I have just taken on an employee, this is what I found;
1) recruitment itself is the hardest part. Many people applied (I used indeed paid-for ads), nearly all totally unsuitable. I increased the salary on offer and got better candidates.
Eventually I got an applicant that seemed perfect. Been working for nearly 3 months and everything has gone smoothly.
2) it is possible to employ as a sole trader but I wouldn’t recommend it. The potential liabilities of a 1 man window cleaning business are very small. But if you employ, you are then responsible for someone, they can sue you, take you to a tribunal etc. even a small error can result in you paying out £10k.
I changed to a limited company before employing, it’s more hassle but peace of mind.
3) The consequences of getting things like payroll, PAYE, pension etc wrong are pretty terrible. It’s possible to do yourself, but it’s a lot of paperwork. this is one instance where getting a professional (eg an accountant) to do this for you is well worth while.
4) people will advise you to take someone on self-employed. My advice would be don’t do it. You’ll get a better calibre of candidates if they are straightforward employed. They will take the job more seriously and will be less likely to want to start up on their own.
5) when calculating how much you can afford to pay them, you need to know:
- how much minimum extra profit you want to make from having a worker
- how much the cost of employing is, including taking into account :
Their gross salary
Their paid holiday
Extra accountancy fees to run a payroll
Your contributions to their pension (minimum is 3% of their salary)
EmployERS National Insurance (this is not the NI that’s deducted from their salary, it’s extra NI you have to pay as an employer)
Bonuses
Overtime
Employers liability insurance
- How much extra turnover you expect to achieve as a result of their work.
In my case, my employee has picked up the work really quickly, and is already exceeding all my estimates.
The next thing is to try your hardest to be a good employer. Don’t make unreasonable rules or demands (such as requireing climbing over locked gates etc). Pay on time and without fuss. Reimburse reasonable expenses quickly.
It’s not easy to employ, but if you’re going to do it, you might as well do it properly.