When should you hire?
Depending on the nature of the business, hiring staff may already be a planned strategy for small and micro companies. But if you’re an owner who works alone and is used to being self-reliant and in control of every aspect of your business, you might not consider hiring staff until you notice some of the following:
- Your workload is overwhelming
- You’re forced to turn down projects and opportunities
- Your time is spent on small, repetitive or detailed tasks
- Customer and client satisfaction is low but your business is still growing
While it might not feel like it, these challenges are in fact a sign that your business is succeeding and that you’re ready to employ someone. Now it’s a case of finding the right person(s) to power your growth.
Top tip: Documenting your operations and business processes before you start looking for someone will help you recognise where the gaps are, and steer you towards finding the right person for the role. You may also be hiring for a specific skillset outside of your area of expertise, and this will involve some research into the role you are hiring for, so you can filter candidates effectively.
Employing someone for the first time
If you’re starting to think about taking on employees, the first step is registering as an employer with HMRC with your government gateway account, or setting one up if you don’t already have one. You will also need to take out Employer’s Liability insurance, which is a legal requirement in the event of an employee becoming injured or sick while working.
You will also need to decide whether you are hiring for full or part time roles, and whether the employment status is self-employed, employed or casual as this will affect statutory rights such as holiday allowance.
For more information on registering as an employer and your legal obligations, see our related article on employer legal obligations under UK employment law
Cost to employ
As your company and client base grows, so will your workload. But can your business absorb the cost of hiring a new employee?
It might come as a surprise to learn that employers in the UK are advised to allow up to 1.7 times the basic salary to cover statutory sick pay, annual leave, pension contributions, recruitment costs, and business overheads such as providing equipment and desk space for in office workers.
Additionally, the recent rise to employer National Insurance Contributions and the National Minimum Wage announced the Autumn 2024 Budget has left many small and micro business unsure if they can afford to recruit new staff. Fortunately, the increase to the employment allowance from £5,000 to £10,500 might help smaller employers to offset these extra costs.
Casual workers and self employed
Casual self-employed workers are a lot cheaper to employ than permanent members of staff, especially if all you need is ad hoc or contractual work to carry out specific projects. Many small business owners will outsource work to freelancers and contractors, who are responsible for managing their own benefits such as holiday allowance and health insurance. Furthermore, small business owners may not need Employers Liability Insurance for some freelancers who work for multiple organisations or work remotely.
Employers can contact their insurance provider or the Health and Safety Executive for more information.
Recruitment laws
Small business owners hiring employees for the first time will need to be aware of statutory recruitment practices, such as writing fair and inclusive job advertisements, carrying out the necessary right to work and background checks, and supplying the correct information in employment contracts.
Top tip: A good way to make your recruitment process compliant from the start is to provide a detailed job description which clearly outlines the duties and responsibilities of the role. This should include the job title, purpose of the role, key day to day activities, expected qualifications and skills, wages, bonuses and benefits, and working requirements (hybrid, remote, office based).
Making an offer:
Once you have found the ideal candidate you will need to make a conditional offer subject to legally required background checks such as Right to work and DBS certificates where applicable. Obtaining character references, while not compulsory, is also advisable to ensure the right personality and culture fit for your business.
The onboarding process:
This will be different for every company but generally employee onboarding involves acquainting the new hire with the organisation, carrying out the necessary health and safety inductions and providing information for the employee detailing their legal obligations towards the business such as protecting company IP, and giving notice if they intend to leave, and your legal obligations to them as an employer, such as holiday pay and protecting employee personal data.
Support for First Time Employers
We offer support and information for small and micro business owners, providing essential services for new companies from incorporation to accounts filing. Visit Easy Digital Company to find out more about how we can boost your small business.
