Hiring an employee is very challenging, more so if you’re a small business. That is why we put this how-to employ someone in a small business guide together. There are so many requirements that you have to meet as an employer. Finding the right employee will increase productivity and have a positive impact on the business. But if you hire the wrong employee, expect them to have a negative impact on the business.
As an employer, you should take the hiring process seriously as it may have huge positive or negative implications for your overall business. Below is a step-by-step guide that you need to follow when hiring a new employee into your business in the UK.
Step 1: Come up with a clear job description
One of the most common mistakes that employers make is failing to come up with a clear job description. Ensure that you’re clear about the kind of person you want to hire, the skills that they should possess, the title of the job, working hours, and the amount you’re willing to pay the right candidate.
During the hiring procedure, have an accurate account of every candidate, including their strengths and weaknesses, expectations, and interview notes. This information will be vital when choosing your most preferred candidate.
Step 2: Choose who is doing the recruiting
Will you be doing the recruitment or will someone be doing it for you? Calculate the time it will take to hire someone and decide if you will do it, assign someone in your business to do it or if you will hire a recruiter to help you out.
But since it is a small business, it is better off if you do the recruitment by yourself. You will have to perform duties like writing the job description, advertising the vacancy, communicating with potential candidates, answering queries, interviewing & sorting out applicants.
Step 3: Make sure every employee has a National Insurance number
It is a requirement in the UK that every employee should have a National Insurance Number. This number is normally made up of both numbers and letters. Each worker pays National Insurance contributions to qualify for some gains such as the state pension.
Furthermore, it means that their tax payments are recorded against their name. So, if the employee is not from the UK, they will have to apply for this number before they can start working for you.
Step 4: Know your obligations as an employer
As an employer, you must know your obligations. This is because many employees may not know the things that they have to perform unless you assist them. It doesn’t matter if they were working with another business or not, you should let them know everything.
The type of contract and employment status that you give your new employee will determine their tax and employment obligations. Some of the usual employment agreements include full-time, part-time, freelance, contract, fixed-term, and consultant.
Step 5: Take note of important tasks and dates
Operating a small business is no joke as there are lots of things to remember. Even though your new employee will make things easier, things will not be simple in the first few months there will be many dates and tasks to note.
The best way to remember important dates and tasks is by logging into HM revenue and customs PAYE online service to access codes & notices concerning your employees, send payroll reports to HMRC, receive alerts from HMRC if you’re late paying or reporting, and appealing a penalty.
Step 6: Understand the rights of your workers
Employees have rights that are legally protected. These should be observed by the employer as failure to-do-so can lead employees to seek compensation. The rights are divided into two – statutory and contractual rights. Most of the statutory rights come from the act of parliament and not the employment contract. These include:
- Equal pay regardless of the sex
- No discrimination based on sex, age, race, sexual orientation, disability, marriage, religion, and belief.
- Statutory maternity and paternity leave
- Have sufficient notice of dismissal
- Workplace conditions
- Terms of employment
- Trade union memberships
- Annual leave and working time limits
- National minimum wage
Step 7: Acquire employer’s liability insurance
The moment you become an employer, the law requires that you have employer’s liability insurance. Also, it is a requirement that you take a cover from an authorized insurer. This insurance is created to compensate an employee that is injured at work. Additionally, it protects your business if it is taken to court by a worker who suffers illness or injury at the workplace.
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Any business that operates without liability insurance is committing a crime. You can purchase the insurance from an insurer or a specialist through the Association of British Insurers or British Insurance Brokers’ Association. Several things such as the number of the employees, the nature of the business, and your former insurance claims history determine the cost of insurance.
Step 8: Create a payroll system
The employer has the option of setting up the payroll or outsourcing the setup to the accountant. To make the payroll system easier, add it the accounting software. Good accounting software should pay your employees efficiently and file reports with HMRC.
Step 9: Keep a file for every worker
Storing up-to-date and accurate records for all your workers is important as it will help you work out their pay and entitlement. Some of the employee’s records to keep include full name, contact, emergency contacts, address, tax details, a signed copy of their employment contract, preferred payment method, and any other vital information about them.
Step 10: Set out clear guidelines on goals and expectations
Having clear goals and expectations is important for all employers. It doesn’t matter even if it’s just one employee. Describe what your employee has to do and they should have an idea from the interview procedure. Also, tell them what you will provide in return so that there is no confusion or misunderstanding.
The employee should know workplace rules such as misconduct, work standards, absence, and use of company facilities. A good employer and employee relationship should be based on mutual trust, honesty, and respect.
Conclusion
Employing someone for the first time can be daunting. Following the steps above will not only help you get a qualified employee but also will assist you to meet legal requirements as an employer. Don’t forget to ensure that your employee has the right work documents and is permitted to work in the UK. Employing a person without the right documents might lead you to face a £20,000 fine.