The ultimate guide to employing staff for the first time

When you’re running a small business, hiring your first employee is a huge milestone. If you’re hiring staff for the first time, be aware that a lot goes into the recruitment process.

Time to expand your team to keep up with your growing business? Amazing. If you’re not sure how to hire your first employee, our advice is to break down the process into three stages so you don’t miss any key tasks:

1. Preparation – everything you need to do before you start hiring
2. Recruiting – the often drawn-out process of finding the right person
3. Onboarding – how you’re going to get someone started in their role

Some parts of the hiring and onboarding process, such as the tax paperwork for new employees and organising WorkCover are mandatory and consistent for all businesses. Other aspects of the hiring process will differ by industry and role, and may require significant research and time investment.

We recommend building the cost of employing someone into your initial budget; this avoids the scramble for time and money that comes from an unplanned hire (head here for help with budgeting for your first year in business). Remember that hiring costs are tax deductible, but if you’re not sure if something is an eligible expense, ask an expert (👋 ).

How to prepare for the hiring process

So, when should you think about employing staff for the first time? We recommend hiring someone way before you desperately need them. If you’re overloaded with work while you’re recruiting, not only could you rush the decision and pick the wrong person, but the service you provide to your customers could suffer as well. It can easily take two or three months from advertising a position until someone’s first day, especially when you take into consideration the notice period someone has to give for the position they’re leaving (which feels like a lifetime when you need someone to start ASAP).

Before diving into recruitment, make sure your business meets the legal requirements for hiring employees in Australia. Our business compliance checklist has everything you need to know, from registering for PAYG withholding and single touch payroll.

Employment contracts

We’re regularly asked, ‘what paperwork do I need for new employees?’ and we always recommend you start with getting an employment contract drafted before you think about any other forms and handbooks. This will help you clarify what you need (from the specific duties of the role, to the hours and locations of working), and identify any potential risks to your business. It’s important to have an employment lawyer draw up your employment contracts; if the contract is ever challenged, the wording of clauses will impact whether they hold up legally.  

Some things to consider include:

Wages

How much you should pay someone depends on your industry and the candidate’s experience, but the minimum you can pay is dictated by the relevant Industry Award or the federal minimum wage.

Be aware that these figures can change and it’s your responsibility as an employer to make sure you don’t inadvertently break the law and pay below the minimum wage (you can’t rely on your payroll system to automatically update – it’s still on the employer to make sure they get it right). Many small businesses choose to outsource their payroll so they don’t have to stress about staying on top of these changes. Keep in mind that offering competitive pay is one of the best ways to attract the top talent – so research what other comparable businesses offer candidates.

Superannuation

Super is an important consideration when hiring employees in Australia, with business owners required to pay a percentage of their staff’s wages into a superannuation fund on top of their regular wages. This percentage, called the super guarantee, is mandated to rise by half a percent a year until it reaches 12% in 2025. Plan ahead for your super obligations by factoring these rate changes into your cash flow estimates.

Super payments go through a super clearing house (an online system that reports your contributions to the ATO and helps distribute super to your employees). This is generally attached to your payroll software.

Leave and benefits

If you’re planning to take someone on full time or part time, you’ll need to put their leave entitlements into the contract. There are lots of different types of leave – some are optional, but many are required by law (read more on that here).

Offering above the legal minimum is a great way to attract candidates, but if that’s not a viable option, think about other benefits you could offer. Think hybrid work schedules, product discounts… but get creative! As a starting point, you could consider what benefits would make a job stand out from the crowd.

The fine print

Some businesses are built on their intellectual property or confidential information, and contracts make sure your employees protect these as much as you do. While the chances of your team causing you trouble are slim, it’s still worth building legal protection into their employment contracts… just in case.

Setting up your payroll

If you’re already using accounting software like Xero, it might be as simple as upgrading your subscription to get the payroll ball rolling – and remember, if you don’t have time (or the headspace) to learn how to do payroll, it’s a really simple task to outsource and will save you many a headache!

As mentioned earlier, you’ll need to set up single touch payroll, which you can usually do through your accounting software (it’s a government system that automatically reports your employee’s wages to the ATO).

