HR expert Viv Foster, from business consultancy Positive Momentum, helps you to understand what you need to do when hiring your first employee.
So you’re at the stage where your business needs more than just you. While the thought of taking on your first employee might feel a little daunting, an extra pair of hands can help you take on more business – and, hopefully, make more money – as well as relieving some of the burden on you. Hiring someone to help you with the everyday tasks can allow you to focus on what you’re good at and what you enjoy doing best: making sales, developing new products or working with your customers.
If you want to hire someone then it’s very important to get the basics right from the outset. It might be tempting to go for expediency over proper process, but my experience is that getting hiring right is time well spent if it means you employ the right person who can help your firm to really take off.
Every employee – even the most casual workers – have rights that you must recognise and abide by, otherwise you may find yourself in trouble. If you don’t have a clue about how to go about the legal aspects of employing someone for the first time then the government’s website, www.gov.uk, is a good place to start. It has a section devoted to employing people, which contains all the essential information.
For a start, you need to be clear about the status of the person you’re taking on: are they a worker, employee, self-employed or a contractor? These various definitions may seem irrelevant to how they do the job, but they are important, because your worker’s status determines their employment rights and your responsibilities as their employer. For example, whether they are eligible for statutory sick pay, maternity (or paternity) leave, paid holidays and redundancy will depend on their work-status definition. It’s also important to the taxman, because it will decide whether you must pay PAYE and National Insurance contributions to HMRC for them. Your accountant or legal advisor should be able to help you navigate this issue.
One of the most important aspects of being a first-time boss – as well as one of the trickiest – is to make the shift in mentality from being a sole trader to becoming an employer. Even if you intend to hire just one person to begin with, you should still start as you intend to go on. That means providing a proper contract for them to sign, which sets out clearly what you expect from them and what they can expect from you.
However tempting it is, hiring someone without providing that person with a properly drawn-up employment contract is a risk to your business, even if they are a friend or family member who just helps you out from time to time. A contract protects you, the employer, just as much as it does your employee. You are both potentially vulnerable if something goes wrong and there isn’t a written agreement between you containing their terms of employment.
You should be aware that, at the very least, any employee who has worked for at least one month has the statutory right to a “written statement of particulars of employment”, which has to contain certain items, such as what their normal working hours are and how often they will be paid.
Again, the government website offers plenty of straightforward advice on how to draw up an employment contract.
But there are some other useful resources for understanding more about being an employer:
• The website of the Chartered Institute of Personnel and Development (CIPD), www.cipd.co.uk, is a good place to look. Pretty much all of it is devoted to the whys and wherefores of employing people, which isn’t surprising as the CIPD is the HR professionals’ trade body. Although some parts of it are accessible only by CIPD members, it offers some good basic advice and a host of factsheets.
• ACAS, the Advisory, Conciliation and Arbitration service, also offers a lot of practical information on hiring and managing staff www.acas.org.uk.
• If your firm is affiliated to a trade body or professional association, then it may have information or hold events that can offer you information about hiring people.
• It’s handy also to know the name of a good local employment law firm. The larger ones often hold free seminars, which can be a good source of advice about what are the current employment hot topics.
Hiring your first employee is a big commitment, in time, effort and money, so it’s important you have the proper foundations in place – complying with the laws, having a candid discussion with your worker about your expectations towards them and setting that out in a clearly-written contract – in order for you to build your business.
In my next blog I’ll tell you how to attract the best candidates and how you can make them want to work for you, rather than for a big firm.