5 Things You Need To do When Hiring Staff
You need to hire your first staff member, or maybe you're just wondering whether you've got everything under control.
Either way you've come to the right place, we've got everything you need to do, and where to go. By the end of this you're going to know the 5 things you must do when hiring staff. Strap yourself in, let's go;
1. Check Conditions & Entitlements
Head over to Fair Work and check what award your employee will be covered under, and what pay and conditions they are entitled to. If they don't fit under an award, then the National Employment Standards set out their conditions. Fair Work actually has some great resources for small business so I highly recommend checking them out.
2. HR Compliance (aka contracts et al)
If the thought of getting employment contracts, policies and procedures doesn't make you feel like putting on a staff member is risky business, then you are definitely not Tom Cruise.
Employing staff is not without risk, not just hiring the wrong person and burning time and money, but what happens when something goes pear shaped (and it will)?
They're not performing, you talk to them about it, they think you're being unfair and take you to the ombudsman. You might win, but having the right documents in place would certainly make it a loss less stressful.
Or what happens if they slip over at work? Take some of your IP, start their own business and make a squillion out of it? Click on the wrong thing and a hacker takes control of their inbox and convinces a client to pay $$$$$ to this account (it's happened).
Again, having the right documents (and systems) in place are invaluable. I know its a cost you don't really want to incur, but if you can't afford these transaction costs, then you can't really afford to have staff (and you definitely can't afford for something to go pear shaped with a staff member).
So what you do you do?
1. Free Templates
This is a terrible idea. Definitely don't do this.
2. Use a lawyer
Using a lawyer can be a good idea. But they have their limitations. They can draw you up some excellent contracts, but what happens after the employee has signed it? What sort of assistance can you get with performance management, contract updates, policies and procedures?
My view is that lawyers can be used when you've got some HR capability internally and you just need a specialist to do the legal documents. This usually means mid size businesses with enough resources and $$ to have a HR person on board.
3. Outsource HR
Outsourcing the whole HR process is my go to for small business. You get to use the specialist skills to create all the contracts and policies and procedures plus the ongoing (24/7) support you'll need when you have HR questions like;
"Is this person entitled to go permanent part time?"
"Is this person now a level 3 under the award?"
"This person isn't performing how do I have the conversation?"
"We've received a harassment complaint. What do I do?"
The outsource model operates on a fixed price per full time equivalent staff member and can be surprisingly cost effective.
So if you're thinking outsourcing is what you need hit me up and I'll give you a warm intro to a real live person instead of being a cold lead off the internet.
If you employ someone you need Workcover.
And I don't mean that like "it's recommended to have Workcover".
No you need it.
As in it's mandatory to have it.
You know with legislation and stuff.
Workcover insures your employees if they are injured at work or to and from work.
How much the premium is depends on how many employees you've got, what industry you're in and your track history of workplace incidents. And unfortunately, it's not like you can shop around. There's only one supplier and they set the price. So smile through your teeth and do everything you can to ensure a safe workplace to minimise the chance of ever needing to claim on it.
4. Insurance Broker
If you're new to business you may have muddled your way through your first insurance policy. But as soon as you get an employee involved I highly recommend you use a good insurance broker who has experience in your industry.
Good insurance brokers know their s...policies and what risks to be insured for. If your premium is a whopper, they may even be able to get you a 12 month payment plan.
My only other highly recommended item here is to consider office holders insurance, business expense and fidelity insurance. Fidelity insurance may cover losses due to employee theft. You might think that people can't steel from you. But from experience working with thousands of businesses over the years I can tell you, this happens more often than not and I'm not talking about the tenner you left next to the coffee machine. We're talking hundreds of thousands that put many a business into liquidation and the directors into bankruptcy. So talk to your insurance broker about it. If you don't have one, or want to see other people, hit me up and I'll give you an intro, or you could go direct and be just another person off the internet.
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5. Accounting & Tax
So far we've covered a lot of legal and risk issues, and now we'll turn to taxes and super. As a small or medium business you'll know the ATO wants it's pound of flesh and they want you to collect it for them. So here's what you need to do;
- Set up the employees in your payroll software. If you don't have payroll software, now is the time. I highly recommend Xero.
- Get them to complete a tax declaration form and return it to you
- You then enter these details into the software & send the Tax file declaration to the ATO from within said software. No more mailing away carbon copies. Hello 21st century.
- Give them a superannuation choice form
- Sign up to Single Touch Payroll within your payroll software
Xero has a superannuation payments function. This function sweeps your business bank account & disburses the funds to the relevant superannuation funds at the click of 2 or 3 buttons. It's way easier than using a different clearing house.
- Make sure you pay the super before the 28th day after the end of each quarter. If your employee hasn't returned the super choice form, or doesn't have a super fund, you'll need to contribute to a "default super fund". Which one? Good question, first it depends on what award, they are covered under. Some dictate which funds are eligible. Not in the award? Then you need to sign up to a super fund as an employer and make that your default fund and let your staff know that's where it's going to go.
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- You (or your accountant) will also need to register you for PAYG Withholding with the ATO. You will pay this on your quarterly BAS’. NB - this isn't an extra tax on your business. This is part of your employees salary, but instead of depositing it into their bank account each pay week, you're paying it to the ATO on their behalf.
- Depending on how big your payroll is you may need to register for Payroll tax. Each state and territory has their own thresholds you need to cross before you start paying payroll tax so check out your requirements in your state (QLD, NSW, VIC, TAS, SA, WA, NT, ACT). If you've got employees in different states, you're in for some.....fun;
Hiring staff is an exciting and scary time and is not without risk. But with the right processes you can minimise them and sleep easy knowing you're on top of your obligations. My advice here is not to be penny wise and pound poor when it comes to these areas. You're not only protecting yourself from the downside (someone slips on a banana peel) but you're setting the foundations for your business growth. The right staff are going to help you build the business of your dreams. Protect them and yourself and do it right.
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