How to set up employee IDs as a UK employer?

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Having a secure and accurate way to keep employee records is no walk-in-the-park for UK businesses. However, the work gets less tedious when you assign employee IDs to all of your staff.

In this short guide, we’ll discuss what employee IDs are, the benefits of implementing an ID scheme, and so on. So, let’s begin.

What is an employee ID?

An employee ID is a unique form of identification that UK employers can assign to individual employees.

An employee ID, like a passport or any other identifying material, is unique to each UK employee, and serves as a reliable proof of identity within the organisation. Therefore, it’s expected that no two employees can have the same employee ID.

A typical employee ID contains personal information about the individual (like their name, address, and payroll details) and some other information about how they relate to your business. This connection is vital for accurate business intelligence and reporting.

‘Employee code’ or ‘employee number’ are other terms that mean the same as an employee ID.

Why should we use employee IDs?

UK law doesn’t mandate businesses to assign IDs to their employees. However, you’ll be doing yourself a world of good if you choose to use employee IDs within your company.

Here are three essential reasons you should consider using employee IDs as a proactive employer.

1. Better organise and manage employee records

Generally, an environment becomes chaotic when there’s no order to things. The same can happen within your company if you fail to put suitable systems in place to keep things organised. Without robust systems, data management becomes unmanageable.

With an employee ID system, you’ll have an organised and well-maintained collection of information concerning your employees. This way, finding an employee’s personal details, payroll information, department, employment details, employee contracts, annual leave and absences, and so on, is a breeze, saving you huge amounts of time.

You’ll find that using employee IDs is especially beneficial if you have more employees than you can count on one hand. It is simply the best way to track staff and everything to do with them.

2. Control access to sensitive information

Not all employees should have the same level of access within your company building or around the online software or applications you use.

With an employee ID, you can grant only specific individuals access to sensitive information. Managing access rights ensures data integrity and security. So, for instance, a salesperson’s ID might not give them the clearance to view information that a senior sales executive’s ID would give them access to.

You can also assign temporary IDs to interns, contractors, or clients whenever there’s a need, and set how far it can get them within your applications or building.

3. Avoid confusion and prevent identity theft

To not put your employees at risk of identity theft, you should avoid placing sensitive information like birthdays and National Insurance (NI) numbers on an employee ID card.

As your company grows, it won’t be long before you employ different people with the same names. Using their names as an identifier isn’t a wise choice, and could cause mix-ups and confusion.

On the other hand, a unique employee ID can help you quickly identify employees, even if they have the same names. That way, you won’t make an avoidable error, like paying Marketing John Doe’s salary to Sales John Doe.

Even if employees change their names sometime in the future, the ID remains the same and will help ensure you don’t make any errors.

What is a good employee ID format?

There is no one-size-fits-all format for employee IDs. UK companies and employers can decide how to design their employee IDs.

Here are some of the most common employee ID formats:

• Sequential digits, based on when an employee was hired. For instance, 00009 would represent an early hire, while 00743 would be for a hire made much later in the year.

• A mix of digits and letters, where letters signify the employee’s department. For instance, ACC1234 could be an ID for an employee in the accounting department.

• Special codes for temporary workers like interns or contractors. For instance, TEMP007.

It’s essential to be consistent with the employee ID format you’ve chosen, as changing it often could confuse employees and defeat the purpose of the IDs.

Your company’s employee IDs should come from the same department if you want them to be consistent. For instance, you can ask your Human Resources department to assign all employee IDs to ensure there are no duplicates, and everything is well-organised.

What is the difference between an employee ID and a payroll number?

Although similar, an employee ID varies from a payroll number in one key area.

An employer typically assigns an employee ID to help identify details about a specific employee.

A payroll number, on the other hand, is more of an identifier for the position, instead of the employee in that role.

For example, let’s assume Jane is a content writer for ABC. Jane’s employee ID would remain the same no matter the position she holds in the company, as that number is uniquely tied to her as an individual.

However, her payroll ID would change if she was promoted from a content writer to a content marketing manager. And her new payroll ID would reflect her current role.

Payroll IDs are primarily used for payroll and tax purposes, and ensure employees are paid what they’re supposed to be paid. This distinction is crucial for accurate tax compliance.

HMRC also records the payroll IDs of employees working under employers who use the Pay As You Earn (PAYE) payroll system.

How do I create employee IDs?

Employee IDs help you keep a tidy database of your employees and allow you to identify them without revealing personal information that might put them at risk.

Using payroll software like PayFit, UK businesses can automatically generate and distribute forms wherever they want employee IDs to appear.

Businesses can also use PayFit to build custom reports that use employee IDs as identifiers.

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