Taking on your first employee - What you need to know

Taking on Staff for the first time

It may feel like venturing into the unknown but rather than being scary it should be a really exciting time and the start of a new chapter in the story of your business.

You have calculated that you have the turnover and sales pipeline and forecasts to grow your business and you are now working all hours just to get the work done.  Taking on a member of staff should be fee generating of about 2-3 times their basic salary.

You remember back to why you wanted to work for yourself, and it was probably so you did not have to work all hours!!  So, now seems to be the time for you to take a leap of faith. 

So where do you start?

What do you want them to do? – Might seem a bit formal but write a job description.  This may show you that you are asking too much or worse you don’t really know what you want them to do.  Being clear about expectations at this stage is vital and in the future you will need to refer back to these, to check the person is performing as you expect.  Of course they are not set in stone and will evolve as the person grows and your requirements in the business change. 

·     What are you going to pay for the role? What is it worth in the market place and is it reasonable and affordable for your business?  You must comply with national minimum wage.  You can always increase a salary as the job grows and your business profits enable it. 

·     What benefits are you going to offer?  We would all like to offer roles with a full and attractive benefits package but be realistic, you can start at statutory requirements and then increase these as your business becomes able to support the additional costs of enhanced benefits.

Make sure you understand the full costs to your business.  It’s not just salary.  You will need to register with HMRC for PAYE (Pay as you earn). 

What else do you have to pay?

• National Insurance Contributions
• Income Tax
• employers’ liability insurance
• and let’s not forget the Auto Enrolment pension to which you have to offer a stakeholder pension. 

Lots of considerations before you start getting excited and appointing someone.

So after some thinking you now know what they will be doing and how much you will paying now the struggle to find the person that is right to fir in your business. 

The approach will be different based on the type of role be careful to choose the correct channel or this can be a very costly (e.g. Agency – if you use one make sure it is right for you) or time-consuming (advert in local paper) activity for you. 

Word of warning as a first appointment it is vital to get it right.  Ask yourself is giving the job to one of your friends a good idea?  What if it doesn’t work out?  You need to make sure you get the right person who will add skills and competence to your business and not just being nice and giving someone a job.  But also do make a decision and don’t find reasons to turn everyone down.  You are not trying to recruit a ‘mini me’ you need someone who will compliment you.

This is your business, your livelihood and the livelihood of the person you appoint.

Once you have identified the person you want to appoint, Yippee. Don’t offer the job yet,  you MUST ensure that they are eligible to work in the UK before offering them the job.  You need to check they have the required documentation, What is the documentation – this can be found at www.gov.uk/legal-right-work-uk  Check the documents and take copies.  If they have a visa make a note of any expiry date as you MUST check it has been renewed or reissued.  Hiring an illegal worker can result in fines and these can reach thousands of pounds.  The easiest way to make sure you are covered is to have a full range of starter paperwork that covers all the information you need to collect for your new starter.  Just think of all the info needed to get them set up on your payroll.

Only a few more hurdles to cross but a biggie is the Employment Contract.  If there position is going to last for longer than a month they MUST be issued with a contract by their start date.  Most employees would expect to have it well in advance of when they start so be prepared as it could delay a start date. 

The contract as a minimum should include:

• employees name
• employer’s name and address
• start date
• job title or brief description
• rate of pay
• hours of work and pattern
• place of work and if any work will be aboard
• holiday entitlement and pay
• sick leave and pay
• contractual and non-contractual benefits
• pension arrangements 
• notice period
• duration if a temporary position
• Any training to be completed

Be aware of the statutory entitlements and make sure you are compliant.  These include minimum wage, holiday entitlement, sick pay, maternity, paternity and adoption leave.  You also need to have disciplinary and grievance procedures.  As well as contract I would also suggest having an offer letter that can easily detail the key aspects of the offer of employment. We make sure that all of our clients have an employee handbook that contains all of the additional policies and expectations so that both you and the employee is clear.

Get all this right and you will have the next chapter of your Companies story off to a great start.  Think it all sounds a bit daunting, don’t you are an expert in your field and I’m an expert in mine so if you want support let GO HR do the HR so you can focus on running your business.