For most employers setting up a new business and taking on their first employee is a daunting prospect. It requires a great deal of thought and organisation and every employer must ensure they are keeping within the legal framework.
Taking on any employee is an investment in your business and of your time and money so it is important that you get this right from the outset.
It is hoped the following step by step guide will be of some assistance to employers thinking of taking on their first employee by providing some guidance on the initial stages and some things to think about when carrying out the hiring process for the first time.
Step 1: who are you looking for?
Before thinking of advertising for an employee you should firstly consider who you are looking for and what outcome you want from them.
Make a mind map or write a list of what you are looking for in an employee. This will be helpful when writing your job description.
Setting out who you are looking for from the beginning helps to focus your mind and search. Being able to portray this to potential applicants will encourage them to think about whether they consider themselves appropriate for the job and whether they can meet your expectations.
Step 2: hours and wages
How many hours per week do you want to offer your employee and how much can you pay them?
Do you want to offer them a fixed monthly salary or an hourly rate?
This should be worked out before the job is advertised so you know how much you can afford to invest in the employee, bearing in mind the national minimum wage and the national living wage.
You should consider your outlays for an employee when working out what you can afford, bearing in mind your responsibility for:
- Tax and national insurance contributions.
- Auto enrolment pension contributions
- 28 days holiday pay per year (including bank holidays)
- Employers Liability Insurance
Think about whether you want to offer your employee a fixed term or permanent contract. Perhaps if you are unsure how the business will work out you can start off on a fixed term contract and review your position at the end.
Do you want to offer your employee part time or full time hours? If you are a small business just starting out you may want to offer a part time contract to your first employee to see if you can then afford to employ another part time employee later.
Some business owners may be thinking about taking on self-employed workers. Business owners are advised to take legal advice on this and think very carefully before proceeding. If the only reason you are considering the self-employed worker option is to save costs at the beginning (such as tax, national insurance and other employer obligations) this would not be advised as it could end up causing a number of problems for you in the future if HMRC or an Employment Tribunal were to look into the matter and decide that the ‘self-employed’ person was, for all intents and purposes, an employee.
Step 3: advertising for the right person
Nowadays a lot of job advertisements are available online. This offers the employer a free and easy way to advertise a job to a wide network of people. Adverts can be posted on your business website, social media, or on job search websites.
Think about whether you want to create an application form for applicants to fill out or whether you want to ask for an up to date CV and cover letter.
Some employers may want to consider looking at social media websites such as LinkedIn to find suitable candidates or they may want to take personal recommendation. These are all free ways to find possible candidates.
The more costly approach would be to hire a recruitment consultant. This may not be appropriate for businesses with limited funds just setting up at the beginning. However, this could be a worthwhile expense as a recruitment consultant can do a lot of the selection work for you and present you with just a few candidates who would be an excellent match for the job.
When preparing a job advert you should look back to the planning stage (step 1) so that the person you are looking for can be portrayed clearly in the job advert. Pick out the key attributes and experience that you are looking for to narrow the pool of applicants down. Lack of clarity and specification in a job advert can lead to a wide range of people applying which will require more of your time when trying to narrow down the pool of applicants.
Every employer should always bear in mind the Equality Act when preparing a job advert. Be mindful not to discriminate against a ‘protected characteristic’.
The protected characteristics under the Equality Act are:
- Gender reassignment
- Marriage and civil partnership
- Pregnancy and maternity
- Religion or belief
- Sexual orientation
Step 4: the selection process
Once you have advertised the job and you have a number of applicants for the job, the next stage is to decide how you are going to narrow down the applicants.
You may want to sift through CVS and applications and pick out the ones which you think are the most suitable for the job and then offer interviews or you may want to call candidates first to get an impression of them over the phone before you offer them an interview.
If you are delegating the responsibility to a manager or supervisor, make sure they are trained in Equality Act issues.
