Recruiting your first employee is a big deal. First of all, you’ll be committing to paying wages for someone every month, so you need to make sure that your cash flow can support this. Then there’s the fact that your business is your baby. If you’ve been running everything on your own for a while, you’ll have to get your head around delegating tasks and handing responsibility to someone else. It’s a lot to think about and that’s before you even consider the legal obligations and duties you’ll have as an employer.
However, there are also plenty of benefits to bringing your first employee on board.
If you’ve been turning work down because there are simply not enough hours in the day, that’s a sure sign you need an extra pair of hands. A new employee can help your business to grow and bring fresh ideas to the table which is great for innovation. They can also bring knowledge, expertise and specific skills to complement your own.
So, if you’re at the stage of hiring your first employee but not sure where to start, read on for the 5 steps we recommend you follow.
- Check your budget
Before getting into the finer detail of recruiting someone new, take a step back and look at your budget to ensure you have available funds. Paying an employee every month will incur cost such as:
- Gross salary (at least National Minimum Wage)
- Employer’s National Insurance (NI) contributions
- Holiday pay
- Statutory payments such as sick pay, maternity leave and paternity leave
- Pension contributions
However, bear in mind that there will also be less obvious costs to factor in such as job advertising, payroll processing, employer’s liability insurance, new equipment or office space and training/development costs.
- Define the role
When you’re sure that there is enough budget to bring someone else on board, you’ll need to work out what they will be doing and whether it will be full-time, part-time or for a fixed length of time.
Writing this in a job description (details of the day to day work required) and person specification (details about the skills and knowledge needed to carry out the role) will really help to clarify your thoughts. There are templates you can use for both of these documents to ensure you cover everything needed.
- The recruitment process
Once you have your role defined, you’ll want to consider where it’s going to be advertised. In the past, this was usually in the jobs section of a relevant newspaper but there are so many other options now. The best one will depend on your business, the sector and the type of role but here are a few ideas to get you started:
- Specialist sector websites
- Your website and social media accounts
- Online advertising and agencies
- Specialist publications
- Via a head hunter agency
It’s important to detail the process you’ll be following, including how applicants will be short listed and selected to ensure fairness and compliance with equal opportunities legislation. As a minimum, you should:
- Advertise the vacancy (with closing date)
- Shortlist applicants for interview against objective and standardised criteria
- Interview candidates, asking the same questions of all, recording answers
- Depending on the role, do a skills test for all candidates
- Select the successful candidate
- Make a written offer (subject to references and checks)
- Follow up references and checks such as the legal right to work in the UK
- Arrange a start date and induction
The easiest way to compare different applicants when shortlisting who to invite for interview is to ask candidates to complete a standard application form (that way, you’ll know where to look for all the relevant information). Receiving a pile of CV’s in different formats with varying degrees of detail can make life much more difficult.
- Know your legal requirements as an employer
As an employer, you’ll need to learn a whole new set of legal processes. To ensure you are fully compliant, an HR consultant can cover these with you but, for the purposes of this guide, here are a few things to be aware of.
- Give your employee the main terms of their employment by the first day of employment, and their wider terms within 2 months.
- Get employer’s liability insurance as soon as you become an employer
- Register with HMRC as an employer before the first pay day
- Check if you need to enrol your employee into a workplace pension scheme (which must have an 8% contribution, with at least 3% paid by the employer)
- Comply with National Minimum Wage
- Protect the health, safety and welfare of your employee/s. You must have a health and safety policy and, if you employ 5 or more people, this must be written down
- Adhere to UK Government employment rights.
This guide from the UK Government gives more information on the 7 steps to take when hiring your first employee.
- Managing your employee
Once your new person commences employment, the work really starts!
This is where you learn how to be a boss and how to delegate. Employees will be looking for challenge and fulfilment in their work, but they also need structure, support, guidance and appreciation.
On top of that, they’ll want to be certain that their salary will be paid on time and that they have opportunities for training, development and growth.
As an employer, you’ll also need to monitor any absence, handle any problems which occur using discipline or grievance procedures, and review their performance with regular appraisals. If things are not working out, you’ll want to know how to legally let your employee go, and lots of that comes from the day to day procedures you adopt from day one.
Making your life a little easier!
If you’re feeling a little daunted at the prospect of hiring your first employee, there are a couple of options which could help make your life a little easier.
The first is to hire the services of an HR Consultant, such as Black Kat HR run by Business Village tenant Kat Derbyshire, to look after all the legal and procedural tasks associated with employing staff.
An alternative option is to hire a contractor/freelancer rather than recruiting an employee. This can often be a more cost effective and flexible solution as you can bring someone on board for one-off projects or with specific expertise. You also don’t need to worry about paying statutory expenses such as employer’s NI, holiday pay, sick pay and pension contributions. However, make sure that you’re not falling foul of HMRC regulations on whether a person is an employee or self-employed.
Free 30 minute chat about your plans…
Interestingly, Black Kat HR helps businesses with both employed and self-employed contracts. Speaking to Kat, she told us that “When you’re taking on people in your business, whether as an employee or contractor, there’s a lot to know and many ways you can protect your business as well as meet your obligations for your people. Black Kat HR help small business owners with all things people and offer a free 30 minute, no obligation, call for anyone wanting to chat about their plans.”
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Recruiting your first employee is an exciting step to take in the growth of your business, but it’s also an important one and comes with lots of legal requirements to protect individuals.
If you’re wondering whether or not the time is right for you to become an employer, get in touch with Kevin Steel to find out how The Business Village can help with advice and support.