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  • A guide to employing staff for the first time

    A guide to employing staff for the first time

    Hiring an employee is an exciting and natural evolution in any business. And it may be something to think about if your workload is becoming too much for you to bear alone. But, as well as providing relief and assistance in day-to-day operations, employing staff is a big responsibility. So it's vital you understand what's expected of you as an employer, including your legal obligations, before you make your first workplace hire.

    There are several costs associated with bringing in an employee, as well as contractual requirements you need to abide by, when you become an employer in the UK.

    So it's in your business's best interests to understand exactly what's involved - and at stake - when hiring an employee for the very first time. Something we cover in detail in this guide. Including what you need to consider, and action, prior to appointing a first-time member of staff.

    1. Finding the right candidate

    Before you hire a new employee you need to think about why you want to bring someone into your organisation. Perhaps your orders are increasing and you need an extra set of hands to process, pack and post goods. Or maybe there's a particular area of your business you want to offload such as social media, PR, or accounting.

    Knowing what you need your new employee to do will help you accurately assess which applicants have the relevant skills and experience to cope with the day-to-day demands of the role. As well as ensuring you only receive CVs from serious candidates who are qualified for the position.

    Recruitment specialists Woodrow Mercer advise that "knowing exactly what you want and need is essential to hiring. Conducting a skills gap analysis will allow you to assess what skills you have and what skills you need, this will then allow you to decide who you need. Additionally this can also help you make decisions when it comes to the job title. If you are finding it hard to find the right person, tweaking the job title can really help attract a more accurate prospect."

    “It is important to be certain of your company values before heading into any interview. These values should be in the front of your mind throughout. Employsure believe that values are twice as important as capabilities. Sometimes this means candidates with the right attitude get hired over those with technical capabilities, this is fine as skills are easier to teach than attitude and presence.”

    Likewise, Nathan Schokker, founder of Talio and experienced employer explains "my first rule is always, always, trust your gut. That internal voice, not your brain, that instinctive voice. Whenever I’ve followed that it’s always worked especially when it comes to people and when I’ve gone against it, it’s failed! Obviously you shouldn’t neglect checking experience, references and attitude should always be a great measure of how well someone will do."

    Tarek Alaruri from Fairmarkit says: “Finding the right candidates is very much a numbers game. We leverage our networks and different recruiting platforms (such as Linkedin) to speak with the most possible candidates and move them into the recruiting funnel. As a first time founder we've learned from each successful and non-successful hire, what we need from the position and what skills they need to be successful.”

    When you have found potential candidates to interview, Joshua Lewis, Owner of BEE (Business Efficiency Experts), shares the following advice on this step of the hiring process: “Once you've got them all ready to go, it's important to have a set list of questions that you're going to ask them.

    “You want the questions to be divided into three main categories. One of the categories is going to be your general housekeeping stuff. For example, are they going to be able to get to the job? Do they have a car? Are they able to work the hours you've asked them to work? What happens if there's work that comes outside of the scheme of what would be your standard day? Asking a few of those sort of basic questions is a good idea.

    “Once you've done that, have the technical questions ready. Try to make it stuff that you can't Google.”

    Additionally, Paulette McCormack from Fresh HR Insights adds that "something many people forget the importance of is the probationary period. A probationary period, often 3 months, after an employee starts gives both parties time to decide whether the employee is suited to the position or the business, and allows either to end the employment without reason. There is a lot more to finding the right candidate than experience or ability, they must suit the company and fit right in. Make the most of your probation periods and treat them seriously."
                 

    2. Registering as an employer

    Once you start employing staff you'll be liable for ensuring all tax and NI contributions are deducted from your employee's salary, and reporting these to HMRC as part of your business accounting.

    If you are a limited company, then you’ll have to register your company and yourself as an employer before making your first hire. Unless you plan on paying your employee less than the Lower Earnings Limit for National Insurance per week (£116 at time of printing). In which case your employee won't be liable for National Insurance contributions, but will still qualify for all the benefits associated with paying NI in Britain.

    3. Carrying out employee ID and background checks

    Once you've identified an employee you want to take on you'll need to perform checks to confirm their identity and their eligibility to work in the UK. As an employer of staff you could find yourself in serious trouble if you hire someone who isn't eligible for UK employment. So don't just take your new employee's word for it. It's easy to check their employment status by visiting gov.co.uk/legal-right-work-uk and answering a few basic questions.

    If your employee is working with or around children you should also complete a DBS (criminal record) background check, to ensure they can safely work in this environment. In fact, you may want to complete a DBS check no matter what. Just to ensure that there are no prior convictions on your new employee's record you need to aware of.

