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Hiring Your First Employee: What Small Businesses Need to Know

Taking on your first employee is an exciting milestone for any small business owner. However, it also comes with important legal and financial considerations.

Here are some key things to think about when making this move:

  1. Decide between full-time, part-time, or contract roles. Consider your budget and needs. Part-time, temporary or freelance contracts allow flexibility.

  2. Learn your obligations for PAYE income tax and National Insurance. You'll need to register with HMRC as an employer and handle PAYE payroll deductions. Use HMRC's tools to get set up smoothly.

  3. Follow fair hiring practices. Job adverts, applications, interviews and checks must comply with UK laws against discrimination. ACAS provides guidance on proper hiring processes.

  4. Get your employment policies in order. You'll need written policies for schedules, leave, equality, health and safety, expenses and more. See templates from ACAS.

  5. Offer competitive salary and benefits. Check market rates for the role and consider extras like pension contributions, healthcare, bonus schemes and leave allowances.

  6. Provide training and oversight. Don't just hand over work. Provide training on duties, workplace systems and your expectations. Schedule regular 1-to-1s.

  7. Talk to insurers and legal advisors. Consult your business insurance broker and an employment solicitor to ensure you have required employers' liability cover and understand all legal obligations.

  8. Know your responsibilities for sick pay and leave. You must provide statutory sick pay, annual leave and rest breaks. Understand how to handle requests for parental or carer's leave as well.

Making the leap to employer can be daunting, but small business owners have a wealth of resources to get it right. Don't hesitate to get expert help navigating any new requirements.


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