Employing Someone in Your Business? Here’s What You NEED to Know with Pip Foulsham
How do you know when it’s the right time to employ someone in your business?
What policies do you *legally* need to have in place when employing someone?
Do you have to hire someone as an employee or is there another way?
I recently spoke with my friend Pip Foulsham on The Social Brain Podcast to discuss all things HR, hiring, and how your business culture and leadership influences your employment of new people.
Prefer to listen to the audio version of our conversation? Go here.
The easiest way to grow your business is by outsourcing specific tasks to other people. But knowing who to hire first and how to hire them can be an overwhelming decision for any business owner to make. We’ve answered your most burning questions about how to employ someone to help you in your business so you can remove that overwhelm and grow your company with confidence.
When’s the best time to hire support as a business owner?
The best time to hire support as a business owner is when you’ve reached capacity for the number of clients you can take on or workload you can manage, or you’re struggling to juggle everything that’s on your plate.
In some instances, you may be freelancing and have an influx of projects that mean you need temporary support to help you get everything done. Alternatively, your business plan may be to expand within the next 3-6 months, and you want to hire somebody new to pre-empt the work that’ll be coming your way.
You may decide to pass the admin tasks that are outside of your core zone of genius to a VA, or perhaps you’re keen to hire a social media expert to help you with your social media marketing. You may wish to hand over the finances to an accountant or take on a sales manager. Whatever role you choose to outsource, it should be something in line with your overall goals and should allow you more time to focus on the most important things.
Do you have to hire an employee or is there another way?
When it comes to hiring help in your business, there are 3 potential ways you can employ someone. These are:
- As a self-employed freelancer
- As an employee with full salary and benefits
- As a worker, often on a temporary basis or zero-hour contract
First up, freelancers. A self-employed freelancer provides a service to you and will invoice you for that service. They aren’t on your payroll and will work for you on a contracted period that may be month to month (i.e. social media management) or on a project basis (i.e. a branding expert). There is no employment relationship between you.
Next, you can hire someone as an employee of your company. They’re on your payroll as a salaried employee, they have a contract of employment, and they may also receive extra benefits like health care or gym memberships (we’ll talk more about this in a moment).
Lastly, you may choose to hire someone as a worker. This is often for people who do seasonal work or work variable hours based on your needs. They may have a zero-hours contract, and whilst they have some employment rights such as holidays and sick pay, they’re not entitled to the same benefits a full time employee would be.
How do you decide what employment status to choose?
Pip explains: “You need to determine how you’re going to use the person first to help you decide which of those categories they will fit into. If you're going to use them on a regular basis, you would probably go for an employee because there's a regularity of relationship there.
“If it's going to be a more ad hoc, occasional, project driven basis or it's going to be seasonal, maybe if your business peaks at Christmas, you might want to think about either the freelance worker or the self-employed category.”
Whichever category of worker you have, it’s important you have an agreement with that individual. It's effectively a contract of employment, but it's called different things. For a self-employed freelancer, it’s typically called an associate agreement. It may be a worker’s agreement or a contract of employment for employees. This agreement is to clarify what the relationship is between you and them, and what the relationship is between you and the client that they're working for (if they’re working for clients on your behalf).
Money is another thing you’ll need to consider when employing someone. If you hire somebody on a self-employed basis, you may pay a higher hourly rate to account for the fact that you're not paying them a pension, holidays, sick pay or other benefits. This means it's done and dusted within an invoice, which is slightly easier versus an employee who’s on your payroll.
With a salaried employee, you may end up paying a lower hourly rate, but you’ve also got to consider additional costs and the fact you've got to do tax and national insurance for them.
What’s the best role to delegate to your first employee?
The best role to delegate to your first employee depends on how you’re spending your time as a business owner and what you enjoy within your business.
Ask yourself: “What do I really not enjoy doing that I could pass on to someone else who knows how to do it better and does enjoy it?”
Pip says: “I actually quite like doing my social media and marketing so that would almost be the last thing I would hand off to other people. I absolutely hate numbers and finance, so from day one of my business, I got an accountant.
“Think about the things that you enjoy doing and you like doing, but also what is the thing that for your business has the most potential. If you’re stuck doing your finances, for example, and actually you are really great at marketing your business, if you got rid of that finance stuff, you'd probably be more valuable over here doing your marketing stuff because that's what you’re great at.”
What are the important legal bits you NEED to know before hiring help?
The bit that everyone dreads the most: the legalities around employing someone. In reality, there are just a handful of things you need to have in place before taking on a new employee.
