Recruiting your company’s first workers is a significant turning point and a chance to locate brilliant individuals who can help it go to the next level of development.
Although strong hiring can provide real value to your company, employee wages are often one of the highest continuing costs you will encounter. In contrast, a poor hire will cost your company much more in lost time and resources.
Fortunately, there are actions you can do to reduce employment expenses and make sure you can maximize the odds of successful hiring when you do discover a fantastic applicant.
Here are the eight most important things to remember when hiring someone.
1. Take into account the price of recruiting an employee
The ONS reports that in 2021, the median pay in the UK increased by 4.3% to £31,772.
The average annual turnover of UK small firms (0-49 workers) is £290,000. This is calculated by dividing the £1.6 trillion total annual sales by the total number of these enterprises (5.5 million). Thus, a tiny company may invest roughly 11% of its yearly revenue in just one employee.
Undoubtedly, investing in a competent employee will pay off in the long term, but be careful to budget accurately for new hires.
2. Consider using seasonal or temporary workers
You may recruit temporary or seasonal workers to strengthen your team throughout peak trade seasons without being overstaffed during calmer months if you need labour to match surges in demand but don’t want to pay a full salary.
Most of the time, temporary workers are recruited on a fixed-term contract, which entails paying them a certain salary for a predetermined time. You should be aware that, unlike contractors, temporary employees should work the same hours, be paid the same, and be given the same leave benefits as your full-time employees.
3. Understand the rules when taking on someone self-employed
Using contractors or freelancers is a great way to access highly skilled labour without having to pay the full and hefty salaries that those kinds of jobs can demand, as well as sick pay, holiday pay, National Insurance, and pension contributions.
If you do use self-employed contractors or freelancers, you need to be fully au fait of the regulations to avoid falling foul of employment law.
In practice, this means not exploiting someone by treating a self-employed worker like an employee without offering them any of the benefits of full-time employment.
According to gov.uk, someone is employed if they:
- Are required to work unless on leave
- Are paid by you to work a minimum number of hours
- Are managed or supervised by someone at your company
- They cannot offer their work to someone else
- Get paid holiday
- Are bound by your disciplinary procedures
- Receive their working tools from your business
You should also be aware of IR35, which was introduced in 2021 to ensure contractors who provide their services to your business through an intermediary (who would otherwise be classed as an employee if they offered their services directly) pay the correct tax. You can use the CEST tool provided by HMRC to check the employment status of potential contractors or freelancers.
4. Create an employment contract and a written statement of employment
An employment contract is a legally binding agreement between employer and employee that establishes the terms of their employment, including pay, working hours, holiday days, responsibilities, standards of behaviour, and the statutory terms set out in employment law.
This is an essential document because, not only does it outline the rules and establish norms that both employer and employee must abide by, but it also ensures that there’ll be consequences if either party violates the terms of the contract. For example, you could be taken to court if you fail to pay your employee’s stated pay, and your employee can be legally fired if they consistently fail to carry out their duties.
5. Distribute your employee manual
An employee handbook provides all the information a new hire could need to acclimate to their new job and maintains a supportive and consistent work environment.
Although not required by law, there may be some overlap with your contract since the handbook may be a more convenient source of information. It’s crucial to outline expectations for behaviour throughout the workday, including limitations on the use of devices like social media and cell phones, as well as dress codes and punctuality. To foster loyalty, you should also offer details about the company’s goals, strategy, and benefits that your new hire may take advantage of.
6. Recognize the rights that your workers have.
Lawfully recognized rights for your workers include the following:
- Legitimate payments
- When they must provide notice if they resign or are fired
- Protection against wrongful termination
- the ability to ask for flexible scheduling
- Time off for emergencies
If you don’t provide these rights, you risk legal action.
7. Ensure that workers are aware of your holiday policies.
A healthy break will keep your staff rested, reenergized, and prepared to work as efficiently as possible. Because of this, your full-time employees are required by law to get at least 28 days of paid vacation per year, including bank holidays. All of this information should be included in their employment contract, along with the required amount of notice and your right to deny a request for a vacation if it would result in understaffing or if a significant event is approaching.
You decide how much time off you offer them after that. For each year an employee works for the firm, some companies give them an extra day off, which is an excellent way to reward loyalty. Others have begun to test concepts like an endless vacation with different degrees of success.
8. Look into government programs that might assist with employing staff.
Because hiring talent is expensive, the government provides several incentives for which your company may qualify. These awards may assist with the expense.
For instance, the government will cover 100% of the expenses of an apprentice’s training up to the funding band limit if you have less than 50 workers and hire them while they are between the ages of 16 and 18 (19-24 if they have been in the care of their local authority). Even though you must still give them a salary, if they are under 25, working in a government-approved apprenticeship, or making less than £967 per week, you are not required to pay National Insurance.
Additionally, firms that qualify may apply for Employment Allowance (up to £5,000 for the tax year 2022–2023). As a result, less employer national insurance is required to be paid.