Taking on your first employee is an exciting time for a start-up founder. Here are some essentials steps you need to follow.
Set a wage
Start-ups are often run on a shoestring and you may not be able to afford to pay much. You must however pay at least the National Living Wage of £8.21 an hour to anyone 25 and over. The rate for under-25s drops from £7.70 to £4.35 depending on age. Apprentices who are in the first year of employment, or are under 19, have to be paid at least £3.90 an hour.
Agree a package
On top of a salary you’ll need to consider other benefits such as holiday allowance, sickness pay and even health insurance or critical illness cover. The package you come up with will depend on the nature of the role and what you need to offer to attract the right talent. Remember that salary is just one part of what makes a job attractive. Offering equity in your business can make a package more attractive while managing salary costs.
Check they’re legal
All employers are required to check a person’s right to work in the UK. This can be done online and some employees will have a code that makes checking quick and easy. Businesses can also check the criminal record of someone applying for a role. These Disclosure and Barring Service (DBS) checks were formerly known as CRBs. A basic DBS check costs £25 and more detailed checks are available for certain roles such as those in healthcare or security.
Ensure fairness and safety
There is a range of regulations you’ll need to comply with to ensure employees are treated properly and kept safe. These relate to discrimination, accessibility, data protection, fire safety and health and safety.
If you hire staff you’ll need employer’s liability insurance that covers you for at least £5 million. There are some exceptions if you hire a family member or someone based abroad. You can be fined £2,500 for every day you’re not insured and there are even fines if you do not display your insurance certificate.
Put it in writing
Employees have to be sent a written statement of employment if they’ll be working for more than a month. While not a contract, this statement must include details such as salary, holiday entitlement, notice periods and expected length of employment (learn more here). Employers have two months to provide this document. You should also supply a contract that covers other relevant terms of employment.
Register as an employer
You must inform HM Revenue and Customs (HMRC) that you are have taken on an employee. Registration has to be completed before their first pay day and can be done up to two months in advance.
Increasing onus has been put on businesses to ensure their staff have pensions. Employers must enrol staff into a workplace pension and make a contribution if they earn more than £10,000, normally work in the UK and are aged between 22 and the State Pension Age. An exception is made in the unlikely event that an employee has already saved more than the pension lifetime allowance (currently £1,055,000).
Plan an induction
If you’re a start-up employing your first member of staff you’ll probably not need a formal induction, but it’s worth taking time to consider the onboarding process. You’ll be working as a one-person HR department and will need to clarify processes for sickness, grievances, disciplinary issues, leave and giving notice. You should also make sure you’ve explained processes and provided training related to regulatory matters such as health and safety and data protection.