Employing your first member of staff is a major milestone for any business. It often signals growth, increasing demand and ambition for the future. However, it also brings legal responsibilities that many first-time employers underestimate.
Before taking the step, it’s worth considering whether employment is the right option, what needs to be put in place, and where the common risks lie.
Do you actually need an employee?
The first question to ask is whether you need an employee at all. Employment comes with legal obligations around dismissal, discrimination, pay and working time.
In some cases, a freelancer, contractor or self-employed consultant may be a better fit, particularly where the work is short-term, irregular or task-specific. These arrangements can offer flexibility and fewer ongoing obligations, provided they are structured correctly.
If the role is long-term, consistent and central to the business, employment may well be the right choice – but it should be a considered decision.
Think carefully about hours and flexibility
When employing someone, it’s important to think about how many hours you need and whether those hours are likely to change.
Proposed changes to employment law are expected to give workers more certainty over their hours, which could significantly affect businesses that rely on flexible or seasonal working patterns. Employers should consider not just current needs, but how working patterns may look over time.
Employees bring value and responsibility
While there are costs and risks, employees can add real value. They tend to work solely for the business, build loyalty, retain knowledge and support long-term growth and succession planning.
For businesses looking to grow with consistency, employing staff can be an important step, provided the responsibilities are understood from the outset.
Getting the basics in place
There is no absolute legal requirement to have a written contract of employment, but in practice it is strongly advisable.
A clear contract sets expectations and protects the business, covering matters such as duties, hours, pay, notice, confidentiality and restrictive covenants. A clear job description, while not legally required, is also invaluable in avoiding misunderstandings about the scope of the role.
Recruitment, adjustments and job offers: keep it fair
Recruitment doesn’t need to be formal, but it does need to be fair. The main risks arise from how roles are advertised and assessed.
Job adverts and selection criteria should focus on genuine requirements and avoid wording that could be discriminatory. Employers should also be prepared to make reasonable adjustments during the recruitment process where appropriate.
Employers cannot ask health-related questions before making a job offer, except in very limited circumstances.
Once an offer has been made, discussions about reasonable adjustments can take place. What is “reasonable” will depend on the size and resources of the business. Small employers are not expected to make the same adjustments as large organisations.
Probation periods and dismissal risk
Traditionally, employees needed two years’ service to bring an unfair dismissal claim. That position is expected to change, with employees getting this protection after an initial six month qualifying period.
This means employers may need to be more careful at the recruitment stage and more structured in how early employment issues are handled.
When business needs change
If work reduces or the business changes direction, employers may need to reduce hours or headcount.
Some contracts allow flexibility, and in other cases agreement may be reached informally, such as reduced hours or temporary arrangements. If changes are long-term, a formal redundancy process may be required.
Three key questions to ask
Before employing your first person, consider:
- Do I really need an employee, or would another arrangement work better?
- What exactly do I need this person to do, now and in the future?
- How can I recruit fairly and protect the business from the outset?
Taking on your first employee is a big step, and getting it wrong can be costly. If you’re unsure whether employment is the right option, or want help putting the right contracts and processes in place, our Employment team can provide clear, practical advice tailored to your business.