    4. Providing a contract and employment statement

    When you're entering into any official agreement, such as an employer employee working relationship, it's important to draw up a contract to protect both parties' interests.

    As an employer it's your responsibility to create this contract and ask your employee to review, sign, date and return it, before they commence work. Among other things, the contract should outline the responsibilities of the employee, their start date, their salary, and the terms of their employment, including any notice period. For employees working with you for one month or more you also need to provide a written statement of works at least two months ahead of the employee's start date in your organisation.

    This process can be made easier with the guidance of a HR company. Zoe Easey, Director of Epix Media, says: “I remember our first hires (6 years ago) like it was yesterday. The one big thing we did that I stand by to this day was hiring a HR company to help. We did this because we were planning ahead; we knew we'd employ more people and wanted to get it as right as we could from day one.

    “It was for a single project of work which largely consisted of putting together our employee handbook and contracts. So, it wasn’t expensive at all. We started as we meant to go on, and to this day we have always had good HR support which is now under a retainer. We couldn't have grown like we have, or been able to face some of our biggest challenges, without them.”

    6. Employee payroll and pension schemes

    The first thing that every company needs to think about when hiring is its financial situation. Aodhan MacCathmhaoil from Taylor Wells, who are nosiness pricing specialists, states that “if you are employing you are obviously doing well and growing. We know all too well the pressures of growing a new business. You need to be totally aware of your payment terms and your cashflow estimates because you need to be sure that you can afford to hire the people you wish to hire. We see lots of small businesses in trouble just a few months after opening due to insufficient funding and a poorly thought through business plan".

    When you employ staff it's your responsibility to pay your employee's salary to the frequency (weekly/fortnightly/monthly) outlined in the employment contract you both signed. Reporting this and any taxes to HMRC. This includes issuing the employee with a payslip specifying his or her gross and net pay, together with any salary deductions.

    In addition to wages you have an obligation as a UK employer to enrol into a pension scheme for employees aged 22 plus, whose salary exceeds £9,400 per year. You'll be expected to contribute to this pension in addition to the contributions your employee makes (usually around 1-3%). More information can be found at http://www.gov.co.uk/workplace-pensions.

    It's important to remember you're liable for your employee's salary and pension contributions, no matter what. So if you lose a big contract or monthly sales are slower than usual, you still have to pay your employee what they're owed under your contract agreement.

    7. Sick pay, holiday entitlement and maternity leave

    Not only are you obliged to pay your employees for the time they're at work. In certain circumstances you're also required to pay for the times they're absent too. Such as holidays, sick leave and maternity.

    Statuary sick pay in the UK is currently £92.05 for up to 28 weeks. Payable from the fourth day an employee is off ill. While statuary maternity leave is 39 weeks. Broken down into 6 weeks at 90% of your usual weekly earnings, followed by £145.18 per week or 90% of your earnings (whichever is lower) for the remaining 33 weeks. In addition full time workers, who work a 5-day week, must also receive at least 28 days paid holiday per year.

    The other thing to consider in regards to paid employee absence is the possibility that you may also need to take on a temp or secondary staff member to cover your employee shortfall. Both of which come at additional cost, on top of the paid leave for your primary employee. Meaning, at certain times of year, the cost of having an employee within your business could rise above your usual outgoings.

    8. Employer's Liability Insurance

    Even if you only hire one person on a short term, part-time, or temporary contract, you're still legally bound to take out Employer's Liability insurance. Regardless of whether your employee is a paid, freelance, or voluntary worker. In fact, the penalty for not having Employer's Liability insurance (EL) is a £2,500 per day fine. So it really isn't a cost worth trying to avoid.

    Employer's Liability is there to protect you in the event that a member of staff has an accident or falls ill while providing their services to you. It could happen on your main premises, or anywhere else an employee is required to work as part of their job role. And this extends to claims for compensation made after their employment with you ends too. Providing they have evidence the condition started as a direct consequence of their employment with you.

    The only exemption applies if your employee is a direct family member. In which case Employer's Liability insurance is usually not required. But, the fines and consequences of not having an EL policy in place are so great to businesses it's always worth comprehensively checking if your circumstances require this type of insurance.

    For more information read our guide to Employer's Liability Insurance.



    Hiring your first employee is highly rewarding and can make the world of difference to your daily productivity, sales targets and brand reach. But ultimately the decision to start employing staff boils down to your ability to meet the requirements of an employer. Something you need to consider carefully before taking on any new member of staff. For more information about becoming a first-time employer in the UK, this government guide offers insightful further reading and support.

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