To employ someone successfully, you need to start off with a clear idea of your requirements for the new hire. What will they be doing day-to-day, and what skills do they need to be successful?
Next, you must carefully follow the employment laws relating to recruitment, such as obtaining employer liability insurance and making sure your new employee has a right to work in the UK.
Perhaps you’re looking to grow your business, or you’re turning down sales. Maybe you’re keen to bring in a specialised skill set, or you’re simply too busy to manage your work-load single-handedly. Reaching the point of needing to hire your first employee is an exciting time. But it’s also likely to be a very busy one! No doubt you want to find the right person and have them contributing as quickly as possible.
In the rush, it’s easy to overlook some of the legal components involved in recruitment. And for a small business especially, running into legal problems in these early stages is the very last thing you need on your plate.
To help, we’ve compiled a checklist of all the legal essentials, along with some advice from our own experience of recruiting into new businesses. It can feel like a lot to remember and a lot of boxes to tick to begin with, but once you’ve been through the hiring process a few times, you’ll soon feel like you’ve got the hang of it.
How to employ someone
1. Check you can afford it
This one may seem obvious, but you need to be confident here – someone will be relying on you to pay their salary on time each month.
It’s important to remember that it’s not just the employee’s salary you’ll need to cover, there’s national insurance payments and pension contributions too. Be sure you have the cash flow to pay the employee regularly and make these contributions too.
2. Define the role you’ll need your new hire to fulfil
Do you need to hire someone with a particular set of skills? Perhaps accounting, or sales experience? Or do you need someone who can offer all-round support because you just don’t have time to do everything yourself anymore? Consider the level of seniority and experience you’ll need this person to have, alongside the salary you’re prepared to pay and/or can afford.
Also, be sure that you’ll have enough work for this person to do. Consider what hours you would need someone to work (full or part-time) and what recurring tasks you’ll be able to assign them so that they can get on with these each week without asking you for jobs to do every few hours.
3. Decide on the appropriate contract
Is it an employee you need, or could the work be outsourced to a freelancer? If there’s a specific area of expertise you need to tap into, you might want to consider outsourcing to a freelancer or consultant to begin with.
Or perhaps you just need some temporary help over a busy Christmas period. In this case, hiring someone on a casual basis or using a casual employment contract may be the best fit.
It’s important to get to grips with the differences between these various types of employment contract, the advantages and disadvantages of each and the different legal requirements.
4. Register with the HMRC as an employer and set up PAYE
You’ll need to Register with the HMRC as an employer so you can pay tax and national insurance for your employee. Bear in mind that it usually takes up to five days to get your employer PAYE reference number and you cannot register more than two months’ before you start paying your new employee.
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5. Take out employer’s liability insurance
You must get employers’ liability insurance which covers you for at least £5 million as soon as you become an employer. This will help you pay compensation if an employee is injured or becomes ill through the work you’ve employed them to do.
Significant fines are enforceable for employers without insurance.
6. Prepare a clear job description and advertise the role
Write out a job description for the role, listing the tasks you’ll need the individual to carry out and the skills they need to possess.
If you’re recruiting for a role that covers an area where you lack knowledge, it’s a good idea to seek advice from people already working in that field. They’ll be able to help you establish what suitable candidates for the role might look like in terms of skills and experience.
With the job description written, it’s time to advertise. Post the role on your company website, online job boards, social media and reach out to your network. If you think you might need additional help to find suitable candidates, you might also want to consider working with a recruitment agency.
7. Comply with equal opportunities legislation
The key piece of legislation to be aware of when recruiting is the Equality Act 2010, which states that individuals must be treated fairly in all aspects of work including recruitment. This means you must ensure that no part of your recruitment process discriminates against anyone with a protected characteristic such as gender, race, ethnicity, disability, religion etc..
It’s also important to be aware that the Act provides for positive action, which means that you can give preference to an individual (of equal merit to another candidate) on the grounds of protected characteristics in order to alleviate an under-represented group in the workforce. For example; an employer may wish to promote job opportunities for individuals over a particular age if they feel this age group is under-represented in their present workforce.
8. Screening and interview process
Now that you’ve received some applications, you’ll need to start shortlisting candidates that you’d like to interview. Out of the initial pool of candidates that you feel have potential, you might want to hold phone interviews before committing to inviting them to a face-to-face interview. Use this as an opportunity to find out a little more about their experience and why they’re interested in the role.
Next, hold face-to-face interviews with your most promising candidates. You’ll need to use a broad set of the same questions for all candidates so that it’s easier to compare them against one another. It will also help you to defend any claims that your recruitment process was unfair or discriminatory.
9. Make an offer
Found your ideal candidate? Great! Its time to make a job offer. Usually, this will be over the phone, with a confirmation of the job title and salary. You should then follow this up with a formal offer in writing.
Once the candidate has accepted, you can inform the remaining candidates that they’ve been unsuccessful.
10. Create an employee file to store all documents
You’ll need to keep all information you hold on an employee; such as references, employment contract, holiday and pay details, in line with GDPR (data protection regulations). Using HR software to save this information in the cloud is usually the safest way to do this.
11. Check the employee’s right to work in the UK
The penalties for employing someone who isn’t eligible to work in the UK are severe, so make sure you check that they have a legal right to work here.
You’ll need to see the original version of acceptable documentation, make copies of these and keep hold of them in line with regulations, taking note of the date you made the check.
12. DBS check
Employers are also entitled to carry out criminal records checks on new employees, but if you do this, you must have a policy on employing ex-offenders.
For certain positions, such as those working with children or vulnerable individuals, you’ll need to request an enhanced DBS check.
13. Provide a written statement
For any employee you’re taking on for more than one month, you’ll need to issue a written statement detailing the main conditions of the employment. This needs to be provided within two months of the employee’s start date.
14. Health and Safety
Before your new employee starts working for you, you’ll need to ensure your workplace complies with current health and safety laws, and that you understand and carry out your responsibilities around fire safety within your business premises.
15. Register your new employee with the HMRC and set them up on payroll
Once you’ve informed the HMRC about your new starter, they’ll send you a PAYE ID for them to use when running payroll.
There are two ways to run payroll, either paying a payroll provider to do it for you or by doing it yourself using payroll software.
You’ll need to record what you pay them via payroll make relevant tax and NI deductions and submit this to HMRC.
16. Add your new employee to your workplace pension scheme
For employees over the age of 22 and earning over £10,000 per annum, you’ll need to enroll them in a workplace pension scheme.
17. Plan an induction for your employee
Get ready to welcome your new employee to the business, putting together an induction to ensure their first few days go smoothly.
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If you’re worried about making the wrong hire, or failing to comply with employment law, our HR consultants can help.
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