Taking on an employee is a big step for any business, as it can involve long-term commitment and cost. You need to work out exactly what kind of person you need, and how to find and recruit them. Then there is a range of legislation that safeguards employee rights, and as an employer you need to be familiar with it.
You also need to have an administrative system to make deductions - on behalf of government - from your employees' remuneration before you pay them. These deductions include:
- Income tax (also known as Pay-As-You-Earn or PAYE);
- Payments to the Unemployment Insurance Fund (UIF); and
- The Skills Development Levy (SDL).
These need to be paid over to the South African Revenue Service on a regular basis. You also need to build your skills in managing staff. If you start learning early, and get some professional support and training, you are more likely to feel in control and confident when you start to experience staff problems or expand your workforce further.
What you need to do before taking on an employee
You will need to prepare:
- A job description that includes the job title, job purpose, duties, main responsibilities and hours. Decide if you need a full time, part time or temporary worker;
- A person specification that outlines the qualifications, experience, skills and motivation of an ideal candidate; and
- A competitive salary offer and any additional incentives.
Advertising for staff
In South Africa, most small business owners recruit staff by word-of-mouth, starting with their immediate family, extended family and then neighbourhood. This is entirely valid, especially if you don't need highly skilled or specialised workers.
An advantage often overlooked in doing it this way is that you have a kind of sanction against dishonesty or bad performance. If you employ your neighbour's son, for example, the chances are less that he will disappoint you than employing a complete stranger. He and you know that he will also face the wrath of his family if he disappoints. Keep in mind, however, that it is a double-edged sword. It is more embarassing firing a neighbour's son than a stranger.
But the main danger of employing people you know is that one tends to neglect the formal aspects of the job - the job description, a contract, strict performance management, and market-related salaries. You are tempted to build your business around the strengths and weaknesses of such workers, which can lead to major problem later on when you start growing your business. Be as business-like as possible from the beginning.
In certain industries business owners even ask one another for semi-skilled or skilled workers when the one business owner has too many workers for his amount of work and the other needs more. Just remember that other business owners are not going to refer their best workers on to you. The workers refered to you from other business owners probably need some training, or could have problematic attitudes.
Bargaining councils, unions, offices of the Department of Labour and the Sectoral Education and Training Authorities are also sources of usually unskilled workers. Universities, colleges and training organisations sometimes have entire departments for placing their graduates at businesses.
If you are looking for slightly scarcer skills and experienced workers, recruitment agencies should be seriously considered. They are expensive, but they have two advantages:
- You don't have to sift through hundreds of inappropriate applications. With South Africa's high unemployment rate, you may very well get literally hundreds of responses to advertisements from desperate people who are willing to lie their way through a job interview.
- You don't have to pay the recruitment agency if the appointment appears to be totally inappropriate in the first month or so. They will find you a replacement before charging you. Placing a job advertisement can also be considered, but be ready to deal with a flood of applicants. Be sure to choose appropriate media. To attract the broadest range of applicants, advertise the job as widely as possible in appropriate media. Newspapers are probably still the most common place for people to look for jobs, but the Internet is also substantial becoming popular. So, if you have a business website, post the job advertisement there too.
Ask candidates for the same information, so that comparisons are fair. Ask candidates to fill in a standard application form where you can pose specific questions for them to answer. This will make their information more concise and relevant than a general-purpose CV.
Hold face-to-face interviews to match the candidate to your job description, and to check the suitability of their personality and compatibility (these aspects are especially important in a small business). Arrange a test for candidates if the skills you require from them are easily measurable.
Do not discriminate
You must have fair selection procedures and not discriminate on the grounds of race, gender, disability or pay. Keep the documentation on applicants and interviews for about six months in case there are complaints from rejected candidates.
Making the job offer
Usually a job offer is made verbally, then confirmation is made in writing. Both methods constitute a contract. Appoint the staff member for an initial probationary period to make sure that they are capable of doing the job.
Inform unsuccessful candidates by telephone or letter, thanking them for their interest and their time. Don't leave them waiting for a response, as the sooner they know the outcome, the sooner they can move on and make their plans.
Written contract of employment
The Basic Conditions of Employment Act requires you to give new employees a written contract of employment when they start work. This contract needs to include the following information:
- Your (employer) details, as well as the employee's details - employer's full name, employer's address, the employee's name, and the employee's occupation (or a brief description of the work);
- Employment details - place of work, date that employment started, working hours and days of work;
- Payment details - salary or wage (or the rate and method of calculating wages), the rate for overtime, any other cash payments, any payments in kind (and their value), the frequency of payment, and any deductions from their payment; and
- Leave details - any leave to which the worker is entitled, the period of notice required for termination (or period of contract).
Unless your business employs less than five people, you also need to include the following information in the employment document:
- Any period of employment with a previous employer that counts towards the period of employment;
- A list of any other documents that form part of the contract and details of where the worker can get copies; and
- A description of any bargaining council or sectoral determination that covers your business.
When the employee starts work
- Carry out an induction: It is important to make new members of staff feel welcome and to introduce them to the business and their role. Spending time on the induction of new employees will save time and problems later. When you do the induction for the first time, it might be fairly informal. But put it down on paper so that you can start developing a more formal and comprehensive induction for future employees.
- Assess their training needs: You should decide early on what training will be required so that the new employee can carry out their role effectively. Training can be informal (for example, in meetings), formal on-the-job training or external training paid for by the business. Contact the relevant Sectoral Education and Training Agency (SETA) for your industry, and ask them what programmes are available that can develop the skills of your employees. You will need to write a Skills Development Plan for your business before you can start making use of the Skills Development Levy that you will pay each month, but the SETA can also advise you on this.
- Organise PAYE and UIF deductions: Contact the South African Revenue Services (SARS) to arrange PAYE and UIF for your new employee. As the employer, you are responsible for deducting income tax from your employees' salaries, and for paying these deductions to SARS regularly. SARS will send you the information and forms you require, and also give advice if you need it.
- Register with your Sectoral Education and Training Authority (SETA).
The law also requires you to keep a record of certain information on each of your employees:
- Employee's name and occupation;
- Time worked;
- Pay received; and
- Date of birth (if under 18 years of age).
This is a demanding aspect of running a business, and can be best approached with some basic planning and documentation:
- Draw up a personnel policy document to give employees clear and easy access to information about your (and their) responsibilities in the workplace. This doesn't need to be long or complicated, but should just set out the 'ground rules' so that simple misunderstandings can be avoided;
- Hold regular appraisals (every week for new employees, and monthly for others) to keep in touch with employees and give them feedback on their performance. Make a point of scheduling appraisals in advance so that they happen as a matter of course, rather than just in response to problems; and
- Get some form of management skills training; to ensure that you have a few basic pointers to build on. There are no hard and fast rules, but time management and making people accountable are among the important skills to develop.
Department of Labour: The Department of Labour has useful guides on its website that explain, in a fairly easy-to-understand way, the most important things that you as an employer need to know and do when employing people in your business. Go the department's home page on the internet www.labour.gov.za and click on the heading called 'Basic Guides'.
SA Revenue Services: The SA Revenue Services also have a limited number of guides that you can read or download from their website www.sars.gov.za.
South African Revenue Services: The SA Revenue Services has a list of offices on their website (www.sars.gov.za) which you will find a link to when you click on the 'Contact Us' button on the SARS homepage.
Commission for Conciliation Mediation and Arbitration (CCMA): The CCMA is a dispute resolution body established in terms of the Labour Relations Act. It conciliates workplace disputes and arbitrates disputes that remain unresolved after conciliation. (http://www.ccma.org.za/)