Employing Staff: A Guide to Retail Recruitment

The difference between good businesses and great businesses is simple: it’s your employees. Your employees are your brand ambassadors, your customer service, your operations, marketing, sales, accounting, and beyond. 

If you want to grow, or scale your business in any capacity, you need to make sure you have an all-star squad of employees who you can trust to help you take your business to the next level. If you’re finding it difficult to understand how to recruit new employees, or just need a quick refresher on everything you need to remember, you’re in the right place. 

Here we’ll cover:

• How to Employ Someone
• How Much Does it Cost to Employ Someone?
• What Should You Consider When Employing Staff?
• What Are the Legal Requirements for Employing Staff?

How to Employ Someone

Managing a business is no walk in the park. So, we imagine you’re probably used to jumping through a few bureaucratic hoops. If so, employing staff will feel quite familiar. Before you can get started recruiting new employees, you’ll have to do some administrative work first.

Register as an employer

We’re going to cover everything you need to know when recruiting new employees. If you’re already registered as an employer, you can skip to the section below.

If you want to hire an employee in the United Kingdom, you’ll first need to register with HM Revenue and Customs (HMRC) as a new employer. You’ll only need to do this if the employee will:

• earn more than £120 a week
• receive a pension
• receive benefits or expenses

When you register, HMRC will ask for your registered company name or business name, or trading name (if this is different), registered business address, unique taxpayer reference, company registration number, contact information, the nature of your business, how many employees you expect to employ, whether you’re intending to offer benefits, and more.

Once you have completed the employer registration form, you will receive an employer PAYE reference number. Pay-As-You-Earn (PAYE) is HMRC’s system to collect Income Tax and National Insurance from employment. This will allow you to run payroll and communicate with HMRC about tax and national insurance contributions based on their salary, national insurance number, and pension contributions. 

Your payroll system will export all of this information to HMRC automatically. It is, normally, paid every month. However, some businesses can do this quarterly (depending on circumstances). You can find out more about paying your PAYE bill to HMRC here.

Note: Okay, here’s the important part. Once you have registered as an employer, it will take up to 15 working days to get your employer PAYE reference number. You cannot leave this until the last minute. However, you cannot register more than two months before you start paying your employees.

Pension

This section covers everything you need to know about pension schemes as an employer. If you’ve already created a workplace pension scheme, you can skip this section. However, we recommend giving it a read through to ensure you’re not missing anything. If you’re found to not be paying pension contributions on time, you could be subject to a fine.

You’ll next need to set up a workplace pension scheme. Your business should have a pension scheme in place by the first working day of your first employee’s employment contract. This is what is known as your ‘Duties start date’. You must automatically enrol any employees working for you into a workplace pension scheme.

You will have to set up a workplace pension scheme, and make an employer’s contribution, for all staff who:

• are aged between 22 and the State Pension age
• earn at least £10,000 a year
• normally work in the UK (this includes people who are based in the UK but travel abroad for work)

Note: If you have any employees who do not currently fit into this criteria, but will be eligible in the future, you must enrol them within your company’s pension scheme within six weeks of them becoming eligible, and notify them of this change.

You’re not expected to create a workplace pension scheme yourself. That would be a lot of hard work. You need to find a ‘workplace pension provider’. There are many different options for you to choose from, that will differ depending on the size and scale of your business, and even, sometimes, the type of business you operate. Have a look around and see what works best for you.

Once you have chosen a pension scheme, and have set everything up for your business, there are a few things you need to know moving forward. 

You must pay at least 3% of your employee’s ‘qualifying earnings’ into your employee’s pension scheme. Qualifying earnings are, normally, an employee’s ‘total earnings’ between £6,240 and £50,270 a year (before tax). Total earnings include: salary/wages, bonuses, commission, overtime, sick pay, and maternity/paternity leave pay. Your pension scheme provider will be able to tell you exactly what they classify as ‘qualifying earnings’. 

Pension contributions are made each month and are deducted from your employee’s pay. These will need to be paid into your employee’s pension scheme by the 22nd day of the next month. Once you have agreed a date with your pension provider to pay pension contributions, you must pay by that date every time you run payroll.

Get the right insurance

Accidents happen. That’s why you’re legally required to purchase ‘employer’s liability insurance’ when employing staff in the UK. If an employee hurts themselves at work, or becomes ill because of the work they do for your business, you could be found liable. In which case, you’d be forced by law to pay compensation. 

Here’s what employer’s liability insurance normally covers: 

• Legal costs: costs of settling or defending compensation claims made by employees
• Medical bills: costs of medical treatment if your employees get ill, or are injured, due to work
• Compensation: costs of paying compensation to the employee (if you lose a claim in court)
• Lost income: costs of paying compensation to the employee while they are unable to work

Employee liability insurance is intended to cover these costs and will protect you if anything goes wrong. However, we want to stress again that you are legally required to purchase employer’s liability insurance before you employ any staff. And, without it, you could receive a fine of up to £2,500 daily. Don’t get caught out and protect both yourself, and your employees, in the event that something bad happens.

Write up a contract

When employing staff, it’s important to outline exactly what you expect from them. This will avoid misunderstanding down the line and ensure that your candidate is right for the job.

While you should obviously outline the key skills and responsibilities of a role when advertising it, an employee contract can communicate the nitty-gritty of an employee’s role. 

Make sure when writing up an employment contract that you include details concerning start date, job title and description, place of work, hours of work, salary, holidays, sick pay, and pension.  

Conduct interviews

The average turnover rate for the retail industry in the UK is 40.7%, according to CIPD. This is the third highest turnover rate behind food services, and support services. 

Needless to say, holding onto your employees in the retail industry can prove difficult which is why it is so important to make sure you know what to look for when hiring new employees, so you can limit excessive turnover where possible. We cover what you can look out for when interviewing potential employees under ‘skills and experience’.

