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Taking on employees: Which? Trusted Traders report

Taking on your first employee is a landmark moment for any business. It can bring in changes to procedures, policies and management style. We talked to several Which? Trusted Traders about their experiences.

In this article

If you own a small business, the prospect of hiring your first employee can be daunting, as you'll have to deal with areas such as contracts, recruitment, legal rights, tax and payments.

But having the right staff can enhance your business, adding skills and expertise to help everything run smoothly, allow you to take on more work and enable you to build for the future.

The key is to approach the process with the right contracts and processes in place.

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Things to consider

Before you start recruiting, remember that employees come with costs over and above their salary. There’s the recruitment process, insurance, and providing essentials such as uniforms, equipment and maybe even business premises.

You'll also have to be aware of the policies for pensions, sick pay, maternity pay, paternity pay and so on.

Adam Maton from WeMove Ltd said: ‘It is a responsibility – you build up your business for yourself. Then when you take people on, they have families and others to support, and you are responsible for someone else.

'If you want to grow, you’ll have to have employees. It’s about doing it at the right time and finding the right people.’

Taking the first step

For many successful small businesses, employees are a necessity to keep up with an increasing workload. Some traders felt they’d been pushed into taking on employees by changes in government policy. Peter Maton from Cox Format Developments Ltd said:  ‘We worked regularly with the same subcontractors, and the government made it illegal to employ people on a self-employed basis continuously. It pushed up our overheads and made us less competitive.’

But it’s not been all bad for business. Peter added: ‘We’ve now found that customers like the fact that we employ our own staff. It makes them more confident in us. We get asked about it a lot because people hear horror stories about subcontractors.’

Finding the right people

Most of our traders’ first employees were people they had worked with before – either as subcontractors or in other companies. A pre-existing working relationship helps reduce the risk - you know what you’re getting to some extent.

Furlonger Tree Services’ Fiona Calverley said: ‘Our guys had been working for us as subcontractors for a while. We needed to make them employees as they were wearing uniforms and driving our truck. It was right for the company to take them on at that point.’

If you need to cast your recruitment net wider, it all starts with getting the advertisement right and being clear about what skills or experience you need for the role.

Adam Maton at WeMove has to recruit quite regularly because of the nature of the business. Experience has helped establish positive working practices around interviews and recruitment in general.

‘We’ve really refined the recruitment process,' he said. 'I won’t judge people on their covering letter and email. You can find people who have the right attitude who aren’t necessarily the best writers. It’s more important to have a series of interviews to get to know the individual and see how they’ll fit with the rest of the team.’

A probation period is a good way to see whether your new employee’s work is up to standard and that they’re a good fit with your business and any other staff.

Getting the right contract, policies and procedures in place

Contracts, policies and procedures are all designed to protect both employer and employee. Having clear job descriptions, health-and-safety procedures and fair contracts spell out what is expected of each employee, and set out what to do if they don’t meet those expectations. It can be time consuming, but it’s worth spending time and money to get these right.

Ideally you would create a bespoke contract to reflect your company and your needs. Adam Maton said: ‘We started with downloadable templates online but that’s evolved over time. I could find a contract template online in five minutes, but it wouldn’t be industry specific and isn’t worth the paper it’s printed on. You need to make sure that the policies and procedures you have in place are fit for purpose for your industry. Then they’ll be worth something if you have an issue with a staff member.’

Fiona Calverley from Furlonger Tree Services did find a lot of information online but, crucially, she already had some HR experience. She recommended looking at the Advisory, Conciliation and Arbitration Service (ACAS) website for information on employee rights and HR procedures.

Several traders mentioned how their accountants had helped them through the process of registering as an employer with HMRC, and dealing with PAYE and National Insurance for the first time. See our article on how to find an accountant for more about how the right professional advice could help your business.

Changing the business

Taking on employees changes the way business runs generally and how you have to work day to day.

Fiona Calverley from Furlonger Tree Services said her office-based role had expanded enormously now that the company has employees. She said: ‘There’s a lot to remember – setting up a holiday calendar, getting them to sign documents and making sure they check their paperwork. You have to have regular meetings, set up appraisals and so on.’  

Taking on extra staff can also change the skills and experience that you have in the team, possibly allowing you to offer additional services.

Then there can be physical changes to the business location too. Adam Maton from WeMove explained: ‘I ran the business from home at first, but taking on an operations manager meant that I needed an office – a fixed base for people to come to. It meant a double cost, but it created a professional image in line with our growing business.’

Outsourcing HR

Growing and taking on employees is a big step, but if you are going to go for it, make sure you get it right. While it might be tempting to try to save money by doing things yourself, this could be a mistake in the long run.

There is support out there, although you may have to pay for it. Adam Maton said: ‘HR issues and responsibilities can be outsourced, I network with a lot of people who do this – don’t take the burden on yourself when you can reach out and find these businesses that will support you.’

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