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Becoming
an Employer
Contents
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Recruitment
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It is important that
you recruit the right people into any business. You should
learn how to advertise the job role well, how to interview
candidates and how to shortlist them, as well as how to officially
offer the job. The Business
Link website provides information as how best to do
this but ensure that you tailor all recruitment policies to
your own specific business, for example, you may not need
to have such a rigorous recruitment process for employing
a Saturday girl as you would do somebody to manage the beautician
side to your salon.
There is important legislation associated with recruiting
members of staff. For example, as an employer you must ensure
that your employees are eligible to work in the UK by making
sure they have work permits, and that if foreign nationals,
they are able to work in the UK and you must adhere to Acts
which include Sexual Discrimination, Disability Discrimination,
Age Discrimination, to name a few.
You
can click here and participate in an interactive tool
that enables you to know you have employed a member of staff
legally and safely. It ensures that you have the correct documentation
for tax and National Insurance purposes and lets you know
what your responsibilities are to the new employee with regards
to health and safety etc.
It is important to assess the likely benefits other types
of workers can bring to your business such as employing people
part time. You can also inform yourself on the advantages
of employing a more diverse workforce in order to increase
your competitiveness as this can enable you to reach new markets
and can improve the content of your goods and service, for
example, you could look to developing your basic salon into
a unisex one and provide the service of nail and feet manicures
or a whole beauty salon additionally. Family members and voluntary
workers, like any other type of worker, can be a valuable
asset to any business, but there are risks associated and
different approaches to how they are employed must be considered.
For example, to ensure that there is no bias shown to a member
of the family over an externally recruited member of staff,
and to make voluntary workers feel welcome through recognition
since there will be an absence of pay appreciation.
Once recruited to a position, it is a good idea to get new
workers started via the use of an induction programme, for
example. This enables you to lay down where you stand as the
employer and allows them to ask any questions. Written information
should be given as a means of reference for the employee and
if anything was to change, they should be notified with reference
to this, in a written manner also. An induction period gives
the chance for any ‘hurdles’ to be overcome and the ground
set as it means to be carried on. It will also hopefully give
the new employee some motivation as they begin to feel incorporated
into the business and they gain some knowledge of what they
will be doing as opposed to being thrown straight into it.
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Paperwork
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It is crucial when you own your own business that you have
all the relevant documentation that is required to make all
operations run smoothly. These include the following:
• A written statement of employment
An
interactive tool is available here to create a written
statement of employment tailored to an individual employee’s
job role. If filled in correctly, it provides the employer
and employee with a document covering all the terms and conditions
you legally have to give your employee within 2 months of
their start date. The written statement must be completed
as one full document although the employee can receive parts
separately, as long as they are all received within two months
of the start date. There should be a ‘principal statement’
that will come in the form of a single document. This should
include the following points.
• The company name, and the trading name if these are
different.
• The company address (and where the employee works if
this is - different)
• The employee’s name
• The date employment began
• If the employment has been continuous, what was the
original starting date
• The salary, how it is calculated, and when it is paid
• The hours the employee works
• The holiday entitlement
• The job title and a brief description.
• The employment contract
A contract must be issued either in a written, oral or implied
manner, or any mixture of the 3. Even if a written contract
is not provided, a written statement of employment must be
which can provide evidence of the terms and conditions laid
out in a contract.
As an employer, you have a legal obligation to issue written
statements of employment within two months of their employment
commencing. This is not a contract but provides evidence if
there are any disputes, as the contract is just as legally
binding if it is oral or implied as well as being written,
but obviously it is harder to prove unless it is in the form
of the latter. For any changes that are made to the written
statement, the employee must be informed in writing within
one month of the changes being made and their consent must
be gained. If you are to provide a written contract, ensure
that it is clear this prevails all other previous correspondence
that may have been orally agreed or implied, and ensure it
is updated from then onwards if there are to be any changes.
If there are to be any changes, then it is essential that
you get the permission of the employee regardless of how the
contract is stated. If you fail to gain their permission they
can sue for breach of contract or claim constructive dismissal
by resigning.
• Employment status
There are 5 different categories in which people can be employed
under. These are self-employed, a worker, an employee, a director
or a contractor. For each category there are different laws
that have to be abided to, and different tax and National
Insurance contributions that must be made.
• Make a job offer and pre-employment checks
This includes procedures such as checking health records where
appropriate and references, and if necessary withdrawing job
offers.
• Changes to an employees terms of employment
A contract may need to be changed for a number of reasons;
changes in the economic environment or because of structural
changes within a business. It may be possible that an employee
wishes to change their contract to gain better pay or working
conditions, for example. Consultation whatever the circumstances
is imperative, and where possible in writing.
