There  comes a time when, as a sole trader, you may decide that it’s time to branch out or take the next steps in your business growth and this can often mean taking on your very first employee.  Taking on your first employee is a significant progression for any business, a really positive step forward and an exciting time ahead. However, it can also be something that can be a complete minefield, after all you are used to it being just you and the thought of someone having else working alongside you can be daunting, without consider all of the paperwork and additional costs that go with hiring that very first 001 employee. So, what comes first? What do you need to get done? How best should you prepare?

Here is my step by step guide of things to consider when hiring your very first employee. 

Preparation & Business planning

First things first, I would always advise that you need to think about whether you do really need that employee. Have you looked at alternative options for example? A great way to experience having an extra person around and work out what you might need them to do, is to consider Apprenticeships, Work Experience and Student Internships.  From a cost perspective these can often be more cost effective in the early days, as you may not need to pay them a committed salary, perhaps just covering expenses. You can really experience what it’s like to have someone else around, how you might want to structure a role in the future and consider what time commitment you will need to make to that role or postholder. 

Alternatively, perhaps you’re happy to dive straight in and want to hire your first employee, so if you do, great.  Consider what steps you now need to take.  You will need to document a really clear job description for that role. Being really clear about what the postholder will do is the most important part, as without this, it will be challenging to advertise and attract the right sort of candidate for your organisation.  Some top tips are to think about ‘why’ you are hiring for this role and what your business needs are. Consider the types of tasks that you will need them to do and the skills or perhaps work experience that may have been useful to demonstrate understanding of these areas.  Finally, consider the salary (remuneration) that you will want to offer.  The more clear, concise and open that you can be about this during the process of recruitment, will really support finding the right person for the role as well. Always remember that as a small organisation you will be able to offer complete ownership of some tasks, something which in a larger organisation individuals would not get the opportunity to do.  Whilst you may not have the larger budgets or perhaps the size of larger organisations, you have some great commodities still and it’s important to work out how you use that to your advantage. 

Costs


One of the really critical points to consider when thinking about hiring your first employee, is undoubtedly the costs involved. Some of the costs will be really obvious, but some will be less so and it’s really useful to think about each and every one of these.  Costs can be split into three particular groups: Basic & Ongoing costs, One off costs, Associated costs.

Basic costs - This is the area that most people will understand and bear in mind when it comes to employee costs. These will include salary, bonuses or commission, Payroll costs such as Tax, National Insurance and Pension costs. These are also all ongoing costs that you will need to factor in year on year.  Other basic costs to consider are the implementation and ongoing costs of having a payroll software or organisation to complete your payroll each pay cycle. If you already have one in place to pay you, then you may find there is simply a small or no increase to add another employee. If you are completely new to this process, you will need to find a payroll provider or software (see Payroll). 

One off costs - These are the area that are often considered, but that employers will not always appreciate can really add up.  These include recruitment costs such as advertising or perhaps using a recruitment agency. Many agencies will have hiring fees anywhere between 8 and 40% of hiring salary dependent on the seniority of the role. These are costs that you may not anticipate, but can be quite high and it’s crucial to ensure that the roles that you are hiring really are critical and that you understand who you need for these roles, so that you don’t make costly mistakes down the line. If you are considering using a recruitment agency, it’s always a good idea to talk to a couple first and get a good feel for how they operate, who else they work with and whether they are the right sort of agency for you to work with. Client and Agent relationships are often crucial to recruiting the right employee(s) and the Recruitment and Employment Confederation (REC) understand that and their website has great hints and tips for working with recruitment agencies, hiring employees and you can search for certified agencies. It’s important to bear in mind that not all agencies will feature here, but they certainly have some great guidance in place, for whomever you choose to work with. 

Other one-off costs will include equipment for employees. From desks, working space equipment, IT, Telephone and Audio Visual perhaps. Yes, there are some great deals to be had, but making sure that you factor these in, consider the business assets increasing and seek good advice around asset management is key. 

