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How to prepare for your first employee: hiring employees for your small business

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It can be an exciting time when your business is at the point that you need to employ staff. It is often a good sign financially. The business is growing, and you have enough capital to share your workload. However, there are many legal obligations you have when employing a workforce. This is not only for their benefit but for yours as well. All the legal requirements are there to provide both you and your staff with protection. What do you need in place when employing staff? Here is everything you need to know. (Also read: A breakdown: the REAL costs of running a successful business and blog)

Background Checks

Before you officially employ someone, check their credentials and background. Following your instincts isn’t good enough when it comes to finding workers for your company. This is to ensure you aren’t hiring someone who has a criminal record. Or someone who has been involved with previous corporate scandals. So it is very important to make sure you know exactly who they are. If you do try to find out all the facts about the person in question, you are required to notify them in writing. Also, if you find out something incriminating and don’t employ them. As a result, you are required to let them know exactly why they did not get the job.

Insurance

You will need to provide your employees with occupational insurance. Every member of your staff will need to be covered. If you fail to do so, you could run into legal issues. The insurance will cover your staff in case they have an accident in the workplace. Not everyone needs to take out insurance for their employees. However, the majority do. How do you know if you need this kind of insurance? If you supply most of their work equipment, and if you pay them per hour, day, or week then you need employee insurance. You also need it if you deduct their tax out of their wages. 

What you need to know about employing staff

Contracts

There must be a contract in place between you, the employer, and your employee. There are many different types of contracts you can use when employing someone. A full-time or part-time contract locks them into work indefinitely. The only way to end this is if either of you terminates their work. When you are hiring your first member of staff, it is a good idea to issue them with a fixed-term contract. This will be set for a specific period of time, or for the duration of a specific task. At the end of this period, the contract will come to an end. It is up to you whether you renew it or not.

Pensions

You should provide a pension plan for your employees. This will attract the best people to apply for roles with your company, as it is a very desirable benefit for workers. You will be expected to pay a contribution towards their pension while most of it will come out of their salary. Normally, employers only need to pay in around 1% of the worker’s salary, but it is a good idea to check the small print before you sign off on a pension scheme. Pension deductions will come off your staff’s pay every month.

Alternatives

There are, of course, alternatives to hiring staff on your own. Just because your business is ready for the next step, doesn’t necessarily mean you are ready for taking on staff. If you do choose one of these alternatives, you will have much less to organize and take care of. You won’t have the responsibility of providing insurance and pensions. You can take on agency workers. Sign up to an agency, and they will send you workers for any length of time. Instead of paying the workers directly, you will pay the agency, who then pays their staff. One thing to be aware of, though – if you hire an agency employee for longer than twelve weeks, you will have to pay them sick pay. Freelancers are another option. They take care of their own tax and insurance, no matter how long you employ them for. However, they usually charge high rates.

It is important to know everything that goes along with employing staff before you actually do take someone on in your company. If you don’t follow all the required steps and sign the right documents, you could end up damaging your business’s reputation. So don’t slip up and thoroughly research how to employ staff today!

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