Congratulations! If you’ve stumbled upon this article, you’re either thinking about hiring your first employee or you’re putting the feelers out there to see if it might be a viable option for the future. Either way, this is an exciting time and it’s great to get yourself prepared.
Whether you’re a freelancer who’s ready to start growing their business, or a sole trader looking to share the workload, hiring your first employee can be just what you need to give you and your company that extra bit of oomph. And with many companies making the move to hybrid or remote working, knowing the ins and outs of how to hire remotely is essential to stay ahead of the curve.
Below, we’ve created this handy guide to help you hire your first employee, with practical tips and advice to get you where you need to be. We’ll look at:
Disclaimer: The information in this guide is for your reference only; it is not a legal document. We recommend that you seek your own legal advice when it comes to hiring your first employee, as well as utilising GOV.UK’s plethora of documentation and legislation.
Knowing when you’re ready to start hiring
For many freelancers, being a lone wolf is the dream – but when workloads become too heavy, or you start craving more time off, it can be tempting to think about hiring someone new.
However, choosing to employ someone too soon can lead to cash flow issues – but leaving it too late can make you feel overwhelmed and overworked. So when is the right time to hire your first member of staff?
Whatever reason you have for wanting to take on your first employee, the most important step is to make sure you can afford it. Which brings us on to our first step:
Recruitment doesn’t have to be expensive – but in order to do it properly, you might want to consider outsourcing it to the experts. Even if you do decide to recruit by yourself, it’s important to work out your own costs, as it will take up time – time that could be spent on client work.
You can use a straightforward formula to work out what your cost per hire might be:
Cost per hire = (your time costs + any external recruiting costs) / the number of people you’re hiring
So for example, if your time is worth £50 per hour and you need a week to write a job description, post on LinkedIn, Indeed, Monster etc., then sift through applications, then contact applicants, THEN conduct interviews, and finally, create a watertight contract, that will be around £1,875. Add external recruitment costs to the equation, it all starts to add up.
You then need to decide on salary for your new hire. If you’re using an external recruitment agency, they’ll have data to help you decide on a fair wage. For your own research, use job board websites or LinkedIn to view similar roles. Ultimately, you will know how much you can afford to pay an employee – and what the value of their work to your company is.
National Insurance, pensions, and PAYE
This guide might seem overwhelming, but it’s so important to ensure you’re not missing anything essential when it comes to hiring your first member of staff. You want to get it right, so you don’t get any nasty surprises down the road.
Aside from salary and recruitment costs, you’ll also need to look at the cost of National Insurance, your employee’s pension, and then PAYE fees. You must provide a pension, regardless of the size of your business (currently just you!), if your new member of staff is over the age of 22 and earning at least £10,000 per annum.
Now you’ve worked out your costs of hiring and are satisfied with the results, you now need to decide whether you should hire a freelancer or an official, part time or full time employee.
Benefits of hiring a freelancer
Disadvantages of hiring freelancers
Benefits of hiring someone part-time or full-time
Disadvantages of hiring permanent employees
If you’ve made it this far, you’re serious about hiring your first employee. You’ve weighed up the pros and cons and it’s looking like you could really grow your business with a fresh set of eyes – and a full-time salary. But before you go any further, getting clued up on legislation and legalities around hiring someone is extremely important.
So what do you need to do to ensure you’re following protocol and can legally employ someone in the UK?
This section could be its own guide, so to keep as informed as possible, make sure you check GOV.UK’s website and follow the guidelines closely.
Now you’ve got to grips with the legalities and financial side of hiring your first employee, it’s time to start thinking about recruiting. Here comes the exciting part! Meeting potential recruits can be in equal parts enthralling and anxiety-inducing, but the most important thing is to take it in your stride and ensure all candidates are given a fair interviewing opportunity.
All that interviewing time was worth it – you’ve found a candidate that you feel will really add value to your business and help achieve that growth you’ve been craving. They’re happy with the salary offer (after a bit of negotiation), and now you need to formalise the deal. So what exactly should you include in an employment contract for your first member of staff? (Again, we would advise seeking legal input from a solicitor before you create a legally binding contract!)
There are a number of other items you could consider including in a contract, but from a legal standpoint, this is the bare minimum.
Congratulations – your new employee is due to start! They’ve signed the contract and it’s almost time to onboard them. But how do you do this?
Employee onboarding can be tricky in an age of remote working, but having a checklist and outline will ensure nothing gets missed and your employee feels comfortable – no matter where they’re working in the UK.
And there you have it! There’s a lot to consider when hiring your first employee – but it’s well worth the steps to ensure you can relieve yourself of additional duties, and grow your business.
Having a virtual office can ensure you can attract better talent, with a credible business location, and ensures you have the chance to meet your employee in person, in a professional building to really create a great first impression. You can even conduct interviews in pay-as-you-go meeting rooms, helping your potential recruits feel more at ease than on a video call. Discover our range of virtual office locations here.
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