• Set yourself up as an employer
Ensure that you register as an employer. This
link gives some basic guidance on operating a payroll
system and obligations that you would have as a contributor
of National Insurance and employee tax contributions.
If this is your first business venture, you may need to register
as an employer with HM
Revenue and Customs as you look to employ people.
You can do this online following the link or you can call
them on 0845 6070143 and they will also provide you
with information as to how to register.
• Keeping the right staff records
It is crucial that the correct documentation is kept on employees
for business and legal purposes. Keeping the relevant records
can help to run your business more efficiently.
• Complying with data protection legislation
It is essential that your business complies with the Data
Protection Act of 1998 if you are processing personal
information. Information
is provided here about how to use the information
that you will be handling under the Data Protection Act.
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Full-time
and part-time work |
You need to consider
when taking on staff whether it will be on a full or part-time
basis. It very much depends on the nature of how your
salon will operate, and would probably be more beneficial
if you had a number of hairdressers employed on a full-time
basis in order for them to build up a good rapport with your
client base. If you are hiring as well, this may mean that
they bring their clients with them, increasing your customer
base. Regardless of how they are employed, you have responsibilities
to them.
• All employees should have a written contract of employment.
• They must receive an itemised pay statement.
• The environment in which they work in has to be safe
and secure.
• Your insurance policy must insure you against any claim
employees may make that has come about as a result of working
for you, for example, an illness.
• You must register as an employer with the HMRC
• Your employees must be paid at least the National Minimum
Wage and gain the minimum amount of paid holiday and breaks.
• In the event of absence from work for more than three
days due to illness, they are entitled to receive Statutory
Sick Pay.
• Your staff are entitled to maternity, paternity and
adoption leave during the first five years of their child’s
life. If any of your employees have children that are under
six years of age, you should consider seriously any request
to use flexi-time.
• At all costs, discrimination must be avoided and all
your employees treated fairly.
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Employing
Directors and Managers |
If your company is
a Limited one, then you must have at least one director.
The director should be appointed by your shareholders as the
person that they believe can run the company best. It is essential
that the correct director is appointed as their responsibilities,
for example, employment law and health and safety, are crucial
to the success of the business.
A manager will usually be employed as someone to take a little
bit of the responsibility away from you while you concentrate
on building the business. Ensure that they are someone you
trust, or has a lot of experience as their role will additionally
contribute significantly to the success of the business.
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Making
a job offer |
Once you have recruited
your employee/employees, and made them a job offer, it is
important that you discuss the terms of employment. Make sure
that you send the newly appointed employee(s) a letter which
details all that you have discussed and get them to return
to you a signed copy, just in case of any disputes. This should
include the job title, the person’s name, the date the employment
will start, any conditions that there are, the date the employment
commences, whether there is a probationary period and if there
are any terms of employment.
Ensure that you check every potential employee’s right to
work in the UK and ensure you keep copies of this documentation.
If you do not check this information, you can be fined or
convicted if they are not eligible to work in the UK. The
Home Office website provides information on preventing illegal
working in the UK.
You must ensure that you are not racist when employing somebody.
This means that your decision for employing someone cannot
be based on their appearance, name, ethnicity, religion or
accent. If you are discovered to be operating your recruitment
process in this way, you can be prosecuted under the Race
Relations Act 1976.
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References
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References are the
ideal way, if you do not know your potential employee, to
gain an insight into their past work experience and the skills
and knowledge they gained and from someone other than the
potential employee. They can be requested at any point during
the recruitment process, although usually are done so as one
of the final stages.
Written References
You can write to the previous employer and include a form.
Things to ask are how long was the candidate employed, what
their main duties and responsibilities were, why they left
the company, what their character was like, for example, honest,
reliable etc., and if there are any reasons why they should
not be employed.
Telephone References
It is usually best to write to the previous employer so that
they can prepare to give you the information you require.
This is just good manners as they should hopefully then be
able to give the most accurate information without them having
to think on the spot.
Obviously you should use references with caution, they are
not always 100% genuine, you do not know what the relationship
was like between the previous employer and employee, they
could have been best friends or related, and so the referee
is unlikely so say anything that may hinder their progression.
Ensure that you are comfortable with the prospective employee
as a person and the rapport you build and use references to
confirm this.
Checking Qualifications
When a qualification is essential to a role, it is in your
best interests to check that the candidate is as experienced
as stated. This can be done at any stage in the recruitment
process, but it may beneficial for you to say in job advertisement
that offers will be made once qualifications (and you may
want to mention references here) have been checked. This may
just deter some people who apply and ‘exaggerate the truth’
on their CV’s in order to get positions, and therefore save
you some time if indeed this was to happen. Use the following
links to check for the relevant qualifications.