Associated costs - This is the area that most employers often don’t consider, they often just think that “oh well that’s a given” which yes they might be, but these are the areas can really can be quite significant costs when hiring your very first employee. Associated costs can include the cost of each and every employee policy that you will need to have in place. From your annual leave, sickness, performance management, additional benefits, family friendly policies such as Maternity, Paternity, Parental Leave, Adoptive Leave and Bereavement policies they can really start to add up. An average employee will take 4.5 days sickness per year, which is the number of days that you would need to pay them too. Likewise, annual leave is something to factor in. The average number of days to take in a year, can add up if employees are unable to take them for example, particularly in 2020 it is thought that on average 15.5 days remain untaken so far in the year, compared to the usual average of 10 days. This is something to really bear in mind.  Most likely employees will also adopt one of more of your additional policies.  

Finally, ‘Time’ is also a really significant associated and ongoing cost in terms of “your time” to train, develop, monitor and engage with your first employee. 

Contracts, Policies & Protection


An Employment Contract - Having a contract is a requirement by law and any employee who works for an organisation, should receive a contract no later than 2 months after the start date of their employment. This contract should ideally be a written document, commonly called a terms and conditions document which includes a number of essential pieces of information.  Employment contracts are in place to protect not only the employee, but also the employer and ensure that there is clarity and not misunderstanding from the very beginning of the working relationship on the most basic of terms. For further advice on employment contracts visit ACAS or seek support from a qualified HR or Legal professional. 

Policies & Procedures – Alongside having an employment contract, it is recommended that as an employer you have an employer handbook or at least the core policies and procedures in place, often those referred to in the contract of employment and related policies.  It’s a common assumption that “we don’t have to have a handbook for just one employee, do we?” but really the best practice is, yes, you should. The employee handbook is not just a set of policies and procedures, but it is also your very best opportunity to document the culture, ethos and values of your organisation. It can provide a history of the business, what you are passionate about, why you value your employees and so on and so forth. It not only sets out the policies and the legal elements, but also your expectations as an organisation.  Having an employee handbook in place, can also protect the employer organisation from any future potential legal claims. Having a robust and an up to date handbook, will support any claims made against you. Often not just the policies, but your culture towards matters and how you might usually approach challenges.   

Onboarding – This is the process of any employee joining your organisation and I cannot express how critical is it to get their joining and induction absolutely spot on.  Did you know that 22% of employee turn over happens within the first 45 days of employment? Or that 4% of employees in the workforce leave on their very first day? Getting it right can make things a lot easier down the line, so here are the things that you need to consider from day one: 

  • Having a checklist of all paperwork and processes that need take place 

  • Ensuring that all paperwork (contracts, handbooks, forms) is given out on day one. Whilst it may seem overwhelming, getting this done and then taking the time to discuss it, will hold you in good stead. 

  • Giving the employee attention, time and investment from the beginning. Take time to discuss their role, how you see it, how you can support them. Do they have questions? There is nothing worse than not knowing how some of the basics work on day one. 

  • Workstation and H&S-again often overlooked, but ensure employees have a safe space to work either in the office or at present at home. Undertaking a home working assessment is also important. 

  • Introductions-whilst it may just be you to work alongside, there may well be clients or other people that you want them to meet. It’s always good to have a welcome message, set up 121 meetings or videos for them to meet and chat with these people over the early weeks. 

  • Meet and Review – All employees will be subject to an initial probation period, which could be anything from a week to six months. Most commonly it’s around 1-3 months. Set aside time to give regular feedback, seek regular feedback and provide them with milestones. Set up their probationary review well in advance and give them time to think about their progression too. 

Payroll – Setting up a payroll for one employee if you are not already set up as an employer, can feel overwhelming, but in reality it’s actually quite straight forward and there are some great place to seek support and advice.  You will need to do things like registering with HMRC to be an employer, choosing a payroll software and organising how you will keep records.  There are some great free software programmes, as well as paid for options out there, you just need to take a look and decide what’s best for you. Seeking the advice of an accountant is also advisable and they already have connections with 3rd party agencies. Speaking to other organisations who have been through this, is also a great idea. In terms of ongoing costs, there may well be some additional costs per employee to have a payroll system and this is something that you should also take into consideration. They can be kept quite low cost. 



