gender less favourably, for example, because they are absent from work for this reason.
- This Act protects employees who are married or in a civil partnership. Single people are not protected by the legislation against discrimination.
- This Act protects women against discrimination because they are pregnant or have given birth.
- This Act protects people against discrimination on the grounds of their race, which includes colour, nationality, ethnic or national origin.
- This Act protects people against discrimination on the grounds of their religion or their belief, including a lack of any belief.
- This Act protects both men and women against discrimination on the grounds of their sex, for example paying women less than men for doing the same job.
- This Act protects bisexual, gay, heterosexual, and lesbian people from discrimination on the grounds of their sexual orientation.
Under this legislation, employers need to be aware of the seven different types of discrimination.
- Where someone is treated less favourably than another person because of a protected characteristic
- This is direct discrimination against someone because they are associated with another person who possesses a protected characteristic
- This is direct discrimination against someone because others think that they possess a particular protected characteristic. They do not necessarily have to possess the characteristic, just be perceived to.
- This can occur when you have a rule or policy that applies to everyone but disadvantages a person with a particular protected characteristic
- This is behaviour that is deemed offensive by the recipient. Employees can now complain of the behaviour they find offensive even if it is not directed at them
- The Equality Act makes employers potentially liable for harassment of our employees by people (third parties) who are not employees (e.g. contractors or external trainers and can also include students)
- This occurs when someone is treated badly because they have made or supported a complaint or grievance under this legislation.
Further guidance on the Equality Act 2010 can be found on the government website. You can also find more information on the Working Positively Together section of our website.
Sexual harassment
PCCs have a legal duty to take 'all reasonable steps' to prevent sexual harassment against their employees.
The Worker Protection (Amendment of Equality Act 2010) Act 2023 came into force on 26 October 2024. Although all types of harassment are concerning, the prevalence of sexual harassment in workplaces has led to these specific legal measures. It is strongly recommended that parishes adjust their existing policy on harassment, conduct and dignity to incorporate the new provisions.
While employers have had the legal duties to combat harassment since 2010, the change introduces a new, positive responsibility to take reasonable measures so harassment does not happen, rather than just acting when it does. It gives employment tribunals the power to uplift sexual harassment compensation by up to 25%, where an employer has breached the new duty to prevent sexual harassment.
The Equality and Human Rights Commission (EHRC) technical guidance on sexual harassment and harassment at work also advises employers to take reasonable steps to prevent sexual harassment by third parties e.g. contractors.
Definition
Workplace sexual harassment is unwanted behaviour of a sexual nature that violates a worker’s dignity or creates an intimidating, hostile, degrading, humiliating, or offensive environment.
Sexual harassment could be a one-off incident or recurring behaviour. It can occur in a number of different ways. For instance, it might include telling sexually offensive jokes, sharing pornographic or sexual images, making sexual remarks about someone’s appearance, or touching someone against their will. Importantly, it does not need to be intended to be sexual.
What actions should parishes take?
PCCs should consider what further reasonable steps could be taken to help protect their staff from sexual harassment. The Employment Rights Act requires employers to take all reasonable steps to prevent sexual harassment.
To respond to the new Act, it is recommended PCCs:
- Consider any potential hotspots
- It is not unusual for incidents to go unreported so, consider conducting an anonymous staff survey to gain a clearer picture
- Consider conducting a risk assessment to identify steps needed to mitigate risk
- Review existing policies so that expectations of staff and any third parties who they may come into contact with (agency, staff, contractors, clients, customers, supplier, the general public etc) are clear.
- Communicate the PCC’s stance on sexual harassment, including by third parties, so that it is clear that it will not tolerate sexual harassment in the workplace and the consequences of such conduct. This could be done by email or notices displayed in prominent places in the workplace for example.
- All employees should take meaningful, good quality training on a regular basis to keep it live. Attendance records should be kept as well as a record of the content of the training.
- Communicate the avenues for reporting sexual harassment and the steps that the PCC will take to deal with any instances.
- Involve the PCC and Church Officers - make sure that everone is on board
- Monitor and report at least annually
From October 2026, The Employment Rights Act changes will mean that employers will be liable for harrassment from third parties also.
ACAS provides advice on what sexual harassment is. The Fawcett Society has a detailed toolkit available for free.