At the interview stage you should avoid asking questions which may come across as discriminatory. For example, you should avoid asking an applicant about their age or health or their plans for children. If you are interviewing a job applicant with a disability, you should make any reasonable adjustments necessary to ensure they are able to continue in the process.
You may want to revert back to the planning stage at this point to remind yourself of who you are looking for. You may want to develop a scoring mechanism for each candidate to note how closely they match your criteria.
You should take good notes throughout the selection process. This will be helpful for you to be able to refer to them when you are making your decision and it will also offer protection in case anyone were to challenge your justification for selecting a particular candidate if they felt it was unfair.
Step 5: pre-employment checks
You have completed the selection process and you have selected the most suitable candidate for the job. Before you make an offer, you will want to carry out some pre-employment checks to make sure the candidate is genuine.
Some specific pre-employment checks may be required: for example if the candidate would be working with vulnerable people you will require a criminal record check from Disclosure Scotland.
Most employers will also require references before offering the candidate a job. This can be problematic if you want to offer the candidate the job quickly to ensure they don’t go anywhere else, but the references may take some time to acquire. In that scenario you may want to go ahead and make an offer but ensure it is made clear that this is ‘subject to references’.
Other checks which you may want to carry out as an employer are social media checks. Looking at the candidate’s profile on Facebook, Twitter, LinkedIn and other social media sites are commonly used by employers nowadays to find out a bit more about their potential employee before they make an offer.
Some employers may also decide to take it one step further and carry out a credit reference check on the candidate before offering them a contract.
Whatever the employer decides, there is no harm in carrying out these types of pre-employment check and indeed many would find it prudent to do so to ensure the protection of the company’s reputation as much as possible. Carrying out these types of pre-employment checks are acceptable, as long as there is no sign of discrimination.
Step 6: making an offer
You have now selected the most suitable candidate and they have passed pre-employment checks. The next stage is to make them an offer of employment.
It is advised to make this offer in writing to make it clear to the candidate the terms of the offer. To be clear, this is not a contract of employment setting out the full terms and conditions of the job, it is just setting out the terms of the offer.
Things you might want to include in an offer of employment are:
- Job title
- Job description
- The amount of hours per week being offered
- Particular terms you may have discussed already at the interview
- Details of the probationary period (if applicable)
You may want to then ask the successful candidate for a signed acceptance of offer to secure their employment.
Step 7: contract of employment and staff handbook
Once the offer is accepted you will then want to have the contract of employment drawn up. This can be handed to the employee before their employment begins and can be signed on the day they start with the company. You must both sign this contract so that it becomes binding and enforceable. It is recommended you get legal assistance with drafting the contract itself to ensure you are protected as much as possible from any potential issues further down the line.
If you are an employer taking on their first employee it is also recommended you have a staff handbook drafted by a solicitor. This handbook should set out various company policies such as:
- Disciplinary policy
- Grievance policy
- Anti-bullying and harassment policy
- Whistleblowing policy
- Social media policy
- Equal opportunities policy
This is not of course an exhaustive list.
The handbook and policies can be tailored to the company. These policies can be non-contractual which means they can be changed without the employee’s consent. Although this may seem like an expense particularly for a small company, it is important to have your policies set out from the beginning of employment. This provides clarity for both you and your employee so you both know where you stand and what is expected of you. It shows you are taking your responsibilities as an employer seriously and it also ensures all employees are treated the same under the same company policies which may help against any potential discrimination or other employment tribunal claims. The staff handbook can save a great deal of stress, time and money for the employer in the long run and it is recommended you have this in place from the beginning.
How can we help?
We hope this article provides some assistance when considering the steps to take when hiring your first employee.
If you are an employer in the Moray area and you require legal advice and assistance with the hiring process, we are here to help. We can advise you on any stage of the process and can draft contracts of employment and a staff handbook should you require this. We also offer employer clients a retainer agreement meaning we can assist you with any employment related query going forward for a fixed fee per month.
Note: This article was first published on the Moray Employment Law website in October 2017.