If you’re a self-employed freelancer, contractor or consultant who is ready to take their business to the next level, you might be thinking about hiring your first employee.
When you’re working on your own, often it gets to a point where you begin to think about how you can expand your business to increase your revenue. To achieve this, you’ll perhaps consider either automating some of your processes, subcontracting to other freelancers or employing staff.
While automating processes or subcontracting to other freelancers may appear to be relatively straightforward, there can be a lot to think about when hiring an employee – from defining the job description, to hiring the right employee, putting together a contract including pension contributions, benefits and insurance, as well as considering what type of management style you’ll use.
Despite the time and effort employing staff can take, having other likeminded and talented individuals onboard can yield the greatest results for your business.
In this article, we’ll guide you through the recruitment process and the main points to think about when you’re considering hiring your first employee.
Considering that the average employer spends around £3,000 hiring a new employee, the recruitment process can be costly (1).
Before hiring your first employee, you need to make sure it’s within your budget.
Having an extra employee will likely increase your profits but you need to be sure that your projected targets will allow you to cover an employee’s salary without compromising your own.
If training is required while you onboard your employee, your profits might be negatively impacted to begin with while you spend time training your new employee.
As well as their salary, they’ll be other expenses to factor in, like the cost of advertising the job, working with a recruiter, running security checks, National Insurance, pensions, training, equipment, software licenses, Employers’ Liability insurance and other expenses.
Employers’ Liability (EL) insurance is a legal requirement for any business with one or more employees, under the Employers’ Liability Act (1969). Employers’ Liability insurance will cover you against any illness or injury suffered by your employee while working for you.
The legal minimum amount of cover is £5,000,000. If you fail to have Employers’ Liability insurance in place once you have an employee, you run the risk of a hefty fine. For every day that you do not carry EL insurance, you can be fined up to £2,500.
Caunce O’Hara provides £10,000,000 cover as standard, as part of our Business Combined insurance policy.
You can find out more about this type of insurance on our Employers’ Liability Insurance page.
When you begin the recruitment and selection process, you’ll first need to put together a job description and person specification.
What will the role involve and what skills are you looking for? It’s important to be specific about the tasks the employee will be required to do, to ensure you get applications from candidates with the right experience.
When creating the job description, think about which parts of your role you would like to hand over to someone else and which parts will be best for you to keep managing.
You’ll need to consider which job title will be most appropriate and of appeal to potential applicants.
To attract talented applicants, you’ll need to market the job effectively by making sure that your job description, especially the introduction, is captivating.
As well as outlining the day-to-day tasks, you’ll need to highlight:
When creating the person specification, think about which skills are essential to the job and which skills are desirable.
Always make sure you specify the salary range in your job description. Omitting this could mean missing out on the right candidates, as for most people it’s one of the most important factors. When determining the salary, make sure that the level of experience you’re asking for is in line with the salary you’re offering.
To get a feel for what salary you need to be offering, have a look on job sites like Indeed, LinkedIn, Reed and Glassdoor. Often, they’ll specify the average UK salary for different job roles and even sometimes the average salary in different regions.
To find candidates, you’ll need to advertise the role. Will you advertise the job directly yourself or use a recruiter?
While completing the recruitment and selection process yourself means you won’t have to pay recruiter fees, it will cost you your time and limit the number of candidates you reach. While using a recruiter can be expensive, it will likely make the recruitment process faster and often you only pay the recruiter if they are successful in finding you a candidate.
Agency fees tend to be negotiated to around 15% to 25% of your new hire’s first year’s salary, plus VAT (3). If your new hire doesn’t stay working with you for long, it’s unlikely that you’ll be able to claim any of this fee back unless there is a clause included in your contract with the recruitment agency.
If you’re thinking of advertising the job yourself, the best platforms to use depends on the industry you are recruiting in and where your potential candidates might be looking. There may be an industry specific job board that would be helpful for you to advertise on.
You could choose to advertise the job on your social media, linking to the job description on your website. This way, connections in your industry can see that you’re looking to hire and might be able to make a recommendation or share your post to their network.
Platforms you could advertise the job on include:
Once you’ve received your applications or CV’s, you’ll need to shortlist them down to those that stand out the most. You can determine this by comparing CV’s to the key criteria outlined in your person specification.
These candidates will be invited in for an interview.
In the interview you’ll need to ask questions that will allow you to find out more about the points they’ve highlighted on their CV and how well their experience aligns with the vacancy. As well as finding out more about their relevant job experience, the interview is a chance to learn about them as a person.
