How to hire your first employee
Adding members to your team is often a key component of growing your business. Here are some important steps to hire your first employee.
1. Create a clear job description
Start by thinking about how this role will help you and your business succeed. What should your new person focus on? From those objectives, you can work out their job description.
As well as key objectives, it should cover off some of the details of the role:
- Day-to-day responsibilities and tasks
- Key skills, qualifications or experience
- Hours, dress code and culture
You can find useful templates online, like this one from MBIE.
2. Work out your pay rate for the role
You need to strike the right balance with your employee's pay. It needs to be enough to attract the level of experience you want, but also be affordable for your business.
It can be helpful to think in terms of a 'multiplier', for example: you might want your employee to generate four times their pay in revenue for your business.
If you're not sure, online pay scale guides can help. There is also a helpful business.govt.nz calculator can help work out your total cost of employment.
3. Do the selecting yourself or bring in help?
Finding the right person can take a lot of time. As well as advertising the role, you need to sort out a short list for interviews, talk to each candidate, check references and possibly get the top contenders back for another interview.
If you don't have the time or skill set for all this activity, you can outsource it to a professional recruiter. If you do, make sure you're involved in the interviews to ensure there's the right fit between you and the potential candidates.
If you're doing it yourself, be sure to make notes on each candidate, including their strengths, weaknesses, expectations and interview notes. You'll need to refer to this again when selecting your preferred candidate.
4. Make an offer to your preferred candidate
When you're sure you've found the best candidate, make them an offer as soon as possible.
Be sure to get an accepted offer before you tell other candidates they're unsuccessful. If the first candidate falls through, you may want to approach the runner-up, and that can be awkward if you've already told them they weren't successful.
5. Understand your new employee's rights
Your employees have legal rights and entitlements under New Zealand law which apply regardless of your employment agreement. Employees can't "opt out" of these rights.
These basic rights include:
- Paid time off
- Minimum pay
- Public holidays
- Sick leave
- Bereavement leave
- Maternity/Paternity leave
- The right to refuse unsafe tasks and the right to a safe working environment
- The right to be treated without discrimination
New Zealand at Work has more information about these legal rights and other employee rights, as well as free resources and guidelines.
6. Find your employee's IRD number
Every employee needs an IRD number. It's a unique eight or nine-digit number that identifies someone for tax purposes.
Inland Revenue can help your employee online if they don't know their Inland Revenue number, or don't yet have one.
7. Find your employee's tax and KiwiSaver details
You and your new team member need to sort out their tax, Kiwisaver and other payroll details.
Talk to your accountant or Inland Revenue about your obligations. Your payroll system will be able to help, but always double-check you have everything dotted and crossed.
There are several important steps to setting up KiwiSaver for an employee, and you also need to make sure you're using your employee's correct tax code.
Remember to record your employee's sick days and holidays in the payroll system as well.
8. Consider your payroll system
While you're going through the recruitment process, think about your payroll system. Payroll is complex, and mistakes or oversights can create big problems.
Online or cloud-based payroll systems can automatically calculate the different aspects, such as your employees PAYE or income tax, KiwiSaver, student loan deductions and more. Some of them even lodge payday filing with Inland Revenue for you.
Online payroll systems often charge a small fee per employee, rather than a big licensing fee upfront. Have a chat with your accountant or bookkeeper about a system that will be right for your business. You could also check out Xero's guide to running payroll.
9. Keep a file for each employee
Up-to-date records for your employees are important. Your employee's files should include:
- Full name, address, starting date, contact details and emergency contact details
- A signed copy of their employment contract
- Any immigration work permits or visas and their expiry dates
- Their job description, outlining their tasks and responsibilities
- Tax details, including their KS2 KiwiSaver contribution form and their IR330 tax code declaration
- Bank account number for direct crediting their salary or wages
- Records of their salary or wages, timesheets, holidays, sick days and any other payroll-related information
- Results of your ongoing performance reviews and development discussions
- Any other important information
Remember you may need to provide your records to your employee, their lawyer or representative. It's best to store this information online, if possible. You'll need to keep them for at least seven years. Employment New Zealand has a complete list of what you should include in your employee records.
Keep reading
What's next for your business?
Small business banking
Every business is different and has unique banking needs, discover your options.
This page is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and should not be relied on. This information has been prepared without considering your objectives, financial situation or needs. We recommend you seek independent professional advice and contact Inland Revenue before acting on this information.