Step 1: Right to Work Check
The first thing you need to do before taking on an employee is to check that they are legally entitled to work in the UK (if you're a UK employer).
You can do this manually by having them provide you with documents such as a passport. There's some information on how to do this on the Gov UK website.
Alternatively, you can pay an independent service provider to carry out an online right to work check for you. They send the candidate a link, the candidate uploads their ID document, they take a selfie, and the software checks the selfie against their passport and says, yep, it matches. You then get a PDF report that says right to work check passed and verified which you can then save on their file.
You must complete a right to work check before they start working for you. As soon as they accept the job offer, get that right to work check done. It is a legal requirement that could be subject to audit in the future.
Step 2: Send them an offer letter
In April 2020, the law changed on contracts of employment. Now we have something called the Good Work Plan and employees must receive a contract of employment, or Written Statement of Particulars, that’s to be signed on or before their first day of employment. The easiest thing for you is when you make the offer, send them the contract as well. If you’re looking to bring in multiple people, get a contract template that you can just fill in each time you employ somebody. It makes life a lot easier.
Those two things are a legal requirement of hiring an employee.
Step 3: Health & safety
If you employ more than five people, then by law you must have a health and safety policy. If you’re planning to hire more than 5 people in the next, say, 6 months, get your health and safety stuff sorted early because then it's just a job off the list. And once it's done, it's done.
You can have policies for days, you can have forms and templates for days, but these three things are the crucial things you need to have in place by law. When it comes to extra policies, Pip shares:
“I get people come to me saying, we want all these policies, and I'm like, okay, but technically by law you don't have to have them because as long as you're following the principles of something like ACAS, you don’t need to create individual policies. ACAS has a guide that says, here's how you must conduct a disciplinary process, for example. As long as you make references - so in your contract of employment, there’s a section at the end about disciplinaries and grievances - as long as there, you say something like “We will follow ACAS's principles and ACAS's guidance”, that’s absolutely fine.
“That's the minimum standard you have to follow. If you want a slightly more flowery policy or you'd like a bit more detail, then of course you can have your own. But to get you started, I think it's about getting your head around some of the simpler bits or the bare minimum legal stuff first.”
How do you decide what benefits to offer your employees?
Benefits on top of a salary are a great way to show your employees you value them, but when it comes to putting together a competitive package, it can often feel like the options available are endless. An important thing to remember is that there’s no point in spending money on something your employees aren’t going to use, so think about what would be most beneficial to them and their lifestyle.
If you’ve already employed a few people, ask them what they value most. Is it flexibility? Is it a private healthcare scheme? Is it more holiday? Can they buy and sell holiday? Everybody’s different, so you may receive a few contrasting responses.
If you haven't employed anybody yet and you want to start out as a great employer with a benefits package, think about the things that you would find attractive in an agreement yourself.
You also want to think about how useful the benefit is actually going to be for them. Let's take a private healthcare care scheme as an example. It’s a very common benefit and a good benefit, but it’s one of those ‘just in case’ benefits. People aren't necessarily going to feel the benefit of it unless they have an issue that they need to claim for.
However, you could use a provider, like Vitality for example, who offer other immediate benefits. Your employees could receive the healthcare policy as well as instant benefits like an Apple Watch or a Cafe Nero coffee every week or cinema tickets.
Ask yourself: “How do I want my people to feel and what do I want the benefit they receive to say about my business?”
Other benefits may include things like pensions, providing education sessions on things like financial planning, an employee wellbeing program, or even something as simple as hybrid working or flexible working. Accommodating an element of hybrid or flexible working is actually a fairly low-cost benefit to you when you’re employing someone and is a big retention tool for many people now.
Pip works with over 36 clients and something she’s noticed a shift in recently is the focus on wellbeing amongst employers. Pip explains: “The other thing I'm seeing around the wellbeing angle is a lot of stuff on menopause. A lot of companies are putting menopause policies in place.
“More groups are covered under the Equality Act now and you know, absolutely the perception of mental health has definitely changed. If you take menopause as an example, a lot of this is about talking about it, educating people, what it means. It's not always necessarily the worst-case scenario. Someone just might need a day to decompress and then they'll be fine the next.”
Employing someone in your business may feel like an overwhelming decision to make, but as we’ve demonstrated with Pip’s insights, it really doesn’t have to be!
Pip Foulsham is a HR People Person who supports small and medium business owners to solve people problems, increase employee engagement and retention, and put a bit of pizzazz into their people plans.
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