The Equality and Human Rights Commission has put together a very valuable 8-step guide for employers on preventing sexual harassment in the worlplace which can be found here.
Health and safety
As an employer, there are steps that you may be required to undertake according to the Health and Safety Executive body (HSE). The HSE have produced this helpful Health and Safety Guide, which includes a template policy.
You will need policies and procedures covering areas such as fire, Display Screen Equipment (DSE) use, eye care, alcohol and drugs, lone working, working at heights and protective equipment.
The law says that every business must have a policy for managing health and safety. A health and safety policy sets out your general approach to health and safety. It explains how you, as an employer, will manage health and safety in your business. It should clearly say who does what, when and how. All Saints, Wokingham have a good example of a parish Health and Safety Policy.
If you have five or more employees, you must write your policy down. If you have fewer than five employees you do not have to write anything down, but it is useful to do so. You must share the policy, and any changes to it, with your employees.
The HSE provide further guidance on health and safety policy.
The status of workers has been contested through multiple legal cases in recent years, and many more are now recognised as having employment rights. There are different categories of worker and the rights and responsibilities differ for each.
A worker may occasionally do work for the parish. The parish does not have to offer them work and they do not have to accept it. Their contract uses terms like 'casual', 'freelance', 'zero hours', 'as required' or something similar. The parish will be deducting tax and National Insurance contributions from their wages and will be providing the materials, tools, or equipment that the worker needs to do the role.
Most people provide personal service as an employee under a contract of employment. The individual is an integral part of the church and paid through a Pay As You Earn (PAYE) scheme. The PCC has an obligation under the contract to offer work, and the employee has an obligation to accept the work offered, within the scope of the contract.
Self-employed contractors normally provide one-off or specific services for a fee which is then invoiced to the parish. They will pay their own Income Tax and National Insurance contributions. They do not have employment rights such as statutory holidays, but they do have some legal protection such as an entitlement to a safe and healthy working environment.
An individual may set themselves up as a limited company for tax purposes, as opposed to being self-employed. This means that the parish pays the company for work completed as opposed to the individual and corporation tax is payable as opposed to personal tax. There are specific tax laws in relation to limited companies so if someone informs you that they are registered as a limited company, it would be advisable to check the situation with the HMRC.
Many PCCs use the services of those who are self-employed, as this is a reduced administration overhead. The risks are that this status may be challenged and that you find there are unexpected liabilities. This could be if:
- HMRC investigate. If the person is paying less tax and NI at present as they would as an employee, then HMRC will expect the underpayment to be made up (both employees and employers’ contributions).
- An employment event happens leading to them claiming employment rights (e.g. if you cease to have a need for them, or if they become sick or pregnant). They may then have employment rights as for redundancy and/or unfair dismissal.
You will need to consider the likelihood and impact of these risks compared to the simplicity of them being self-employed. This needs to be based on facts around key terms and conditions on offer and the PCC’s working relationship with the individual, not just because someone says they are self-employed. The safest approach is to issue a contract of employment to them so they are an employee (although that may not be their preference and it involves more administration). If you decide not to then you will need to satisfy yourself of their self-employed status, both for tax and employment purposes.
Tax: Checking if they are exempt from PAYE
Someone is probably self-employed and should not be paid through PAYE if most of the following are true:
- They are in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
- They can decide what work they do and when, where, or how to do it.
- They can hire someone else to do the work.
- They are responsible for fixing any unsatisfactory work in their own time.
- Their client agrees a fixed price for their work – it does not depend on how long the job takes to finish.
- They use their own money to buy business assets with, cover running costs, and provide tools and equipment for their work.
- They can work for more than one client.
HMRC has advice and an online tool so that you can check someone’s employment status for tax online or by phone on 0300 123 2326. Once you have completed the tool and have an outcome, keep a record of this.
Employment: Checking their employment rights
Someone is probably self-employed and does not have the rights of an employee if they are exempt from PAYE and most of the following are also true:
- They put in bids or give quotes to get work.
- They are not under direct supervision when working.
- They submit invoices for the work they have done.
- They are responsible for paying their own National Insurance and tax.
- They do not get holiday and sick pay.
- They operate under a contract (sometimes known as a ‘contract for services’ or ‘consultancy agreement’) that uses terms like ‘self-employed,’ ‘consultant’ or an ‘independent contractor.’
