Help me I’m hiring Help me I’m firing

© Copyright GENIAC UK Limited 2016

01 Help me I’m hiring 02 Be prepared 03 What kind of employee? 04 Building your A team 05 Interviewing 06 Selection & negotiation 07 Contracts & benefits 08 Auto-enrolment 09 Training 10 Employee retention

11 Help me I’m firing 12 Types of dismissals 13 Redundancy 14 Notice periods 15 Know the risks - protect yourself 16 Tying up loose ends

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Contents

© Copyright GENIAC UK Limited 2016

If you’re a start-up or a small business, finding great people is probably high on your to-do list. Yet finding the right person is only half the story. All too often busy business owners miss out on the basics - this ebook is your guide to getting hiring right.

Help me I’m hiring

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£30K

£20K

£10K

£0K

At Geniac we get this. We’ve grown from 20 to over 60 people in 3 months so know all about the hiring cycle. Plus all the work we do for our customers: onboarding new starters, employee contracts, setting up handbooks and policies and helping them out if things go wrong means that we really know the pitfalls and - good news for you - how to avoid them.

That’s why we created this ebook - a handy guide to walk you through the essentials. Armed with this knowledge you’ll be well-placed to not just bring in your A-team but to employ them like a grown-up. Whether you’re hiring or firing, we’ve covered what you need know, the key things to consider and included tips from legal experts and real businesses.

Who’s it for? – Founders and business owners looking to make

their first hire – Small businesses and startups wanting to grow

their teams – Businesses without an HR Manager – Businesses with a disciplinary issue or needing to

make redundancies – Anyone interested in hiring or firing

A recent study by Oxford Economics reveals that replacing members of staff incurs significant costs for employers: anywhere from £20,114 per retail employee to £39,887 for someone working in law.

Replacing staff

£ £

£40K

Law Retail

Getting the right people on board at the right time can be make or break for any business - especially a small one. And the smaller you are, the more damaging it can be when a hire goes wrong.

Help me I’m hiring

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Hiring a new employee is a good time to really think about the skills and strengths that you lack as a business and what key assets you need in your team to deliver on your plans for growth.

Prepare yourself02

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What kind of employee do I need? Employee Vs Contractor/FreelancerThink about these questions to help you decide if you are in need of a long term employer/employee relationship or whether someone freelance could help out. – Is there enough ongoing work for a new full time

employee? – Can I spare the time to train someone new? – Is the work I need completed going to take too much

of my/my team’s time on an ongoing basis? – Do I need a niche skill set for a finite period of time?

Do your homework before recruiting. Examine the current state of employment in your industry for the skill set you need. Is there a shortage of work or workers in that field? What kinds of salaries and packages are being offered? Getting this information together will allow you to understand the lay of the land and therefore help you to make a plan for your hiring strategy.

How do you know it’s the right time to start hiring?

Answer yes to any of the below and it could well be time to hire: – Are you turning away work because you’re short on

time or resources? – Are you spending time on work that is outside your

core skill set? – Is your team too busy with the day-to-day to

research and develop new product ideas and/or new clients?

– Do you need specialised skills that are critical to the growth of your business?

Prepare yourself

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Before you hire someone you need to register as an employer and get a PAYE number from HMRC in order to pay your employees. This takes about four to six weeks can be done, like most things, online.

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Did you know there are six different types of employment status, each with their own rights, responsibilities and contracts?

Different types of employees

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WorkerThis is usually what is referred to as a ‘casual’ worker. They don’t have the same amount of statutory rights as employees but are still entitled to the national minimum wage and paid holiday among others. All other policies should be clearly stated in their agreement.

EmployeeAn employee is someone who works under an employment contract. A person may be an employee in employment law but have a different status for tax purposes. It’s your responsibility as an employer to work out each worker’s status in both employment law and tax law.

Employees have rights to statutory minimums. You should also have an Employee Handbook setting out your employment policies (more on this in the Contracts and Benefits section).

