How to hire your first employee

Hiring your first employee is a huge and exciting step for any small business. It is an important stage in the evolution of your company because as your business expands you will not be able to handle every task yourself.

However, this important milestone is also one you need to approach with awareness, both about your legal obligations and the importance of choosing the right person for the job. Here are some tops tips for hiring your first employee.

Decide what you can afford

Cost is a major consideration when it comes to hiring someone. You will decide how much you are willing to pay your employee and you must pay them the National Minimum Wage. Take a thorough look over your finances to ensure you can pay your employee comfortably, so you are not left in a position where you are losing money or unable to pay yourself.

Remember that the cost to you will be more than the advertised salary due to National Insurance and pension contributions. The recruitment process itself is also likely to cost money because even if you choose to recruit your employee yourself, you may still have to pay advertising costs.

Define the role

Consider very carefully the specific things that you are looking for in the job role; the description of the job itself, the expectations you have and the required experience. Think about what that person would be doing on a day-to-day basis. This will ensure that you choose the right person and that they will fill their working time efficiently and productively.

Think about whether you need someone at all; could you tackle some of the tasks yourself with better organisation? Do you have enough work to keep that person busy full-time or could the job start as a part-time role and be built up from there? You may wish to think about hiring a freelancer or consultant to help you as this could be a more cost-effective option.

How to attract the right applicants

When it comes to thinking about the right person for the role, write down the skills, characteristics and qualifications of your ideal candidate. Do you want a pro-active self-starter? Someone who is detail-orientated?

Write the job description, pinning down exactly what the role is and its full remit, giving you the best chance of finding the right person to fit your requirements. List the key responsibilities; essential and desired skills and experience; and details about your business, its location and any other information which could make you stand out from your competitors.

Your employee’s salary will be dependent on their level of experience and expertise but you will need to make the salary competitive in order to find the best person. Benefits are often used by companies to entice the best people to work for them and can be a cost-effective way of hiring the right talent. So think about whether you could offer flexible working hours, extra training or any other company benefits, which could draw employees in.

The recruitment process

It is essential that you find the right person with the necessary skills, qualifications, knowledge and expertise to fulfil your business objectives. Advertise the role where you know you will reach likely candidates. Increasingly, job adverts are online and there are many job sites, such as Monster, Indeed and Reed, who can help you reach job-seekers. The cost and service between sites will vary, so ensure you research every option before choosing one.

If you have a good profile on social media, it is definitely worth posting to let your followers know you are searching for a new employee. Make your post fun and quirky to engage as much interest as possible. There is also the option to use paid social media advertising to advertise jobs, which will typically cost less than a traditional jobs site. It is also worth asking your network of contacts if they may know of anyone who could fill the role.

Alternatively, you may wish to use a recruitment agency, but this can be an expensive option for many small businesses, who will prefer to be in charge of the process themselves.

Choosing the right person

Think carefully about the selection process; are you going to have a series of questions? Do you want to test candidates’ skills? Compare applications against the post’s requirements and ensure you are consistent in your approach, so you can compare shortlisted candidates.

When making your choice, be fair and objective. Look for someone who shares your ethos and enthusiasm for the business and its future vision. Maintain all records for transparency so after your chosen candidate has accepted the role, you can let unsuccessful candidates know and give them feedback.

Carry out checks

Before hiring your preferred candidate, you will need to carry out a number of checks. These include following up with the referees they provided when they applied for the job. You are also required by law to check that they can legally work in the UK. In certain professions, such as those that involve working with children, you will also need to apply for a DBS check.

Statement of employment

You will need to give your employee a written statement of employment if they work for you for more than one month. This sets out their main conditions of employment such as pay, hours, description of work, job title, holiday entitlement etc. This must be given to your employee within two months of their start date.

Employers’ liability insurance

You will need employers’ liability insurance, with cover of at least £5m, as soon as you become an employer. This allows you to pay compensation if your employee becomes ill or injured as a result of the work they do for you. You can get quick online quotes from business insurance brokers such as Simply Business.

Register as an employer with HMRC

You will need to register as an employer with HMRC before you start paying your new employee. It’s advisable to register in good time; this can be done up to two months before the first payday. In addition to registration, your responsibilities will include deducting the correct amount of PAYE and National Insurance Contributions (NICs), paying employers’ Class 1 NICs, making statutory payments, and keeping records for at least three years from the end of the tax year they relate to. This may sound complex but payroll software can make the process relatively straightforward.

Enrol your employee in a workplace pension

You will need to enrol your new employee in a workplace pension scheme. By law in the UK, employees aged between 22 and 66 and earning a minimum of £10,000 per year, must be automatically enrolled in a company pension scheme unless they choose to opt out.

Welcome your new employee

Start on the right foot with your new employee. Spend time introducing them to your business and the way you work, so you can get the most from them. If your employee feels well-informed, then they will be better equipped to do their job. Meet regularly with them to set expectations and discuss any training needs within the first few weeks and aim to schedule regular catch-ups to see how they are doing.