Sally Hulston, Employment Partner at Knights plc
Picture this: your business is really starting to take off but you are tired of working so many late nights. A new opportunity has arisen and you could just do with another pair of hands to ease the pressure. A good problem to have, all things considered, but is it as easy as putting an advert on LinkedIn, doing a series of interviews, choosing the best person and then giving them some of your work to do? Or is there more to taking on your first member of staff?
10 top tips!
Choose the right kind of person
Top of our list is: choose the right kind of person; not necessarily the one with the best education and the best skills, but the right one for you and your business. Let us explain the difference. It is widely reported that one of the key reasons why a person does not work out is because they are not the right “fit”. Often this means that they share a different set of values and beliefs and they don’t like working as a team.
If you are taking on your first member of staff, you need to have someone on board who you trust, which may not be the person with the shiniest CV. Simon Sinek, a popular thought leader and author of the latest book, “The Infinite Game”, suggests that you are better taking on a medium performer with high trust over a high performer of low trust. In other words, find someone who “gets it” and is prepared to work with you to achieve your objectives, and be on your wave-length.
You won’t know everything about them from a short interview so your gut feel and, ideally, a recommendation from a trusted contact is important.
Decide whether you want to take them on an employee or another kind of worker
Following the series of high profile cases (such as Uber and Deliveroo), there has been much discussion recently about whether someone is actually employed or whether, instead, they are a worker or even self-employed. These cases are vast and ongoing- the Supreme court Uber appeal is still to be heard (it is due to go to hearing on 22 and 23 July 2020). The upshot is that whatever is written down on paper in a contract is not the full story- a judge will also consider the working relationship in practice.
There is a difference between the three types of status and each comes with different rights and responsibilities. You might think that you want to “employ” someone but that will bring with it the need to pay them, amongst other things, holiday pay, sick pay and family friendly pay (such as maternity pay), not to mention that, after 2 years with you, they will obtain the statutory right not to be unfairly dismissed and the right to receive a redundancy payment. You are also required to pay them a salary regardless of whether there is enough work to fill them up. If you are happy with them having employee status, then you next need to decide if you want to employ them on a full or part-time basis. If the latter, you will need to decide how that will work- will you have set days and times that they work or are you happy for them to do the work at any time that suits them?
If you are worried about having enough work for them to do all the time, then you might want to consider taking them on as a worker. That would typically mean that they are free to work for others at the same time, so long as it does not compromise the work they are doing for you. As a worker, they would still be entitled to things such as the National Minimum Wage (NMW), holiday pay and the rules under the Working Time Regulations (such as the right to have so many rest breaks and not to work excessive hours) but you would only need to pay them for the work they do. It is also easier to let them go (and less risky) if they are not employed by you. Normally, all you need to do is give them the required notice under the contract- it is less important to go through a process with them. That said, you must remember that workers (as well as employees) have the right not to be discriminated against.
A person is self-employed if they run their business for themselves and just undertake certain tasks for you on an “arms-length” basis. Self-employed workers aren’t paid through PAYE and they don’t have the employment rights and responsibilities of employees or workers.
Do your background checks
Linked with point 1 above, do your homework on that person. Don’t be lazy and skip the reference checks (it is recommended that you get two references; one from a previous employer and a personal one). Importantly, make sure that they have the legal right to work in the UK. For more information, see here: Document Checking and guidance here: Right to Work Guidance
You must carry out the right to work checks regardless of whether you are taking on an employee or a worker. You can be sent to jail for 5 years and pay an unlimited fine if you’re found guilty of employing someone who you knew or had ‘reasonable cause to believe’ did not have the right to work in the UK.
You can also be penalised if you employ someone who does not have the right to work and you did not do the correct checks, or you did not do them properly, which could result in you having to pay a civil penalty (fine) of up to £20,000 for each illegal worker.
In addition, you need to decide if a Disclosure and Barring Service (DBS) check is required (which is typically required if they are working around children or in the healthcare sector). Click here for more information: Check someone’s criminal record
Decide how much to pay them
It goes without saying (hopefully) that you need to pay them at least the National Minimum Wage (NMW) which, at the time of writing, is £8.21 per hour for those aged 25 years or over. This rate increases every April so make sure that you get it right. Here is a link to the rates on the gov.uk web-site: National Minimum and National Living Wage rates
If you are unsure what the market rate is for a particular post, there is a great deal of information on-line, especially on recruitment web-sites and so it is worth checking a few out.
Register with HRMC to be an employer
If you are taking the person on as an employee, you must register before the first payday. It usually takes up to 5 days to get your employer PAYE reference number. You cannot register more than 2 months before you start paying people. For more information, click here: Register as an Employer
Get employer liability insurance
You must get Employers’ Liability (EL) insurance as soon as you become an employer – your policy must cover you for at least £5 million and come from an authorised insurer. For more information, click here: Employers’ Liability Insurance. You may not need EL insurance if you only employ a family member or someone who is based abroad.
Provide a written statement of work
Currently, all employees must be issued with a written statement of particulars if their employment is to last at least a month. You must provide this within 2 months of the start of employment.
From 6 April 2020, employers must give written statements of terms to all workers (not just employees). This statement must be provided on or before the first day of employment.
What happens if you fail to provide this? Unless an employer can demonstrate that there are exceptional circumstances, employees could be entitled to an award of between two and four weeks’ pay for a failure to provide an initial written statement of work or a note of any changes to their terms of employment. This right only applies, however, if the employee has successfully brought another substantive tribunal claim.
Set up and manage a workplace pension scheme
Employers have to provide a workplace pension scheme for eligible staff as soon as your first member of staff starts working for you. You must enrol and make an employer’s contribution for all staff who:
- are aged between 22 and the State Pension age
- earn at least £10,000 a year
- normally work in the UK
You may be fined if you pay late or do not pay the minimum contribution for each member of staff. Click here for more information on how to set up and manage a workplace pension scheme: Set up and manage a workplace pension scheme
Ensure that they are safe at work
This not only means that they are free from physical dangers but also that their mental health is well looked after and they are free from discrimination. There is also a specific duty to look after disabled workers, making reasonable adjustments to their role and working conditions if necessary (see the useful ACAS Guide here: ACAS disability discrimination guidance) as well as a general duty to keep their data safe and only processed in accordance with the Data Protection Act 2018. For more information on the Data Protection Act, click here: data protection guidance
For rules on health and safety, click here: health and safety guidance
The final point is to keep the communication channels open. If they are your only member of staff, you might not want to put in a place a formal annual performance review process. Indeed, many big businesses are also moving away from the once a year conversation and moving towards constant feedback (which goes both ways).
If things are not feeling right, talk to them about it and give them an opportunity to improve and offer the necessary support and training they need. The worst thing you can do is put your head in the sand and hope it gets better (remember too that once an employee obtains 2 years’ service, they have many more rights which means terminating their employment is more tricky)- so call it early if it really is not working.
Equally, and to end on a more positive note (because we are sure you know how to spot a good worker!), make sure that you tell them if they are doing things right too! Most workers thrive on being told they are doing a good job and it will motivate them to continue to improve and do their best for you.
If you would like to speak to a member of the Knights plc Employment Team, please contact firstname.lastname@example.org
Knights plc is a commercially focused national law firm providing a wide range of advice and assistance to businesses across the UK.
21 November 2019
© Knights plc 2019. All rights reserved.