Taking on your first employee is an important milestone of your business’ development. However, there are many administrative tasks, as well as legal requirements to consider. We’ve teamed up with our Managing Director, Helen Broughton MBE (who knows a thing or two about setting up a successful business) to give you our guide to taking on your first employee.
Step 1 – Preparation
- Create a job description – What do you want your employee to do? What skills will they need? How many hours will they need to work? What salary can you pay (you’ll need to consider NMW requirements)? How will they be supervised? Often the first employee is someone you know and may even be related…all the more reason to be explicit about what you expect them to do.
- Don’t be tempted to recruit someone like yourself – Think about your strengths and weaknesses and recruit someone to fill the gaps – you’ll be happier doing what you enjoy and are good at….and so will they.
- Don’t oversell the role – Be mindful of creating or encouraging unrealistic expectations…it can be problematic backtracking on promises, and it certainly isn’t the best start.
- Know your numbers – Look at the cost versus the extra income you’ll be able to generate. As well as the cost of a salary, you will also need to cover employment costs (employer’s NI, pension contributions etc.). You may need to purchase additional equipment or even invest in premises, introducing or increasing rent, rates, and utilities.
Step 2 – Make sure your house is in order
- Check the facts – Make sure that they have the right to work in the UK; get references and certificates – verify what your new recruit has told you; you need to be able to trust them.
- Agree how you will manage the person in advance – There’s no point recruiting someone to do a job that requires a lot of your time to train and answer questions if you plan to be out of the office a lot.
- Don’t forget the admin. Payroll, employment contract, staff handbook, health and safety in the workplace, statutory obligations (paid holiday, equal opportunities, protected rights etc.)
Step 3 – Get Growing
- Once your first employee is settled in and working well don’t forget to build in regular checks (appraisals) with them to make sure things are going as well for them as they are for you.
- You will need to keep an eye on increases in the National Minimum and Living Wages.
- Pension auto-enrolment will be something you need to put in place. You’ll receive a letter with the details of what you need to do in due course.
Your To Do List
Comply with the law in terms of:
- Registering for a PAYE scheme reference number. You can register online with HMRC and it can take up to 2 weeks
- Paying at least the National Minimum Wage (note that this is age related)
- Ensuring the person you employ has the right to work in the UK
- Providing at least the minimum number of paid holidays (for a full time person this is 20 days plus bank holidays
Draw up the following:
- A contract of employment
- Job descriptions
- Risk assessments
- Staff handbook
- Annual appraisal process
- Add incentives
- Set objectives
The world of employment can be a minefield but there is help available. Professional help doesn’t need to be expensive; most advisors will give you basic information for free and Google can be a great source of information (if you can spare the time to wade through it all). Also, HMRC provide basic tools to help with payroll and Real Time Information (RTI) obligations.
If you’ve no prior experience of payroll then you may want to outsource to an accountant or specialist payroll provider. Doing this can remove some of the stress of running your own business, as well as ensuring your payroll is administered accurately and on time.
If in doubt about anything…ask. If you do engage the services of a professional to help out, the cost will be a fraction of the cost of getting it wrong!
To find out more about any of our services, call us on 0800 731 3178