Employing Staff

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Employing staff to work for your business can be daunting, and whilst you should ensure that you have checked that the employment will further your business objectives and that you are familiar with the employment laws you will need to follow, it can also be rewarding when you find the right staff for your business.

Before you set about finding staff to work for you, known as recruiting, you should firstly sit down and do some research to ensure that you attract the right person for the role and to ensure that the employment achieves the objectives that will support your business aims.

You should give full consideration to the following aspects before you start your search for the right staff member/s for your business:

  • To ensure that the staff member is able to have a positive impact on your business objectives you should consider exactly what you want them to achieve, what this will look like on a day to day basis and what kind of skills you will expect of them and how will you know if they are successful in their role. This will enable you to produce a job description which will set out the main features of the role, the main duties on a day to day basis, their responsibilities and how their success will be defined. You should include their job title and how they will interact with you and any other staff, including who they will report to
  • You should ensure that you can afford to employ someone and that their employment will enhance the sustainability and profitability of your business. If you are following good business practices, you will already have a cash flow forecast and therefore you should adjust your projections to include both the cost of employing someone and also any increase you expect to see in your sales or reduction in expenses you anticipate. Remember that even if the person is employed in a role where they are expected to increase sales, this will take time for them to train fully and so this should also be factored into your projections.
  • You should familiarise yourself with the employment law that you will need to comply with, for example ensuring that your employee has the right to work in the UK, complying with equal opportunity legislation, working hours legislation, paying at or above minimum wage and ensuring that you provide enough paid holiday to name just a few. As a new employer, this can be daunting, if you are a member of an organisation such as Federation of Small Business or an organisation specifically to regulate or support your industry then you may be able to get support and guidance from them.
  • Whether it is documented or not, an employment contract comes into force as soon as employment starts. You must as a minimum provide your employee with a written statement which documents the main terms agreed. In the absence of a documented contract, statutory terms will apply, that is to say the minimum that the law requires. It is however good practice to have a full contract of employment as it ensures that both you and your employee/s know exactly what to expect and can ensure that misunderstandings are avoided. It is a good idea to have a contract of employment drawn up specifically for your business to ensure that all necessary aspects are covered.
  • Before your first employee/s start, you must take out Employers Liability Insurance, your policy must cover you for at least £5,000,000 and be taken from an authorised insurer. You should also consider and Health And Safety implications for your staff. See our page on Health and Safety
  • Once you have employed someone, you will need to register with HMRC as an employer and with The Pension Regulator to comply with Workplace Pension Laws. By the time your employee starts, you will have already agreed their rate and period of pay and ensured that this meets the current Minimum Wages Rates. You will need to notify HMRC of each payment you make to your employee on or before the payment date and will need to calculate how much tax, National Insurance and pension you should deduct from their pay. The amount of pay rate that you have agreed with your employee is known as their gross pay, the amount you pay them after any deductions is known as their net or take home pay. Depending on the level of pay, you may also have Employers National Insurance to pay. If you provide any benefits to your employee/s then you should also be aware of the correct process to follow to ensure that these are taxed correctly. It is crucially important to get your staff pay right, it is the basic reason that they are working and so if you aren’t confident you should engage the services of someone who can complete this for you.
  • Before their first day, you should have planned an induction programme for your employee. This is a planned course of activities which enable your new employee to become familiar with their working environment, their role and training on how to undertake this. It is sensible to include a probationary period of around 3 months for a new employee to ensure that you are both happy with the employment and a review of their performance should be conducted at regular intervals.

Managing employee aspects, from recruiting, induction, ongoing training and handling conflicts is commonly referred to as Human Resources or HR. If this is new to you, it can be advisable to use a consultant to ensure that you get things right, even having a professional drafted employment contract can be a big help to ensure that things are correct. There is no legal reason you cannot oversee things yourself, however it is such a complex area with hugely negative consequences for errors. If you do decide to go it alone, you should ensure that you take information from reliable sources. Free and impartial advice is available from the Advisory, Conciliation and Arbitration Service known as ACAS