Employer/Employee protection policies - Employers liability insurance is a legal requirement under the Employers Liability act of 1969 and is there to protect all employees in the case of potential injury or illness as a result of working for your organisation.  It can cover damages, legal fees, compensation and other related items, in the event that an employee was to take a case against you.  This is something which is entirely necessary and that can be purchased from most well-known insurance organisations. Taking a look at this article from AXA, one of the largest insurers, is a good place to start. It covers off all of the background of this type of policy and why would need it. There’s no obligation to purchase it through AXA but it’s a useful article.  

Kickstarter Campaign 2020 – The basics

It would be remiss of me to not mention the new Kickstarter scheme launched in November 2020, when talking about hiring your first employee. This scheme launched by the government in September 2020 is a fantastic opportunity for many organisations to hire their very first employee (or additional employees) on a job placement.  So, how does it all work? 

The scheme is open to all organisations and candidates between the ages of 16-24 are eligible.  Employers are claim the cost of hiring an employee for a maximum of 25 hours per week, over a 6-month job placement.  The amount that can be claimed is the national living wage of £6.45 for employees aged 18-20 and £8.20 for employees 21-24. Employers can claim 100% of that salary back (within the limits per week, across the 6 months).  The associated National Insurance contributions and employer automatic contributions for pension enrolment are also covered. In addition, employers will receive a funding grant of £1,500 for each job placement as part of the Kickstarter scheme. This money should go towards any set up costs for that person, in order to develop their employability and skills. It can also be spent on equipment and training materials.  

So, you’re ready to take on a placement, what else do you need to consider? Each job placement under the scheme must be a completely new role, it must not be the replacement of any other role or any planned vacancy. It should also not be used as a way to take on employees, resulting in the loss of another employee or contractor’s loss of work.   The concept behind the scheme is that the placements will support the individuals aged 18-24 looking for longer term work, career support and training for the future. Consider how you can support these employees with CV writing, preparing for interviews, training, development and skills within the workplace. 

Kickstarter Scheme – Additional support and next steps 

Once you’ve decided on your role and you know that you are ready to take part in the scheme, you now need to decide if you are going to need to find a gateway organisation to support your application (relevant for anyone taking on less than 29 roles) or whether you are looking to become a gateway organisation yourself i.e. taking on more than 30 roles or open to other organisations to apply via yourselves.  If you are a member of Freedom Works, they are offering this service for free - please contact Clare Constable, [email protected], if you would like further information.  For more information on ‘Gateway applications’ please visit the government website.   Angela Potter, CEO, Clearline recruitment recently discussed hiring your first employee as part of the Kickstarter campaign in her webinar for Freedom Works. I would definitely urge you to watch the video, read the information or perhaps get in contact with Angela as a partner of Freedom Works. 

Any gateway organisation that you are using to make your application will be able to support you in the next steps and will also be able to advise you on timeframes, essential criteria and what to prepare yourself with over the coming weeks. Gateway organisations will be able to guide you through the process of recruitment, jobcentre plus support and most importantly discuss the eligibility criteria with you of each potential employee. There are some key pieces of guidance, in order to suffice the Kickstarter scheme and future payments. 

In summary, it’s really vital to consider all of the paperwork, costs and fundamentals which go alongside taking on any new employee, as outline above.  I hope that this article has helped you to gauge a better handle on the things to consider.  Getting business support, business advice and having someone to help you through the process, is essential and as a HR Consultant I would always recommend getting some good HR advice and support. It isn’t always the case that it’s expensive or costly and can be the difference in getting it right first time, or not.  Taking your first steps as a new employer can be daunting, but it’s also extremely exciting for you and your business. In the current climate, being able to offer someone a lifeline for work, is one of the most rewarding things you will ever do as an employer. Don’t delay, get started today.


For any questions about this article and ongoing support with the Kickstart scheme or HR support please get in touch today at [email protected] or 07971 881448 












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