Even more paperwork

There are a bunch of other admin tasks you’ll need to do, which aren’t all legally required, but are really helpful to at least start before you begin recruiting. Consider all the new employee paperwork you’ve been given when starting jobs in the past, from the simple ones like emergency contact forms to extensive employee handbooks. These can be fiddly to make and could be a huge time drain, so it’s good to get them out of the way early.

Other documents you’ll need include tax paperwork for new employees, which can be found here:

• Tax file number declaration form
• Superannuation standard choice form

Note that the ATO is changing certain requirements around this; some payroll systems will have their own automated form for this.

We’d love to say that this is it for paperwork, but hiring employees in Australia is a complex process (so be prepared for more later – sorry).

Recruitment

How to get started

Here’s some things to keep in mind when you start actively recruiting:

• Learn about what hiring discrimination looks like, so you can build inclusive practices into every stage of recruitment. Australia has strict anti-discrimination laws, and regardless of your business structure you’ll need to make sure you’re hiring process is fair and inclusive.
• Make a plan for your candidate communications. Set up systems like email rules or a shared mailbox to manage your inbox and create automated replies to candidates to save time digging through your inbox later. The last thing you want is to miss the perfect person because their application got lost in your Monday morning emails.
• Craft a well-written job description – it’s the best way for candidates to learn about the role, and is often their first impression of your business. A good job description will help generate more interest and attract the right talent.

The cost of finding candidates will depend on how many people you want to see your job ads. Generally, the more specialised skills you need, the wider the net you’ll have to cast. Paying to post your ad to multiple listing sites or boosting a LinkedIn post is a great way to increase your reach, but can get expensive if you don’t find candidates quickly. You might even choose to outsource your recruiting entirely depending on the role and your situation, however for small businesses hiring their first employee(s), we recommend picking them yourself this time around if you feel confident.

How to choose the right candidate

Looking through resumes and interviewing candidates takes significant time. Setting must-have criteria for what skills or experience you need will help you be more selective; you don’t have to interview everyone, and frankly, you don’t have time to!

Keep these tips in mind:

1. Two interview rounds work well for most professional roles: a short one to scope candidates out, and a longer one for people you want to learn more about
2. Trust your gut; interviewing someone you’re not sold on is a waste of your time and theirs
3. Think about what you want to know about your candidates, and what questions will help you find out that information. Do your best to ask all candidates all the questions (this means trying to avoid going off on tangents during interviews)
4. Don’t forget to discuss practical things like salary expectations, notice periods from their current job, and what sort of working arrangements they’re after before you make an offer

How to onboard new team members

You’ve lined up the perfect candidate, they’ve signed their contract and they’re starting soon, so what now? One of our best tips for onboarding new employees is actually to make sure you nail the preparation stage, this means you can focus on getting them set up and settled when they start. You’ll still need to spend time on various compliance tasks, like submitting tax paperwork for your new employee, registering them with WorkCover and setting them up in your payroll. If you’re not confident with this, we recommend getting help from an accountant – not getting pay and compliance right can have serious legal implications for businesses.

Apart from the time spent training, other costs that business owners often forget to budget (time and money) for include:

Equipment and tech

An expense that plenty of people forget is all the additional equipment employees need, from technology and furniture to the random bits and bobs that they’ll need day-to-day (stationery, office supplies, work uniforms, etc.). The software and programs your business uses for work may also need to be upgraded to support new users, which can get expensive depending on your tech stack.

Insurance

Apart from registering for WorkCover, you might need to change some of your existing policies to cover your new employee. Adding extra devices to insurance can often raise your premiums, and you may also want to take out employee liability insurance. Do some research on which existing policies will be affected by hiring someone, and check out any new policies that might be appropriate for your growing business.

Employing staff for the first time? Talk to us to find out how we can help

Getting help from experts (from lawyers to accountants) makes sure you don’t miss key steps, leaving your business at risk. We can help you streamline your employee payroll and compliance tasks, or take them off your hands completely, so you can focus on finding the perfect candidate, while still having time to run your business.

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