Organists and Musicians
The Law & Religion UK website has guidance on the position of organists and musicians.
The status of the working relationship between the organist and parish can be determined using the employment status indicator. In most cases, as there is a high degree of mutuality and control, you will find that the organist is an employee. As required by (Canon B 20, paragraph 1), and with the exception of cathedral or collegiate churches or chapels, the formal appointment of an organist to any church or chapel must be by the minister and with the agreement of the PCC. In terms of remuneration, there has been a tradition of describing payment to the organist as an honorarium. However, a true honorarium is a ‘one-off’ payment after the event to say thank you to someone, it is not usually pre-determined. Therefore, paying a regular sum of money each week or month (even where it is topped up occasionally with separate payments for weddings, funerals etc) is likely to be regarded as a ‘salary.’
Recent employment tribunal case law (2008 onwards) suggests that tribunals are of the mind that most if not all organists are employees; even if the parties have explicitly agreed at the beginning of the working relationship that it is one of self-employment. Therefore, it is generally safest to establish an employment contract.
See which employment records should be kept and how long for.
If parishes are in doubt, it is a good idea to keep records for at least six years, to cover the time limit for bringing any civil legal action.
Whistleblowing
Whistleblowing is the term used when an employee passes on information concerning wrongdoing. This can also be referred to as “making a disclosure” or “blowing the whistle.” The wrongdoing will typically (although not necessarily) be something they have witnessed at work. Further information on whistleblowing can be found on the gov.uk website and ACAS website.
Policies
All employers must legally have the following policies in place;
- Disciplinary Policy
- Grievance Policy
- Health and Safety (if have five or more staff)
A privacy notice is also a legal requirement. More information on privacy notices can be found here.
Both the disciplinary and grievance policy should be in line with the Acas Code of Practise which can be found here.
Other policies which are not legally required but best practise to have include;
- Data Protection Policy (GDPR)
- Family friendly leave - Maternity, Paternity, Parental, Shared Parental, Adoption, Neonatal Care, Bereaved Partners Paternity, Carers, Parental Bereavement Leave. More information on these types of leave can be found in the Family Friendly Leave section of the toolkit
- Equality, Diversity and Inclusion Policy - essential in demonstrating compliance with The Equality Act 2010
- Whistleblowing Policy and Procedure
- Sickness Absence Policy - Clarifies the procedure for reporting and managing absence, both short and long term
- Annual Leave Policy - Rules for holiday entitlements, booking and emergency leave
- Flexible Working Policy
- Performance Management Policy - Explains how employee performance is assessed and supported
- Social Media and IT Use - Including use of employer equipment and platforms
- Bullying and Harassment Policy - Promotes a respectful workplace and outlines how complaints will be addressed
- Drugs and Alcohol - Manages risks associated with substance misuse
- Expenses and Reimbursement Policy - Clarifies rules for claiming business related expenses
Employer-provided living accommodation
See general information on tax arrangements related to employer-provided living accommodation on the gov.uk site.
PCCs need to be aware of an HMRC ruling that may affect long-standing church workers living in PCC-provided accommodation. HMRC announced in March 2020 that the treatment of individuals provided with living accommodation as ‘representative occupiers’ had been identified as an Extra Statutory Concession (ESC). The government decided to withdraw the ESC with effect from 6 April 2021. If you provide accommodation to your employees under this concession, you must make the necessary contractual changes. A ‘representative occupier’ relates to posts that existed before 6 April 1977 where an employee:
- resides in living accommodation provided rent-free by the employer
- who, as a condition of the contract of employment, is required to reside in that particular living accommodation and is not allowed to reside anywhere else
- occupies the house for the purpose of the employer, the nature of the employment being such that the employee is reasonably required to reside in it for the better and more effective performance of the duties
The representative occupier ESC does not extend to retired employees under Employer-financed retirement benefit schemes (EFRBS) legislation. If you have provided living accommodation to a retired employee under the representative occupier ESC, the prescribed or responsible person (Employment Income Manual) must report this benefit to HMRC by 7 July following the end of the tax year. You need to give your employee a written statement of employment if you are employing someone for more than one month.
Useful links
gov.uk: Employ someone: step by step
ACAS: Template letters, forms and policies
gov.uk: Register as an employer
gov.uk: National Minimum Wage and National Living Wage rates