Prepare for the hiring process
Before launching into the hiring process, it’s helpful to do some careful preparation. Here are some points to consider.
Decide what you can afford
Hiring your first employee is a significant financial investment. Aside from your employee’s salary, there are numerous other potential expenses to factor in, including entitlements and obligations, employee benefits, PAYG tax and workers’ compensation. You may also need to invest in new equipment and workspace.
Given the costs involved, consider whether it makes more sense to hire a full-time, part-time, casual or contract employee. Pay rates and conditions differ for each of these types of employment. Review your business budget to determine what you can afford and think about why you need an employee. An independent contractor can help with specific projects on a temporary basis with little overhead cost. However, permanent employees tend to have a stronger sense of company loyalty and long-term commitment to your vision.
Assess your business needs
Before hiring your first employee, take the time to thoroughly assess your business needs. Start by reviewing your current operations and pinpointing the areas where you need extra support. Make a detailed list of the tasks you want your new hire to handle, and consider the skills and experience required to perform these duties effectively. For example, perhaps you need someone to manage administrative tasks or handle the finances.
You can then use this list to create a clear job description based on your business needs to help you attract the right person for the job. By understanding exactly what your business requires, you’ll be better positioned to hire your first employee with confidence and set them – and your business – up for success.
Understanding employer responsibilities
Hiring a new employee in Australia involves a number of legal requirements that shape how employment arrangements are set up and managed. These obligations relate to areas such as taxation, work rights, insurance, record-keeping, payroll and superannuation.
For example, tax arrangements typically rely on the employee having a tax file number issued by the Australian Taxation Office. Employers also operate within a framework that includes confirming a person’s right to work in Australia and holding workers’ compensation insurance appropriate to their business. Many businesses use payroll systems that support Single Touch Payroll reporting, which is the mechanism used to provide pay and tax information to the ATO.
Accurate employment records play an important role in meeting compliance obligations, and payslips are part of the standard documentation employees receive when they are paid. Superannuation is another key component of the system, with payments made for eligible workers under the rules that apply to each industry or award.
Together, these elements form the regulatory environment in which employment takes place, and organisations refer to this framework when managing new hires and ongoing employment arrangements.
Consider employment types and conditions
When hiring employees, understanding the different types of employment can help you to choose the one that best fits your business needs, while ensuring you’re meeting your obligations. The rules regarding pay rates, leave entitlements and employment conditions are different for each type of employee.
For example, full-time employees generally work standard hours and receive the full range of employee entitlements, including paid leave and other benefits. Part-time employees work fewer hours, but still receive many of the same entitlements on a pro rata basis. Casual employees, on the other hand, have more flexible working arrangements and are paid a higher hourly rate (casual loading) to compensate for not receiving paid leave or certain other benefits.
Get familiar with Fair Work regulations
Navigating Fair Work requirements can seem overwhelming at times, but fortunately, there are resources available to help you. To ensure you are compliant with the regulations, check the Fair Work Act. The National Employment Standards under this act set out the minimum pay rates, entitlements and employment conditions for employees. You can also use resources like the Fair Work Ombudsman’s pay calculator and the business.gov.au employment contract tool. These resources can help you identify the correct modern award, determine the correct pay rates, draft a compliant employment contract and understand your obligations around minimum pay, leave and workplace safety.
Also consider your tax and superannuation responsibilities, including PAYG tax, fringe benefits tax and the superannuation guarantee. By getting familiar with Fair Work provisions and using the available tools, you can ensure your business meets Australian laws and provides a safe working environment for your employees.
Set up for compliance and success
To set your business up for compliance and success, start by making sure you have a clear employment contract that outlines pay rates, hours of work and leave entitlements. Register for the necessary tax and superannuation obligations, and set up a reliable HR management system to ensure your employees are paid correctly and on time.
It’s also important to understand how much tax you need to withhold from your employee’s pay and how to pay superannuation guarantee contributions. By taking these steps, you’ll meet your obligations as an employer, create a positive work environment and lay the foundation for a productive and compliant workplace.
Register for pay and record-keeping requirements
Employers register with the ATO for specific pay and record-keeping obligations regarding employee taxes. This can include setting up Single Touch Payroll (STP), registering for PAYG tax, if applicable, and setting up to issue payslips to employees. Employment records that employers are required to keep include employee pay, hours worked and leave entitlements.
The Australian Taxation Office provides online services and resources to help you manage your payroll information and meet your obligations. By staying on top of your pay and record-keeping requirements, you’ll ensure your employees are paid correctly and you’re prepared for any audits or reviews.
Attract the right applicants
Once everything is in place, it’s time to start looking for candidates. Following the steps below can help you find the right employee for your business.
Imagine your ideal candidate
Before posting your job, consider the type of potential employee you want to hire. Write down the characteristics, skills and qualifications you’re looking for in your ideal candidate. These attributes will help you to create a job description that attracts the most suitable applicants for your role.
For example, you might imagine your first employee as being a self-starter with a growth mindset. When identifying these qualities, also consider the type of worker – full-time, part-time or contractor – that best fits your business needs. Identifying these qualities early on will help you spot the perfect candidate when they’re sitting in front of you.
Create a compelling job description
As a small business, getting the job posting right can help you to stand out in a crowd of big competitors. Start with an engaging summary of the role and clearly describe what the job entails. To attract candidates who enjoy working at small companies, explain that you’re hiring your first employee and are excited to be expanding your business. You can find the best talent for your vacant position by including the following elements in your job description:
- accurate job title
- overview of your company
- key job duties and responsibilities
- required and preferred skills
- employee benefits or perks
- compensation details.
Clearly state the wages and payment structure in the job description. As an employer, you need to pay the correct wages and benefits to comply with legal requirements. This includes making proper payment for superannuation and adhering to all relevant employment standards.
Identify your top candidates
Sifting through resumes and assessing the suitability of applicants can be a challenging task. Here are some steps you can take to find the top candidates.
Conduct pre-employment screening
Once you’ve attracted several applicants to your job posting, it’s time to screen your candidates to determine who should move forward in the hiring process. Find out which applicants meet your basic requirements and desired skill level by:
- reviewing resumes and cover letters
- conducting 15–30 minute phone screens
- communicating with candidates through email or by phone to arrange an interview.
Interview promising applicants
During the interview process, ask questions that will reveal if your candidate’s vision aligns with yours, as well as broader questions to learn how they respond in difficult situations, what motivates them and if they can drive business value. Include questions specific to the employee’s role to ensure alignment with job expectations and responsibilities. Look for the following qualities and attitudes in your candidate’s answers:
- flexibility
- grit and resilience
- passion
- cultural fit
- versatility
- sense of accountability
- competitive drive.
Check your candidate’s references
Calling your top candidates’ referees will give you an opportunity to assess their honesty, collaboration skills and ability to do the job. Beyond resumes and interviews, speaking with someone who has worked directly with your candidates will provide you with insights into whether they are the right fit for your company.
Bring your ideal candidate onboard
Creating an exceptional onboarding experience once you’ve found your ideal hire can help you to lay the groundwork for a positive working relationship. Here are the steps you can take to bring your new hire onboard.
Send an offer letter
After making a verbal offer to your top candidate, send an official offer letter. Your offer letter should explain the terms and conditions of employment and include details such as:
- job title
- start date
- compensation
- benefits.
Welcome your new hire to the team
An exceptional onboarding experience sets your new employee up for success in their first days, weeks, months and beyond, and gives them the tools they need to start making an immediate impact. To help your first hire feel empowered in their role, you can create an employee handbook to convey important company information and consider planning out their first month in detail, offering specific goals and clear expectations that will help you measure their success.