• Degree and secondary level qualifications – use
the Experian website.
• Vocational qualifications – use
the Qualifications and Curriculum Authority (QCA).
• National Vocational Qualifications (NVQ’s) –
contact your local Learning
and Skills Council to access the database for your
industry.
Pre-Employment checks
Only carry out any pre-employment checks that are essential
and need to be done for a specific reason, and ensure that
the employee/potential employee knows what checks you are
going to be carrying out on them and how they will be done.
Make sure that you only use sources to carry out these checks
that are reputable and reliable, and if they provide any adverse
information, then make sure that you give the employee/potential
employee a chance to explain this and make your decision from
there.
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When
you take on a new employee |
HRMC has compiled
two packs filled with information aimed at prospective employers.
There is one for registration purposes and one for taking
on new employees.
Below is a checklist for things you should make sure you have
covered before taking on an employee, although do note this
list is not exhaustive.
• Ensure you are registered to employ people with the
HMRC (see above taking on staff). If you are not registered
then make certain you do so, but if you are then make sure
you inform them that you have taken on a member of staff.
• Get hold of the employee’s P45 and National Insurance
number. If you cannot get a P45 then fill out a P46. Make
sure this information is entered into the accounts and a payroll
is set up.
• Plan their induction period
well. They must be aware of your company policy and procedures
and be given an induction on health and safety issues to ensure
that they comply. Ensure that they have an adequate workstation
(if appropriate) available for them when they begin. Include
in your induction an introduction to your other employees
and allow them time to get to become acquainted. Make sure
that as part of the induction, ongoing support is provided,
and training if applicable, and the new employee knows where
to get this from.
• You are legally obliged to provide an employee with
their contract of employment within two months of them starting
work with you, although it is applicable from day one.
• Make sure you are covered for employer’s liability
insurance if you need it.
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Ensure that your employees
are eligible to work in the UK
You should check each employee’s eligibility to be employed
in the UK, regardless of their racial background. Failure
to check this out could lead to you being prosecuted or paying
a fine of up to £5000 per employee, if it is discovered that
a member of your staff is working in the UK illegally. Ensure
that at all stages you are not discriminating against anyone
in any way.
Make sure you check and keep a copy of all the relevant documentation
that confirms a person’s right to work in the UK. If you have
obtained the correct documents for your records then you will
have a defence if any legal case is brought about. There are
two lists which contain different types of documentation.
These lists can be found on the Home
Office website. You should ask to see (and keep a
copy of) either, one original document from list
one, or, two original documents from list two.
It is your responsibility to take the appropriate steps to
ensure as far as possible that the person you are employing
is the holder of the documents they provide you with.
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Carry out an Induction
Although there is no legal obligation to do so, carrying out
an induction will help your employee understand more about
your company and enable them to establish themselves more
quickly within their job role. If a good induction is conducted
then the chances are there will be less mistakes made in the
long run as the employee will gain a good foundation, as opposed
to possibly learning on the job where they can pick up other
people’s bad habits!
You should use this time to persuade them as well that they
want to work for your business. Good induction programmes
lead to less confusion on the part of the employee. Failure
to provide them with a good one can lead to decreased morale
as if in a few weeks or months in they don’t understand something
and believe it to be a basic point, they may fear asking for
help when really they had never been told about it in the
first place.
Invest time into developing induction programmes, as if you
get them right first time for the employee, you can rest assured
that you have done a good job. Make a checklist of things
to be included and prepare a pack for them to take away if
you feel this is necessary. Make sure there is someone to
look after them on their first day, ideally their line manager
so they feel there is someone always on hand for them to ask
questions to and that they won’t be disturbing any of the
other colleagues. Ensure that they feel they can ask whatever
questions they want; it is nerve wracking enough on your first
day at work so make sure they don’t feel like a burden as
well.
The induction period is a good time to present the new employee
with their written statement (if the first part is completed)
and to discuss it. Make sure you arrange a follow-up meeting
from this so the new employee can discuss anything with you
they may have come across on their own.
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Pay
and Pensions |
Paying your staff
If you are employing people in your business you have to decide
what your rates of pay will be to ensure that you keep your
staff happy and motivated. Use pay rate systems and ensure
you review them, as well as benchmarking your wage rates with
other businesses to ensure that you stay competitive.
As an employer it is essential that you understand how legislation
affects the National Minimum Wage and Statutory Sick Pay as
there are procedures that need to be followed as well as paperwork
that should be documented. When paying wages you as an employer
have obligations to fulfil for example, when paying maternity
and paternity pay and holiday pay. Information about all these
types of wage structures are accessible through the Business
Link website.
