Hiring your first employee: How to get it right
Some things in life and business you can make up as you go, styling out mistakes and using errors to make you stronger, next time round. Hiring your first employee (or any employee) isn’t one of them, and you do need to be on the right side of the law, when planning how you’re going to do it.
On-boarding may be more of a skill (deciding what tech or tools you’re going to provide them with, for example, or any training), but for business fundamentals like becoming an employer, it’s best to stick close to gov.uk (the government’s website), and guidance around employing staff for the first time. It currently sets out seven golden rules for getting the employment process right, which I’ve unpicked here, to get you ready for signing on the dotted line.
1. Decide how much you’re going to pay
Along with deciding how much you’re going to pay your employee, you need to make sure that this is at least the National Minimum Wage.
This sounds simple enough, but will depend on how old your employee is and whether they’re an apprentice.
There’s a handy calculator on gov.uk to help employees work out if they’re getting the minimum wage (or the National Living Wage if they’re over 25), and you can easily use it to do your own checks. Just answer the questions as if you were the employee, and be as accurate as you can.
That covers your responsibility as an employer, but do make sure you’ve done some research around the role, and what seems a fair and realistic wage for what you’re going to be asking your employee to do. It’s all about balance, because whilst you need to watch costs, it can pay to pay well.
2. Check their right to work
Not everybody has the legal right to work in the UK. Currently, employers face fines of up to £20,000 if unable to prove they’ve checked an employee’s right to work. It’s not worth the risk, and really very easy to do.
Along with fundamentals like a valid passport, the online quick-check tool on gov.uk asks about British citizenship, which you’ll need to confirm with your prospective employee. Depending on your answers, the tool gives you plenty of guidance about what documentation you need to check and make copies of, to confirm the employee’s right to work.
Once you’ve confirmed their right to work, you may also need to check things like a criminal or health record, taking care to follow the current data protection rules throughout the process. Don’t worry, there’s lots of information on all of this on gov.uk’s employer checks page.
3. Do a DBS check
These used to be known as CRB checks, and are very important for businesses working with vulnerable people (such as children), or in security. You can get guidance on Disclosure and Barring Service (DBS) checks, and remember, the rules around these are different for Scottish and Northern Irish businesses and employees.
4. Get employers’ liability insurance
You’re doing all the groundwork and starting with the best intentions, but things can go wrong, in any job. Say your employee was injured as a result of working for you, and made a claim, how would you cover the costs of any compensation and legal work?
Employers are required by law, in most cases, to have insurance in place. There are exceptions, for example if you’re employing a close family member, but even then, you’ll want to consider your insurance options. Claim costs can run very high, and your policy will need to cover you for at least £5,000,000.
Sounds like a lot? When shopping for a quote just bear in mind, you can currently be fined £2,500 for every day you’re not insured, and risk a £1,000 fine if unable to show your employers’ liability (EL) insurance certificate when asked.
5. Create an employment contract
Found the perfect person? You’ll be keen to offer as quickly as possible and get to work, but hold your horses. It’s very important that you send details of the job, including terms and conditions, to your new hire, in writing.
If you’re employing them for more than one month you’ll also need to give them a written statement of employment. Check the guidance on what this statement should contain, and seek legal advice if you need to, or are taking on a few employees. Make sure that you’re completely comfortable with the contract, and run through it with your employee, even if you’ve discussed particulars in an interview already.
That way, you both know where you stand, and there won’t be any surprises once you’re working together.
6. Register as an employer
There aren’t many things Her Majesty’s Revenue and Customs (HMRC) doesn’t need to know. As you might have guessed, you’ll need to register as an employer, and you can do this up to four weeks before you pay your new employee for the first time.
7. Set up a workplace pension scheme
You may have noticed a few headlines about this recently. Pensions are big news, especially where small businesses are concerned, due to new legislation around employer responsibilities.
It’s best to take it seriously, know what’s required and not treat it as a ‘grudge job’. There are lots of different rules around ‘automatic enrolment’ for employers, mainly depending on how many people you have on payroll.
But one thing is clear, by 2018 you’ll need to provide a workplace pension for eligible staff. Get cracking now and avoid the stress of doing it in a hurry.