If you’re spending 8 hours a day together, you need to make sure that you will work in harmony and that your values align, otherwise it could make work difficult for the both of you.
Therefore, in the interview, it’s just as important to be assessing attitude and personality as it is job experience and qualifications.
To gain extra certainty of a candidate’s ability, giving them a task to complete in the interview, that would be required in their job role, can be a good idea. This could be a scenario-based task or even a multiple-choice test.
As well as testing their practical abilities, some employers also provide candidates with a personality test to get a feel of who they are. Sometimes in an interview setting when a candidate is often feeling nervous, this can be hard to gage.
You may want to consider asking someone to sit in the interview with you, so that you have a second opinion.
Once you’ve decided which candidate is most suitable, you can make a conditional or unconditional offer of employment.
If your offer is accepted, you’ll need to draw up a contract for both yours and their benefit. There can be a lot to consider when drawing up a contract which is why it’s often best to gain legal advice from a law professional to ensure it covers all areas.
Depending on the nature of the job, you’ll need to specify whether they’ll be expected to work from the office, on site or from home. You will also need to think about whether you’ll offer flexible working, such as flexible hours and hybrid working.
How many holidays will you offer a year and what level of sick pay will you cover? Employees have a legal right to paid time off, whether working full time or part time. For full-time workers, they’re entitled to 5.6 weeks of paid annual leave per year (2).
Statutory Sick Pay is a legal requirement if your employee has been off sick or self-isolating for at least four days in a row, including non-working days. You can find out more on Statutory Sick Pay (SSP) on the gov.uk website here.
Another factor to consider in the contract is the probation period. A six-month probation period can give you both a chance to make sure that the candidate is a good fit. Will the job be subject to checks or references or do you need to see proof of qualifications and identity? This will also need to be outlined.
Where references and checks require getting the release of information from a third party, the candidate’s signed consent should be obtained. Where any of the checks create discrepancies, the candidate should be given the chance to offer an explanation. The candidate should also be notified of their rights regarding their personal data in a job applicant privacy notice (3).
For more advice on writing contracts and for access to a range of templates for various clauses including maternity policy, holidays policy, dress policy, home and remote working policy, plus lots more, head to the Markel Law Hub – an online resource of legal and business guides written by expert solicitors.
When the employment contract is finalised and signed by both parties, you’ll focus your attentions on the onboarding process.
This will give you chance to consider which management style you’ll use to best manage the relationship and ensure your employee is supported.
In their first few weeks of employment, you will need to provide any necessary health and safety inductions as well as providing the relevant technical training.
During the onboarding process, it could be helpful to provide your employee with a staff handbook which outlines areas such as your mobile phone policy, social media policy, no smoking policy, car policy, lone working policy, clear desk policy, maternity policy and so on.
Throughout the recruitment process when hiring people, it’s crucial to be mindful of discrimination and The Equality Act 2010. For more information on this and your legal obligations, visit the Markel Law Hub.
There are many factors to consider here and often people can be unaware of their own biases or unintentionally discriminate.
Ensure your job description encourages equality of opportunity and also make sure that the questions you ask in the interview process are not based on stereotypical assumptions or that have no bearing on the job role, such as whether the interviewee is planning on having children.
Even specifying the number of years of experience needed rather than specifying the type or breadth of skills required can be seen as unlawful discrimination in advertising (3).
Having someone else interviewing with you can help to avoid hiring based on personal biases.
During an interview with a candidate, make sure they are legally allowed to work in the UK. If you ended up accidentally hiring an illegal worker, your company could be fined up to £10,000 per worker and if you knowingly employ an illegal worker, you could be jailed for up to two years (4).
If the vacancy you are recruiting for requires working with children, young people or in a position of trust, carrying out a Disclosure and Barring Service check (previously Criminal Records Bureau or CRB check) on the candidate is essential. Insurance policies tend to have this as a condition of cover, which is why it’s important to ensure you complete the check.
When employing someone new, you must check whether you need to operate PAYE (pay as you earn) on their earnings. You can register as an employer with HMRC.
Where can you go for reliable legal information and advice about hiring people, the recruitment process and a variety of other business issues, procedures and laws?
Often, online information regarding legal matters for businesses can be conflicting. For information you can rely on, visit the Markel Law Hub.
The Markel Law Hub is an online resource containing a range of documents and articles to help you manage the various laws you can encounter when running a business.
The Law Hub currently helps over 50,000 users and contains:
There are two ways you can access the Markel Law Hub.