Hiring staff for your small business: what you need to know

For your business to grow, you need to recruit the right people. But if you’ve never employed someone before, where do you start?

In this post, we’ll look at a couple of the essentials to think about when hiring staff for your business, along with some common mistakes to avoid.

Define the role you want to fill

What new role or roles would your business most benefit from? Think about the skillsqualifications and experience your ideal person would have.

Here are 3 things to write down to help you understand who the right person is for your business:

  • a job description that sets out the responsibilities of your new hire.
  • a person specification.
  • a set of potential interview questions.

Documents such as the above will help you speed up the process of identifying and selecting the right person.

They’re also useful to refer back to in case you’re ever challenged by unsuccessful candidates.

Consider employment status

You’ve decided that your business team needs to grow, but does that growth mean you need to become a traditional employer?

Think about what you need and what employment status would be best for any hired help. Here are some questions to consider:

  • Do you need a full-time, part-time or fixed-term (contract) person?
  • Do they need to be employed by you?
  • Could you use the services of a self-employed, freelance service provider?

For example, some tasks such as design work may need to be done only occasionally. Would it be right to put someone on the permanent payroll for a role like this?

Or would it be better to treat this as project work that you could outsource as and when needed?

Conversely, you could be spending too much on outsourced work that could be done better and cheaper by someone working in-house.

There are various tests to help you determine an individual’s employment status. It is important that you select the correct one as differing employment statuses affect the statutory rights of any new person you hire.

A brief pause for reassurance

All of this may be more than you were bargaining for when you first thought about growing your business. The good news is that you don’t need to do all of this thinking and research alone. We often help our clients with an outsourced HR service, so do get in touch with our HR team if you need a hand.

Taking on new staff: common mistakes by small businesses

Let’s look at some of the most common issues we see when small businesses hire new people.

Mistake: no contract of employment

As an employer, you’re required to give individuals a written statement of particulars (a contract of employment). This has to be done within 8 weeks of the person’s start date.

From April 2020, the 8-week window will disappear and you’ll need to supply a contract by the person’s start date.

We can help with drafting your contracts via our own up-to-date contract templates.  ACAS (acas.org.uk) also has basic contract templates on their website.

Mistake: no pre-employment checks

If you don’t do the necessary pre-employment checks on your employees, you may incur fines.

The checks needed, depends on the nature of the work, but one essential is to confirm that your employees have the right to work in the UK.

Individuals who’ve been here for 5 years can apply for settled status and so may be eligible to work. However, it’s always best to check the current immigration laws to ensure you don’t put your business at risk.

Other tests include criminal record checks which are carried out by Disclosure Scotland in Scotland. Such activities are essential if your work involves access to children or vulnerable members of society.

Mistake: no payroll process

You’ll need to register with HMRC within 4 weeks of hiring a new member of staff, as employers must take responsibility for the correct handling of PAYE tax and National Insurance contributions.

You’ll also need to comply with National Minimum Wage requirements, which are notified in October and then applied the following April.

As payroll becomes a more complex and demanding task, including new provisions for auto-enrolment for pensions, we find that more of our clients are using our outsourced payroll service to help them.

While it’s definitely not a requirement to outsource payroll work, it often makes sense to do it.

Mistake: no employer’s liability insurance

As an employer, you’ll need to get employer’s liability insurance unless your business is run with close family. The minimum cover is for £5 million pounds, and it needs to be provided by an authorised insurer.

On a related note, employers have a responsibility for providing a safe and secure environment, including for people working from home. Whilst you should carry out risk assessments, there’s no need to write these down if you have fewer than 5 employees, but for any greater number of employees, you’re legally required to have a health and safety policy and documentation.

The Health and Safety Executive (www.hse.gov.uk) offers a range of support.

Mistake: no knowledge of employment legislation

It’s natural to expect your staff to perform to their best ability and to conduct themselves well. But you also need to protect your business as well as possible in case your staff don’t meet your expectations.

As your workforce grows, you may have to deal with a range of employee matters. You need to understand the statutory rights of the individuals you work with – from maternity leave to holiday to how best to manage their capability and performance, such as providing regular and constructive feedback and creating personal development plans. It’s best to have clear policies and procedures documented for all of this and more.

Our team can guide you through these challenges ensuring compliance with current employment legislation and best practice.

ACAS has a guide for new employers and advises them to “know the law”.

Let’s sum up

Taking on new staff is exciting: it’s a clear sign that your capacity is on the rise.

Amid that sense of eager anticipation of growing your small business, remember to do your preparation. Check what sort of working arrangement is best for taking on new people, then get your documents and processes in order, and make sure you avoid the common mistakes we’ve listed above.

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