Self-employed and contractorContractors and people who are self-employed are not covered under employment law, are not paid through PAYE and therefore are not taxed the same as employees. They are however protected for their health and safety and sometimes against discrimination. All other terms should be covered in their contract. To work out if someone is a contractor or self employed or if they are exempt from PAYE check the government site on employment status.

DirectorsYou may want to appoint a new director for your business. These people help run the company for the shareholders and have different rights and responsibilities from employees. Directors will have a contract with the company and will often receive regular payment.

Office HoldersThese are appointed positions in a company which do not require contracts and do not receive regular pay. These positions include: board members, club or trade union secretaries and trustees. Office holders don’t take a salary and aren’t under the supervision of the appointing body (i.e. they aren’t employees).

Check out more on employment rights in the contracts and benefits section.

Different types of employment status have different rights and contracts. Your responsibilities as an employer differ too. Here are basic descriptions of the most common types of employment:

Different types of employees

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Finding the talent04

Those familiar with the hiring process will tell you that there has been a shift in what job-seekers are looking for.

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Ensure you make the effort to get potential hires excited about your business and the work that they will be doing. You expect candidates to put time into writing their application - equally you need to put some thought into their job description. Helping new recruits envisage what their experience working with you will be like is key to attracting talent in it for the long haul.

It’s not all about the ££In a study done by recruitment consultancy Robert Walters, 91% of millennials said career progression was their top priority when considering a new job.

“More and more people want something other than just a day job,” says Geniac co-founder Mike Galvin. “They want to be contributing to something bigger like growing a business.” This shift in what people look for in their work life has an impact on how you should approach hiring.

Mike Galvin, Geniac co-founder

Finding the talent

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Tom Davenport is a co-founder at TalentPool, an online platform that helps high-growth businesses hire junior talent. He has seen thousands of job postings over the past few years and knows the importance of a carefully communicated job description.

“Companies have lots of different audiences; customers, investors, suppliers, employees and prospective employees to name a few. And to each one, the company will probably be or mean a different thing. So communication with each group needs to reflect this,” says Davenport.

“Focus on the things that really matter to employees; culture, team size, office, employee support, working hours, opportunities for development and progression. To an employee, their job is the place they spend more time than anywhere else: a community and a way of life - it’s not about being ‘the UK’s leading service provider within our sector’ or whatever you want to be to your customers.” Progression top priority when considering a new job

Finance top priority when considering a new job

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Interviewing05

If you’re new to hiring, interviewing can be intimidating. So how do you come off more Sir David Frost and less first-time-rookie? Preparation is key.

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A lot of interviewers like to start the hiring process with a very casual screening: a phone call, Skype or a quick coffee. This way you have a better chance to find out whether it’s worth putting in the time for a full interview. If there is potential, then you can start a more formal process. “Get as many team members involved in the interview process as possible,” says Galvin. “Invite them into the office a few times. Opinions vary on this, but 3-5 interviews seem to be the average for finding out if a candidate is right for your company.”

Make sure to stay in touch with them throughout this process. Disappearing for days and weeks at a time may let the interest go cold and you could end up losing your top pick to someone else.

Know the law: which interview questions are illegal to ask?Think back to interviews you’ve been the subject of and there will be the same few questions that shouldn’t come up.

Seems surprising these days but some interviewers don’t seem to realise that when it comes to interviews, some things are off-limits. Anything that is deemed discriminatory is illegal to ask about in an interview that means age, race, religion, gender, sexuality, maternity and pregnancy, marital status and general health so DON’T ask anything along these lines e.g.: – How old are you? – Do you have any kids?

– Are you married? – Do you observe any religious holidays? – Which country are you from? – Do you like to go out for drinks? – Have you ever been arrested?

Are tests right for your interviews? Some companies will assign tasks or give tests to their interviewees to get a feel for their style of work. Hiring a whole new team? Consider a group interview to check out the dynamics.

