Your First Employee
As your business grows, you get to the point that you just can’t do it all anymore and it’s time to expand. Then the tough decisions start.. outsource or take on an employee. There are pros and cons to both options but let’s assume you’ve decided that bringing someone in as that first employee is the way to go. What’s next?
Registering as an Employer
If you are a limited company and pay yourself a salary, then you should already be registered as an employer. If you are self employed or don’t pay yourself a salary then you will need to register as an employer with HMRC and you can do so here.
You must register before the first payday and it can take up to 15 working days to get your employer PAYE references through (although at the start of the new tax year it can take a bit longer) but you can’t register more than 2 months before you start to pay your first employee.
Once you are registered and have your first employee then you need to run payroll each month and submit data to HMRC each month via Real Time Information (RTI reporting). There are plenty of software options (at varying price points) that can help you with running payroll and your submissions, or there are payroll bureaus out there (or speak to your bookkeeper / accountant about how they can help). But remember, even if you get help and support you remain ultimately responsible for payroll within your business.
The legal boxes
Once you are an employer then you need to ensure that you are complying with Employment Law, Health & Safety Law, National Minimum Wage Laws etc.
It can seem a lot but there are lots of resources out there from the Government Website, to ACAS to independent HR professionals and advisors (our favourite is Mandy Hamerla at Modern HR) all of which can help keep you on the straight and narrow.
The key considerations are:
Probationary period – how long and what are your criteria for “passing” this
Employment contract
Staff handbook
Holiday policy
Sickness policy
Plus all the policies and procedures to cover both you and your employee.
Getting all of this right from the start is going to get you set up ready for as you grow. And of course, employers liability insurance is also a must!
Pensions: Auto-enrolment
Auto-enrolment means you usually have to put your employees into a pension scheme and this starts from the employees first day – however, you can defer enrolment for 3 months from the employees start date and most employees do this as that generally ties in with probationary periods for new employees.
For employees that meet the following criteria you must enrol them into the pension scheme:
Aged between 22 and the state pension age
And earn over £10k per year (£833 per month / £192 per week)
And both the employee and employer have to contribute (Employees 5%, Employers 3% - these are the minimum amounts) and these need to paid each and every month.
For those that don’t meet these then they can request to join and you may also need to contribute and employees can request to opt out.
There are varying schemes available and common ones are NEST, People’s Pension, NOW Pensions are commonly used ones but there are lots of schemes available so have a look what is on offer and the charges the employees incur on their pensions.
The Pensions Regulator will require you, as employer, to complete a return to them every 3 years.
Being a “good” boss
This can be the hard part. There is no legal rules to follow for this but being a good boss is what helps you keep your employees .. but it’s also not about being a push over either!
I think the key to this is:
Clear policies, procedures and handbooks – everyone then knows where they stand
Fairness – treating all employees fairly and with compassion
Trust – micro-management of your staff is never going to work well for them or for you. Trusting them to do the task at hand (and training them to do it too) is key for job satisfaction for all.
Praise – yes, it might be their job, but a thank you is always appreciated for a task well done or acknowledging when someone goes above and beyond
Formal feedback – having a formal appraisal system in place to ensure you are monitoring performance etc.
And as your business grows, having a clear hierarchy and career progression can help to retain quality staff.
Rachael