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guide how to hire your first employee

Guide: How To Hire Your First Employee

by constructaquote - 16 December 2017


Taking on your first employee can be an exciting time. It marks a stepping stone in your business and the start of a new chapter. However, while taking on an employee may be great for the growth of your business, you should first establish if you are 100% ready for this next step.

First, you should consider if you are doing absolutely everything you can yourself to save costs as much as possible, but this is not always possible when there is so much to do and sometimes, hiring an employee even during uncertain times can help boost your business.

An extra pair of hands and someone else to bounce ideas off could be the difference between your business growing or failing, but the business must be in a position where it can pay for your employee comfortably as well as manage any other costs.

While an employee comes at a cost, if you can afford to pay someone this will help to free up more of your time so that you can focus on the high-level areas to grow the business. It’s important to understand exactly why you need an employee. Be clear about their role and how they can benefit the business before you waste time looking for the wrong person.

When you’re ready to recruit your first employee, you can either advertise for the role yourself and post it on social media, or you can go through a recruitment agency. Recruitment agencies have a database of talent. However, this comes at a cost and agency’s fee will increase in line with the salary. For example, on a salary of £20,000, the recruitment agencies fee will be around 20% – 25%.

Using platforms such as LinkedIn, Twitter and Facebook may help you find candidates for free. However, they may not have the skills and expertise suited for the role and will, therefore, waste a lot of your time.

What to look for in your first employee?

When hiring your first employee, you may want to employ someone with a variety of skills so that they can take on a wide range of activities under their one role.

For instance, you may need someone who has good marketing skills but can also help out with selling and manage some aspects of admin. Or, you might need someone who is an expert in just one area and can take the reigns of that particular area, for instance, sales, marketing, admin or customer service.

The type of candidate you need will depend largely on your business type and what you need them to do. It will also depend on the amount of money you can afford to pay them. Will you be taking on someone part-time or full-time? Many first time employers take on a part-time employee first and then increase their hours to full-time as the business makes more money.

Will your business need someone experienced who can jump straight into the role and take control or are you happy to take on someone with little or no experience and devote time to nurture and mould them into what you need?

The candidates level of experience will determine how much they are prepared to work for. Experienced staff will usually come at a higher cost than non-experienced staff who are often willing to work for less just to get their foot in the door.

However, while experience is vital for many roles, a determined and passionate worker can generally bring a lot more to a business than an experienced person can. Experienced employees can often be stuck in their ways and resistant to learning new methods while non-experienced employees are willing to do whatever it takes.

When interviewing for a new recruit, try and find out about their personality as well as their work credentials. While you’ll be employing them to do a job, it always helps if you can get on with your staff too. Find out what they’re interested in and what they like to do in their spare time. If partying is a top priority for them, be aware that they may (not guaranteed) be the type of person to phone in sick.

While skills and experience may be top of your list of must-haves, it’s also important to find someone that you get a good gut feeling with as in the beginning it’s going to be just the two of you and getting on well will help the business. However, this doesn’t mean you should employ someone you want to be best friends with as employees will soon start treating you like a mate and not their boss.

If you find someone who ticks a lot of boxes but doesn’t give you a good gut feeling, employing this type of person could make things hard for you on a daily basis, and you really don’t want things to turn sour and end up with a tribunal issue on your hands.

Even though you’re probably raring to go and hire someone quickly, it’s better to take your time and find the right candidate that is motivated to grow the business with you. Striking a balance and finding a good all rounded recruit can be hard but they’re worth it when they come along.

What are your legal obligations as an employer?

Taking on a new employee may benefit your business, but it also comes with a host of legal responsibilities for you as the employer. Here are the main things you need to do when hiring someone…

  1. Carry out candidate checks

Before the applicant can start working for you, you need to check that they are legally allowed to work in the U.K. You can do this by completing a few simple government questions here.

You should also check that they are safe to work with by running a criminal record check known as a DBS check. This is particularly important if your business operates around children.

  1. Provide a statement of employment

This document will state the conditions of employment and must be sent to the employee within two months of starting their work for you. You only need to send a statement of employment to workers that will be working for you for one month or more.

  1. Provide the employee with a contract

For both you and your employee to be on the same page, you need to set out what their role will entail and what you expect of them. You need to send them an official contract of employment. They must sign the agreement section of the contract before starting work for you.

  1. Register with HMRC

You must register with HMRC as an employer within four weeks of taking on your first employee, and you will be responsible for paying your employee the agreed salary and also deducting the correct amount of PAYE (income tax) and National Insurance from their salary.

  1. Pay your Employee correctly

You must pay your employee the pre-agreed amount that was either on the job advertisement or discussed between you both at the interview. The pay must comply with the National Minimum Wage law.

Each employee you pay must be given a payslip which clearly states their gross and net pay, income tax, National Insurance deductions and any other deductions such as pensions. You are also legally obliged to submit payroll data to HMRC each time you pay your employees. This is subject to the Real Time Information regime implemented in 2013.

You will also need to factor in sick pay, holiday pay and maternity pay for your employees. Your employees may be eligible for Statutory Sick Pay (SSP), which is £89.35 a week for up to 28 weeks.

You can offer more if you have a company sick pay scheme but you cannot offer less. Company schemes are also called ‘contractual’ or ‘occupational’ sick pay and must be included in an employment contract.

You can find out more about the governments pay rules here.

  1. Enrol your Employee for pension

Employers in the U.K. must enrol their employees in a new workplace pension scheme if they earn more than £9,440 a year and are aged 22 and over. You can find out more about the governments’ workplace pensions here.

  1. Health and safety

As an employer, you are entirely responsible for any death, injury or illness that affects your employee as result of being in your workplace. This means you must take adequate action to prevent any harm to your employee by providing a safe and secure place of work. You only need a formal Health and Safety policy if you have more than 5 employees. However, you should always take time to carry out risk assessments in your business and eliminate any potential hazards.

You can view our article on Health and Safety legislation here. 

  1. Insurance

It is a legal requirement in the U.K. for all employers to have employers liability insurance.

If your employee is injured or made ill as a result of an issue within the workplace, they may want to make a claim against you. Without employers liability insurance, you will have to pay any compensation claims to the claimant (your employee) as well as any legal fees.

If you are found trading without the required liability insurance, you could be faced with heavy fines. If you fail to obtain valid employers liability insurance, you could be faced with fines of £2,500 for every day you have traded without it. You could also be fined up to £1,000 for not displaying the certificate of employers’ liability insurance.

Find out more about employers’ liability and get a quote here.