Good hires are intelligent and know when someone is unprepared. Make sure you know what you want to ask and be prepared to talk about your company - and about yourself.

Interviewing

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Killer interview questionsIt’s almost become a rite of passage to endure the gauntlet of quirky, mind-boggling and sometimes downright absurd questions being posed in a lot of startup or tech industry interviews. So if you want to be that guy then here’s a little inspiration: – “Are you smart?” — – “How would you test a toaster?” – “Who could win in a fight, Chuck Norris or Godzilla?” – “Who was the greatest band of all time, Rolling

Stones or the Beatles?” – – “What makes you angry?” – – “What do you consider to be the ‘greater good?’” – – “Count to 11 in 3.5 intervals.”

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Once you have decided on your most suitable candidate it’s time to make an offer. Veteran employers will have had a discussion with potential employees about salary expectations sometime during the interview process.

Selection & negotiation“If you’re at offer stage with a candidate, and their asking price is a little lower than your budget

- consider leaning in and offering the higher amount. It’s a great way to kick off your relationship, at no loss to you.”

Tom Cavill, co-founder at Bricklane.

A well prepared employer will have worked out a budget for the position’s salary.

Don’t be afraid if those numbers don’t match up. Negotiation, although seemingly uncomfortable, is completely normal (in fact it’s expected) during the hiring process.

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“ We work with a lot of early stage businesses and it still amazes me how many people have been sitting in a job for seven or eight months just on good will and no employment contract,”

Mike Galvin co-founder, Geniac

Contracts & benefits

Offer

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Workers and EmployeesAs mentioned, having workers and employees working for you without contracts is a very, very bad idea. They must both have signed and written statements of their terms within two months of their start date. These statements should include: – Company name – Employee’s name, job title or description of work

and start date – How much they will be paid – Hours of work – Holiday entitlement – Place of work – A written grievance, disciplinary & sickness absence procedure either in the contract or in the employee handbook

Note: Employment contracts come as part of the Geniac HR package - we’ll even create them for you.

Because workers and employees are both protected under employment law their contracts need to include the statutory minimums for: – National Minimum Wage – Paid annual leave – Rest breaks

– Maximum working hours – Right to not have unlawful deductions from wages – Protection from whistleblowing – Right to be accompanied to grievance or

disciplinary hearing

Some additional rights that employees have under employment law are: the right to claim for unfair dismissal (after 2 years of employment), statutory maternity and paternity pay and leave and rights on redundancy.

DirectorsThe terms in a director’s agreement with their company as an officer are different from those as an employee and their contracts should reflect this separately. The Articles of Association are the statutory guidelines for an officer and a Director’s Service Agreement sets the terms of employment for a director.

Just to be clear, failing to issue proper employment contracts is extremely risky - not to mention illegal. These agreements will set the tone and foundation for the duration of the employment. They protect your interests - and those of your new recruit. For example, if you don’t have a contract then that means you have no IP protection in place. So if your employee walks off with your code, and you don’t have an employment contract you have nothing in writing which says it belongs to you.

Contracts & benefits

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Offer

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Policies:“Not all policies are required by law,” says Geniac’s legal expert, Liza Hunter. “However, it is advisable to provide guidance around the terms of their employment that are not contained within the employment contract.” These policies and guidances should be included in a staff handbook.

Did you know that as a Geniac client we can create or review your employee handbooks for you?

Some policies are statutory minimums. This means that they must be provided to each employee at the beginning of their employment. Some are not obligatory but are recommended in order to guide behaviour and avoid confusion or dispute.

All companies must have written grievance and disciplinary policies.

It is also a legal requirement that an employer has a written policy setting out the process around sickness absence.

If an employer has five or more employees then there must be a written statement of the health and safety policy. It is advisable to have a policy even without meeting the minimum amount of employees as this will encourage compliance with health and safety regulations.