It is vital as well as an employer to understand what PAYE
is (Pay As You Earn) and to be aware of the common errors
that are made associated with filling in the relevant forms.
Also detailed here are what the key principles of National Insurance are, for example, the contribution types you
can pay and how these differ for employees and employers and
for the self employed.
Pension schemes
As a business it is optional as to whether you run a pension
scheme, although you may be obliged to offer one through a
third party depending on your size. As an employer you should
know your legal obligations and what type of pension scheme
you should use, if any.
Running a pension scheme enables you effectively to offer
employees tax-efficient benefits at a relatively little cost
to you, allowing you to recruit or retain the best employees.
Topics covered on the Business
Link website include regulating the schemes, the responsibility
of the employer and trustees, and the tax advantages that
come with operating pension schemes. If you are self employed,
you cannot join an employer’s pension scheme and do not qualify
for the additional State Pension. You can find out here information
about how personal pensions work, state pensions, stakeholder
pensions and other tax-efficient savings, as well as lots
more. Choosing the right pension scheme can be challenging,
and it is hard to know which one is right for you or your
employees. This section provides information about choosing
the right schemes, for example, an occupational pension scheme,
a stakeholder pension scheme or a group pension scheme. Information
is provided about schemes that are approved and unapproved
and you have the ability to compare schemes that are out there,
as well as guidance on things that should be considered.
Information can be accessed from the Pension
Service website. This details all information an employer
will need to know relating to pensions and how the employee
is or is not covered.
Sickness, sick pay and injury
Terms and conditions with reference to these, how much sick
pay is and how it is calculated.
Period of Employment
Whether it is temporary or permanent, and how long the period
of employment is for or if it is fixed, and how often, if
at all, the contract will come up for review.
Notice period
How much notice needs to be given from both parties. There
is a legal requirement, although this can depend on what is
incorporated into the employment contract as employers may
wish to receive more notice. Legally, employers must give
one week’s notice if the employee has been employed continuously
for more than one month but less than two years. If the employee
has been employed continuously for over two years, two weeks
notice must be given and one extra week for each year over
that, up to 12 weeks. An employee, legally, must give one
week’s notice if they have been continuously employed for
over one month.
Dismissals, redundancies and other exits
All the relevant information can be found here at the Business
Link website on topics including dismissing employees,
making employees redundant, when employees resign and many
more associated issues. Advice is given on what you need to
do to sort out your tax and how to end contracts correctly.
Two things should be included in the written statement that
should have already been provided to your employee. They are
the names of the people who deal with grievances and with
disciplinary procedures and dismissals, and how applications
for these should be made. You must ensure that any disciplinary
rules and procedures you have, and what an employee needs
to do if they are not satisfied with an outcome, is easily
accessible information to the employee, for example, if it
is not incorporated into the written statement then it must
appear in the company handbook which all employees have easy
access to. If they win a dispute and it is discovered that
an employee has not been issued with a written statement then
you can be forced to pay out.
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Managing
your staff |
Setting the rules
You should ensure that you have procedures in place so that
all the employees are aware of the employment policies for
your business. These include working hours, disciplinary procedures,
training and performance management, benefits and rewards,
equality and health and safety policies. Operating clear policies
will make certain that you comply with the law and they prevent
potential risks that may arise. The policies that are mentioned
provide a minimum legal standard which should be enforced
to comply with best practice. Having such policies in place
will also set a precedent for dealing with all issues fairly
and consistently.
It is important also that there are procedures in place for
any employees who are found to be under the influence of drugs
and alcohol whilst at work. As well as this having a harmful
effect on any individual involved, it can also impede strongly
on the image of your business, not to mention the dangers
posed to fellow employees and customers. Policies should be
drawn up by any employer to coincide with the Health and Safety
at Work Act 1974. This should also include information about
your company policy on smoking.
You should try to use monitoring systems wherever possible
to make sure that your staff are being productive and that
their quality of work is to the set standard. This can be
quite easy in a salon as you can often see the results and
depend on your customers to tell you if they are dissatisfied
with a service they have received. But it is worth bearing
in mind that as opposed to speaking up, some customers may
visit you once, have a bad experience and never return. It
is therefore in your best interests to ensure you have staff
that listen well to their customers and give them what they
want or advise in the best possible way.
Working time and time off
A good business will have measures in place to deal effectively
with staff absences and sickness. There should be ways in
place that enable you to measure the levels and try to identify
reasons that contribute towards absence. Absences that are
not planned for can affect motivation and productivity, and
most importantly, profitability. Look into how you can implement
procedures to hopefully control absence levels within your
business, as well as how it can be managed as a disciplinary
issue.
