What to consider before taking on an employee

Managing people

1 August 2016

Sole traders make up the majority of UK business. According to the November 2015 Business Population Survey, 76% of UK businesses don't employ anyone except for their owner.

Members of government, the British Chambers of Commerce and other professional bodies have all hailed the potential benefits of expanding, both for sole traders and the wider economy and yet, for many, it remains a daunting prospect.

We believe, however, that with some good research and a plan of action, it can be an accessible and exciting move towards a bigger and better business.

Business need

The first step is deciding that your business definitely needs to take on staff. The Advisory, Conciliation and Arbitration Service has some sound advice on this: assess your work flow to establish whether you'll need someone permanent or seasonal, work out if you'll have the time to train and manage a new employee and look at how your competitors are handling staffing.

We also suggest taking a good look at the alternatives. That could be hiring freelancers or taking advantage of new technology. For example, task management software like HiTask, toggl or Harvest could be easier and cheaper than employing a PA.


If you do decide to take on an employee, you'll be legally required to take a few steps, including:

After you've worked out all of the costs, factor them into your cash flow forecast to make sure that they're more than matched by the benefits your new hire brings.

Other paperwork

If you intend to employ someone for more than one month, you'll need to provide them with a written statement of employment. Far from being a legal burden, this is an excellent exercise in pinning down exactly what you want from your future member of staff. Draw up the contract at the same time as you write any job adverts. This should help you find the right balance between selling the company to the best candidates and setting realistic expectations.

Once you've offered someone the job, you'll need to confirm they have the right to work in the UK. Gov.uk has a list of all the documents to check. If you work in security or with vulnerable people, you might also have to complete Disclosure and Barring Service (DBS) checks.

Risk management

Before bringing someone into the workplace, it's also essential to ensure that you're aware of all the potential risks: and put safeguards in place to protect your business.

First on the list is employers' liability insurance. This is legally required and covers employee injury or illness that occurs as a result of their work. You can be fined up to £2,500 for each day you're not properly insured and up to £1,000 for not displaying your insurance certificate.

Another important issue is data security. If you or your employee works on a computer, for example, ensure it has sufficient safeguards against viruses and data loss – both of which often happen as a result of human error.

Deal with each risk adequately and you'll find that this makes your business far stronger and safer in the long term, which only adds to the benefits a new employee can bring and brings you a step closer to growing your business.