A data policy is encouraged as this supports the employer in complying with the requirements of the Data Protection Act.

BenefitsWhich benefits matter? There are some benefits that are simple to set up for a startup that will add value to your employment offer. For example you can implement a Cycle to work scheme, Childcare vouchers or simply upgrade your holiday and sick pay above the statutory minimums.

Share schemes: This is when looking ahead has great value. Should you decide to implement a share scheme the sooner you implement it the better as its value to senior employees will diminish the longer you wait to roll it out.

07Contracts & benefits

Statutory Req Recommended Best practiceDisciplinary Data Dress PolicyGrievance Flexible Working Smoking PolicyHealth & Safety (5+ employees) Expense Social Media PolicySickness policy Bribery

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The auto-enrolment program started in 2012 in an effort to increase employer’s and employee’s contributions to pensions schemes. As auto-enrolment is now mandatory for all employers, you need to get on board with this quickly - and make your pension scheme clear to all employees.

Auto-enrolment

£ ££Under auto-enrolment an employer is obligated to enroll all employees into a qualifying pension scheme and will have three choices for qualifying schemes: – Use the government low cost scheme called NEST

(National Employment Savings Trust). – Use an already existing plan from a pension provider. – Create a new pension plan that can be used as a

benefit to attract better talent.

Staging datesEach company has a different time when they must be compliant with auto-enrolment, which depends on a number of factors such as company size and formation date. Check with the Pensions Regulator’s office for the most accurate date.

Geniac can set-up your Auto-enrolment scheme for you - we’ll even deal with The Pensions Regulator on your behalf.

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Your company’s philosophy towards training should be that of an ongoing process - not a crash course.

Training09

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Training doesn’t have to be formal or expensive but it should be part of your ongoing commitment to your team - and your business. Let’s face it, going through all that effort to find and hire the right employee only to set them to work unprepared doesn’t make a whole lot of sense.

Take some time to think about all the areas of the business your new employees will need to become familiar with. Some will be job specific and some not, but they should all come together to make a training plan. It makes sense to keep the information organised and packaged together so it can be used again in the future.

Don’t forget to ask your employees for feedback about the training process - what did they wish they had known and what wasn’t so useful? And - remembering the “ongoing” component here - what would they like training on next?

Training is very important for employee retention - 40% of employees who receive poor job training leave their positions within the first year.

Employee retention

New hires are looking to be immersed in their jobs and company culture; learning and growing in their position is tantamount to success. Engaged teams work harder don’t forget. For new starters, onboarding is always worth the effort. How else will you ensure your new hire not only gets your business and what is required of them, but understands your culture too?

Training

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60% 40%

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It’s safe to assume that once you’ve put in all the effort to find, hire and train a new employee, you’ll want to keep that person working with you for as long as possible.

Employee retention

Long term employees are an advantage to a growing company - they are a source of knowledge, experience and trust. Employee retention is best achieved by fostering a mutually beneficial relationship. These are some of the biggest factors at play when it comes to job satisfaction: – Ongoing training – Flexibility – Goal setting – Environment – Work-life balance – Rewards – Comfortable communication – Challenging work – Autonomy – Impact

It’s encouraging for small businesses who can’t always compete with the big boys on salary to note that the things employees care about are more to do with atmosphere, balance and feeling valued than money.

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As an employer, the dismissal conversation will be one of the most difficult you will have. In what is already a sensitive situation, it doesn’t help that over 50% of businesses find employment law confusing. In this section we cover the essentials of what you need to know about dismissals.

Help me I’m firing

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The rules surrounding employment and dismissal are only intimidating if you don’t know much about them. Although it’s true that most statutory laws are made to protect the employee and not the employer there are sets of guidelines that, if followed, will protect you from any accusations of wrongdoing and hefty tribunal claims.

If you are thinking about terminating an employee it’s important to really think long and hard about your options. Dismissal procedures can be time-consuming and emotionally draining for all parties. Don’t make a dismissal decision in haste. You may come to regret it.

