Guide · Payroll and HR
Guide to hiring your first employee
Straight answer: before the first employee starts work, the employer must prepare the contract, gather the necessary details, report the admission to Social Security and organise payroll processing. It must also define who reports holidays, absences, overtime and changes during each month.
This guide is for: companies and business owners hiring for the first time, or who want to reorganise the flow of information between management, employees and accounting.
When must the admission be reported?
The general rule set out by Social Security is that the admission must be reported in the 15 days before the employee starts work. Specific situations have their own rules. The admission should not be left until the moment the first salary is prepared.
Which information is required?
- Full identification of the employee.
- Start date and type of contract.
- Role, working hours and place of work.
- Base pay and any other agreed components.
- Meal allowance and how it is paid.
- IBAN and the necessary tax information.
- Contractual details that must be reported or registered.
Who should prepare the contract?
Payroll processing and contributory reporting do not replace employment-law advice. Where the type of contract, its clauses or the organisation of working time require legal analysis, the contract should be prepared or reviewed by a qualified professional.
The accounting team does, however, need to receive the relevant contractual information in order to process pay and contributions correctly.
How is payroll processing organised?
Before the first month, the calendar and the way variables are reported should be defined. The person responsible internally must send absences, holidays, overtime, bonuses, commissions, sick leave and other changes by the agreed date. Changes reported after processing may require corrections.
What changes with the Contributory Cycle Simplification?
The new contributory model is being implemented in phases. Social Security relies more on the continuity of contractual data and on automatic assessment, concentrating the employer intervention on validating information and managing exceptions.
This increases the importance of keeping contracts, base pay, changes and terminations properly up to date.
Which costs should be anticipated?
The cost of an employee is not limited to the net amount received. The company must consider gross pay, contributions, allowances, insurance, training, equipment and other associated charges. An annual forecast helps avoid a hiring decision based only on the monthly salary.
Which routine should exist every month?
- Confirm active employees and contractual changes.
- Send payroll variables within the internal deadline.
- Validate payslips before payment.
- Make the payments and keep the receipts.
- Check returns and contributory amounts.
- Report admissions, suspensions and terminations immediately.
Which mistakes are common?
- Reporting the admission after work has started.
- Not correctly identifying all pay components.
- Sending overtime, absences or sick leave after payroll has closed.
- Keeping contractual data out of date.
- Confusing payroll processing with employment-law advice.
Official sources and related content
See the Social Security information on reporting a new employee and on the Contributory Cycle Simplification.
See also what to organise when starting a company.
The payroll and HR administration service can be adjusted to the number of employees and to the information flow of the company.
Related concepts
Base pay · Payslip · Withholding tax · Contribution · DMR