Taking on Your First Employee? A Practical Checklist for Small Businesses
Taking on your first employee is an exciting step for a small business. It can mean you're growing, taking on more work and building a team around your business.
But employing someone also comes with responsibilities.
For a small business owner who has never employed someone before, knowing where to start can feel overwhelming. There are employment agreements, pay rates, superannuation, payroll, payslips, leave entitlements and record-keeping requirements to consider.
You don't need to know everything yourself, but you do need to make sure you've considered the important things before your new employee starts.
1. Understand the type of employment
One of the first things to establish is whether your new team member will be employed as a full-time, part-time or casual employee.
The type of employment can affect things such as leave entitlements, minimum pay rates and other employment conditions.
If you're unsure which arrangement is appropriate, it's worth getting advice before making an offer.
2. Check the applicable award and pay rate
Not every employee can simply be paid whatever rate the business chooses.
Depending on the role and industry, an award may apply and set minimum rates and conditions.
You'll need to consider:
Which award, if any, applies
The appropriate classification for the role
Age of the employee
Minimum rates of pay
Penalty rates or allowances where applicable
Overtime
Public holiday arrangements
It's important to check the current requirements rather than relying on what you may have used for a previous employee or business.
3. Provide an employment agreement
Your employee should understand the terms and conditions of their employment.
Depending on the circumstances, this may include information such as:
Position and duties
Employment type
Hours of work
Rate of pay
Pay frequency
Leave arrangements
Notice requirements
Other relevant employment conditions
It's also important to understand what information or documents you are required to provide to a new employee.
4. Set up payroll
Before your employee starts, make sure your payroll system is ready.
This might be payroll software, accounting software or another system appropriate for your business.
You'll need to consider how you will:
Record hours worked
Calculate wages
Process deductions
Calculate superannuation
Pay employees
Issue payslips
Keep employment records
Pay frequency is also important. The frequency with which you pay your employee and your payroll setup will affect how you manage your superannuation obligations, so make sure your system is set up correctly from the beginning.
5. Understand superannuation obligations
Employers generally need to make superannuation contributions for eligible employees.
The rules around superannuation can be complex, and the rate and payment requirements can change, so make sure you're working from the current requirements.
Your payroll or accounting software can help with calculations and reporting, but it's still important to understand what your obligations are.
6. Make sure your employee receives payslips
Employees need to receive payslips that contain the required information.
Don't leave this until the first payday. Make sure your payroll system is capable of generating and issuing compliant payslips before your employee commences.
7. Consider leave and other entitlements
Your employee may be entitled to various forms of leave depending on their employment type and circumstances.
This can include annual leave, personal/carer's leave and other forms of leave.
Make sure your payroll system is set up to record and calculate leave correctly.
8. Check your insurance and workplace requirements
Before your employee starts, consider what insurance and workplace obligations apply to your business.
This may include workers compensation insurance and other requirements relevant to your industry, workplace and employees.
You may also need workplace policies or procedures appropriate to your business.
9. Think beyond the paperwork
Getting the employment paperwork right is important—but employing someone is also about people.
Your new employee is joining your business, your team and your workplace culture.
Consider:
How will you welcome them?
Do they understand their role and expectations?
Who will they go to when they have questions?
How will you provide feedback?
How will you handle difficult conversations?
What support is available if they're struggling?
And remember, people don't leave their personal lives at the door when they come to work. Relationship difficulties, caring responsibilities, grief, financial stress, family pressures and other challenges can all affect how someone feels and functions at work.
Sometimes an employee simply needs someone independent to talk things through with.
10. Helpful Resources
Fair Work Ombudsman fact sheets:
Fair Work Pay Calculator
ATO employer obligations
Superannuation information
SafeWork SA resources
Supporting the people behind your business
Small business owners often have accountants, bookkeepers, lawyers and other trusted professionals they can turn to when they need advice.
When it comes to people, having an independent sounding board can be just as valuable.
At Chat It Out Counselling and Wellness, I support individuals, employees, managers and small business owners through counselling and workplace support.
This can include confidential employee counselling, manager support, workplace communication and support navigating difficult conversations.
The goal isn't to tell people what they should do. It's to provide a safe space to talk things through, gain clarity and explore practical ways forward that work best for them.
Free New Employee Checklist
If you're taking on your first employee—or haven't employed someone for a while—I've created a free New Employee Checklist to help you work through some of the key things to consider.
[Download the Free New Employee Checklist]
It isn't a substitute for legal, HR, payroll or accounting advice, but it can provide a useful starting point and help you identify areas where you may need further advice.
Need support with the people side of your business?
Chat It Out Counselling and Wellness provides counselling for adults and young people, as well as employee counselling and support for small businesses and managers across Adelaide.