“When an employee is not performing well, and this is especially true for small businesses, the employer’s main course of action tends to be avoidance; and this is one of the most common, and costly, mistakes they make,” says Galvin.

Help me I’m firing

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Kinds of dismissal

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A dismissal can be either fair or unfair depending on the reason for it and whether the proper procedures have been adhered to. A dismissal that is deemed discriminatory is automatically considered unfair.

Constructive dismissal is when an employee resigns due to an employer’s breach of contract such as lowering of wages or drastically changing the job description and responsibilities.

Wrongful dismissal is when the employer breaches the employment contract during the dismissal process i.e. not giving proper notice.

If you have reached the decision to dismiss an employee Acas code of practice should be followed in order to complete a fair and lawful termination. Read the steps.

There are four kinds of dismissal:Unfair, Fair, Constructive & Wrongful dismissal.

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Redundancy

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Redundancy is when an employer dismisses an employee because they are no longer needed. “Maybe you had a big field sales force and now you’re switching to all online sales, you wouldn’t need that big team of salespeople any more. That’s a potentially fair reason for redundancy,” says Galvin.

When making someone redundant you should be careful to consider the rights employees hold: – If you are hiring in another area of your business, the

redundant employees have the right to a consultation about moving to a different position within that area.

– They are entitled to a reasonable amount of time to look for other work.

– They have the right to not be unfairly chosen for redundancy i.e. for discriminatory reasons.

– The right to Redundancy pay after two years consecutive employment with your company.

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Notice periods

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Notice periods are different for each kind of employee and your employment contract must state the notice for that employee.

The statutory minimums are: – at least one week’s notice if they have been employed

continuously for more than one month – at least one week’s notice for each complete year of

continuous employment up to a maximum of 12 weeks.

Although it is not legally mandatory, it is best practice to put a termination notice in writing in order to keep record and avoid confusion.

PILON (or payment in lieu of notice) this can be made if you do not want the terminated employee to return to the workplace after being given notice. This means that you would pay them for the duration of the notice period as compensation for breach of contract.

Gardening leave: This is where during their notice period an employee is not required to be present at work. This usually happens if an employee is leaving for a competitor. While on gardening leave, an employee should still receive their normal pay.

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Know the risks

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Even if you may have followed every procedure to the letter you could still unfortunately be taken to an employment tribunal by an employee, contractor or interviewee for reasons surrounding dismissal, pay or discrimination.

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Tribunals are non-governmental and will listen to both the employer (respondent) and the employee (claimant) before making a decision. If the tribunal sides with the employee you could pay compensation or even have to reinstate them (this happens rarely for obvious reasons).

It’s advisable to avoid tribunals if you can. Not only do they get expensive but suck a huge amount of management time. They aren’t exactly a morale boost for other employees either. Tribunals can be settled before reaching a hearing through the early conciliation process. If you can’t do this amicably between yourselves, Acas will work with both you and the employee to try to reach a solution.

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Tying up loose ends

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Even after you terminate an employee, you are still bound to provide a few last documents to them - and to the government. When an employee is dismissed you must classify them as a leaver and notify HMRC, deduct NI and tax as usual and provide your former employee with a P45 slip.

Exit InterviewsExit interviews can provide you with a wealth of knowledge. An employee leaving is likely to be far more honest than a current one and will have valuable insights into your company. Ask them what they liked and what they didn’t. You may find that there will be changes you can make to that will help to improve your employees’ performance, retention and overall happiness - and that knowledge may save you from having to do this whole process all over again.

P45

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Whether it’s your first new hire or your first employee moving on, Geniac is here to help.

Thanks for reading!

Our HR package includes: – Employee handbooks and policies – Employee Contracts – RTI compliant payroll – Auto-enrolment – And more

To see how we could help your business get in touch with Geniac at +44 203 696 8214 or enquiries@geniac.com.