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Contractors Guide for New Employers

Employment comes with both its positives and negatives.  Everyone has heard of a horror story at some point relating to a previous staff member, but this shouldn’t put you off.

When first starting out as a small business, having to recruit your first employee will come with many questions, such as:

  • How do you go about hiring the right person?
  • How do you get the best out of someone performance wise?
  • How do you sort out an employment contract?

The list can seem endless, so Gorilla Accounting are here to help answer these questions and shed some light.

Step 1: Knowing the Law

1. Dismissal of an employee

Worst case scenario, but is essential you understand. You’ll quickly understand the person you recruit will be completely different to the interview. 

Unfortunately, not all recruitment works out well, so you have to dismiss.

Dismissing an employee has to come with a solid reason, which can be backed up with evidence. A Dismissal comes with regulations to ensure you are being fair. These regulations include:

  • Informing the employee of the problem at hand
  • Holding a meeting to discuss the problem
  • Allowing the employee to be accompanied
  • Deciding on appropriate action
  • Allowing the employee the opportunity to appeal

Pregnancy, Maternity Leave or Unauthorised Deduction from wages are unfair reasons for dismissal and the employee can claim on these grounds, regardless of how long they have been employed.

2. Notice

Dismissal has to come with notice. Employees are entitled to one week notice if you would like to dismiss them. However, this does not apply to everyone. 

Employees who have been employed for two years are entitled to two weeks’ notice and then continues to increase by one week per year up to a maximum of twelve weeks.

Notices can also be extended with an agreement between both the employer and employee.

3. Wages

The current (2016) minimum wage rates for employees 25 and over is £7.20.

It is against the law to deduct an employee’s wages unless you are legally required to do so, i.e. tax purposes. You are also permitted to deduct should you have contractual right to do so, this is usually documented in a separate written contract signed by the employee.

4. Holiday Entitlement

Employees are entitled to use holiday as leave from their first day on the job.   If you as an employer are unsure about what your employee’s holidays should be then you can calculate it on the HMRC Website.

5. Maternity Leave

Employees are eligible to take up to 52 weeks maternity leave. The earliest the employee can take maternity leave is 11 weeks before the babies due date. However, if the baby is born early, the maternity leave starts the day after the birth and the employee must provide evidence of the child’s date of birth, either in the form of birth certificate or a document that is signed by either the doctor or midwife.

6. Agency Workers

Agency workers are entitled to the same basic standards of employment, including notably pay and holidays.


Step 2: Sorting out an employment contract

A contract is a life saver for employers, as it saves misunderstanding between the employer and employee later.  As a contractor, this will come as no surprise, you must vet the contract and understand it inside out. 

The Law requires that employers need to provide employees with the contract two calendar months after starting work. This also has to include a written statement of the main terms of the contract, for example pay, holidays and working hours.


Step 3: Paying the Right Rates

As an employer, it is a good idea to find out what the going rate is and also consider what you as an employer can afford.

From day one of employment, it is the law that the employee should not be paid lower than the National living and minimum wage.


Step 4: Recruiting the right people

To recruit the right person to work for you, you need to have an idea of the personal qualities and skills they will need to affectively complete the work, and draft a description of the job so you attract the right candidates. 

Advertising the job effectively will increase the number of potential employees interested in the position. This can be done through Job Centres, Employment Agencies, and the Internet etc.


Step 5: Training and Inductions

As an employer, it is your duty to make sure the new recruits settle into their new work environment by getting them familiar to their job role and the colleagues they will be working with.

Training the staff also needs to be an important concern for employers. Effective training can both motivate the workforce as well as improving the staff’s efficiency.


Step 6: Set Rules

Employers need to set boundaries early on that should cover absences, health and safety, standards of performance, time keeping, use of social media and the use of company facilities.

Also employers should point out what is to be expected if any of the guidelines are to be broken.


Step 7: Communication

Communication is key!

All the information above needs to be communicated to the employee. This is because they need to know their job roles, the rules etc. This knowledge can allow them to feel confident in their work, giving them a sense of importance and control in the company and therefore motivating them and increasing their levels of commitment to the organisation.


Finished

You can now become the best employer you can be! For more information on how to run a Limited Company, we recommend reading our Contractors guide to setting up a Limited Company.   

For any further questions, or to learn how useful appointing an accountants can be, call us today on 0330 024 0406.

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