As a business you should be aware of how much time off work
an employee is legally entitled to. There are lots of different
arrangements that need to be made for full-time staff and
part-time staff, whether the leave is statutory or discretionary
and whether it is paid or unpaid. Different legislation applies
to young people still at school and to those who are undergoing
training for their jobs or being made redundant. There are
parental commitments that people have and also emergencies
that arise, as well as public duties that must be served.
You should make sure that you are in line with the law regarding
these issues. There are regulations in place about working
hours in a week and break entitlements. This includes how
many hours can be worked legally without a break and how many
hours are legal to be worked in any working week. It is explained
here how these rules may differ for younger workers and it
gives advice on how to manage your employee’s hours also.
Under the Working Time Regulations 1998, most workers are
entitled to annual leave or paid holidays. You should be aware
therefore of how much holiday you can give your staff.
When your employees are required to work overtime, it usually
demonstrates that your business is dealing with changes in
demand or with labour shortages. Employees must agree to work
overtime, and there are quite a few legal and management issues
that should be addressed. These include the existence of contracts,
health and safety issues and the alternatives to it.
Inevitably as a business you will at some point be faced with
an employee either having to take maternity or paternity leave.
There are numerous legal matters associated with this. It
is important to realise that as an employer who is supportive
towards this, you can reap many benefits which include retaining
experienced staff, increasing morale and reducing absenteeism
and increasing productivity as your employees will value you
as a good employer. The subject of adoption should also be
looked into and what your employee’s rights are if they decide
to adopt a child. You should seek advice of how to manage
expectant mothers at work
Flexible working can bring many benefits to a business, for
example, it can improve staff efficiency as they have more
free time to fit in other activities, therefore improving
their work-life balance. It may enable you to retain these
members of staff for longer, resulting in you being able to
offer a better service to your customers for more of the time.
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Improving
staff performance |
Skills and training
As an employer, it is important to understand that your staff
may want to develop themselves and it would be good for your
business if you favoured personal development and offered
training to those employees who want it and /or require it.
Read about how you can come up with good ideas and advice
of how to offer training, for example, are you equipped to
offer it in house? And how can you tailor the needs of your
employees to fit in line with your business to make it even
more successful. You may decide to enter a niche in the market,
for example, offer hair extensions or become specialised in
afro-Caribbean hair, and to do this you will need to ensure
all your staff are trained and have some expertise and knowledge
in the area. Try to develop your management as well, so hopefully
as you expand as a business, you will want to be able to create
a team that consists of different skills that enable the business
to run effectively and efficiently.
Motivation
It is important and very favourable for your business if you
as an employer can retain your staff by keeping them well
motivated and enthusiastic in the workplace. There are several
ways in which you can do this and some are mentioned below.
Motivation can have a high impact on staff turnover and it
is important that this is controlled as it poses a major threat
to your business if it becomes unmanageable. There are many
other factors contributing towards turnover and these are
discussed, as well as a way of how you can measure the levels
in your business.
• In order to get the best out of your employees, you
could implement a staff incentives scheme in order to reward
the performance and productivity of your staff and get the
best out of them. Different types of schemes can be used and
they do not have to be costly. Research shows that employees
are just as well motivated by fun schemes that are not a financial
burden on the business as they see the use of the schemes
as recognition in itself.
• Use Appraisals to manage performance. This enables
clear objectives to be set and so there are no illusions as
to what the targets are for each employee to reach. This also
enables each employee to have their own appraisal criteria
dependent on what level they are at in the business. Having
an appraisal system in place also gives employees the chance
to have their say and it allows them to identify their strengths
and development areas and put in place action plans to resolve
these.
• A good way to improve motivation is give your employees
a stake in the business by setting up an employee share scheme.
Look into how to choose the best one for your business after
considering the views of HM Revenue and Customs schemes and
taxed employee share schemes.
• Meeting the need for a strong work-life balance can
really benefit your business. It allows employees to feel
they have time to respond to other responsibilities in their
lives and not just have hours after work. By recognising this,
employers give themselves an advantage over any competition
as this is increasingly what employees are looking for as
opposed to a more traditional clocking on and off system.
Enabling your employees to feel more in control of their working
lives can lead to increased productivity and lower absenteeism.
• A good communication channel is critical to the success
of your business. As you employee people it is vital that
you listen to them; their ideas and their views. This makes
you an understanding and involving employer and provides tangible
benefits to the business as employee involvement and empowerment
can have a direct affect on productivity
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