Whenever you do hire new employees, it’s important to make onboarding as seamless as possible so they can be up and running in no time, including being able to operate your point of sale system, check inventory levels, order more stock, and more.

If you’re using an electronic point of sale system, or are interested in using one for your retail store, why not try Lightspeed Retail. Lightspeed customer, Beermash, switched to Lightspeed and got up and running in under 5 minutes. Easy to set-up. And, even easier to use. Find out more about Lightspeed Retail here.

Note: We won’t be going into employee retention too much in this article. However, if you want to know how you can overcome any labour shortages you have, and supercharge your employee retention, you can read our blog. 

How Much Does It Cost To Employ Someone?

On top of salary and expenses, there is a range of hidden costs attached to employing staff. Your recruitment cost will vary depending on which method you use to track down potential employees.

Recruitment agencies

Hiring through a recruitment agency may make the process more efficient. They hold valuable knowledge about the job market, as well as access to a huge network of potential employees.

They can also streamline the recruitment process, potentially saving you the time and money spent doing it yourself. However, the costs are usually 15-20% of an employee’s first salary so may not be an option for businesses who are trying hard to cut costs.

Online job boards

You could post a job on an online job board, which will usually only cost you a few hundred pounds and is a quick way to find suitable staff. See below a breakdown of pricing for some major job boards:

• Glassdoor: £149 for thirty days
• Monster: £179 for thirty days
• Careerbuilder: £239 for thirty days
• Reed: £100 for four weeks
• LinkedIn: You can set your own budget, Linkedin will charge for the amount of views your ad receives each day. 

What Should You Consider When Employing Staff?

Salary

Salary is the single biggest expense when it comes to employing staff. So, it’s important to ensure before hiring staff that you can afford to do so.

Check the average salary in your specific retail sector and the role you’re hiring for. Take into account the experience level of your candidates, and ensure that your compensation package properly reflects the skills and responsibilities of the role.

If you employ someone on a contract, you’re legally obliged to pay them at least the National Living Wage (for those aged 23 and over) and the National Minimum Wage for those 16 to 23 years old.

• 23+ years old: £10.42
• 21-22 years old: £10.18
• 18-20 years old: £7.49
• Under 18 years old: £5.28

If you’re looking to save money on salary, hiring younger employees may be a good strategy. Consider, however, that they may have fewer skills and experience than their older peers. You should also decide how often you’ll pay your employees. Whether you pay them monthly or weekly is dependent on the nature of your retail business. 

Skills and experience

When employing staff it’s important to consider their existing skills and experience and whether they match up to what’s required for the role in question. Here’s a short checklist of things to consider:

• Look for a career-oriented mindset: Your employees are your business. How they act, behave, speak to customers, and more, is how your customers will view your business. If you have employees who are rude, disruptive, or lazy, that’s how customers will see you. When interviewing candidates, you should try and understand what they’re seeking to get out of the position, how they intend to grow, what skills they want to develop, what aspirations they have, and more. You’ll be able to get a sense as to whether they’re just in it for an easy payday, or they’re actually looking to build a career for themselves. Of course, be realistic, ultimately, you’re offering them a job and they will be looking for money as one of their main motivations for taking it. But, finding someone who wants to develop themselves means they’ll take themselves seriously, and your business, and how people see it, too.
• Prioritise potential over experience: We’ve covered this above but the retail industry has the third-highest annual turnover rate which means you’ll be hiring people more often than you would like. You need to understand that a lot of the time, you might be recruiting people who have less experience, typically, if they’re younger. Try to identify candidates who demonstrate a lot of potential either in their ability to learn, transferable skills, or their attitude. Remember: you can train someone who cares to become better at what they do, but you cannot train someone who is good at what they do to care.
• Do some background research: Conduct a background check on candidates (you can either do it yourself, or have this process outsourced). Call previous employers, ask for references, do your due diligence to cover all bases. Of course, you can never be certain that the person you’re hiring will work out in the long run, but if you cover these basics and trust your gut—you’re increasing the odds of finding the right fit for the role and your company. You should also bear in mind that when it comes to the retail industry, and less experienced employees, that candidates may not have any references for you to contact. 

Personality

Finding a suitable candidate with a personality to match can be a challenge. You might find a candidate with the appropriate skills and experience for the role, but without a suitable personality. Conversely, you may find they lack the skills and experience but have a radiant personality.

While there’s no such thing as the perfect employee, you can certainly find someone whose combined personality and experience are a good fit for your business. Here’s some things do look out for:

• Look for cultural fit: The candidate you employ must fit in with the social environment and culture of your company. Do they seem to be confrontational, difficult, or stand-offish? Unless those are the core pillars of your company culture (which we doubt they are), we’d suggest pursuing other candidates. Employees who are poor cultural fits which inevitably leave after a short period of time, and refuse to contribute any actual effort in the time they are with you. 
• Be mindful of non-verbal signals: Whenever a person comes for an interview, there are some non-verbal cues you can pick up on. Do they seem eager, or excited? Or, maybe do they look bored, or indifferent? Your business is not a free ticket to an easy salary. Be critical. If a candidate wants to work for you, you’ll be able to tell. 

Confidence, empathy, and self-awareness are essential traits in any retail employee. Use questions to gauge how strong your candidates are in these areas.

What Are the Legal Requirements for Employing Staff?

Eligibility

Before employing staff, make sure that the candidate is eligible to work legally in the UK. To work in the UK you need to be a British citizen, or a resident with pre-settled or settled status. 

If your candidate doesn’t fall into any of the above categories, they will need a work visa and a work permit to work in the UK. They can only apply for a Tier 2 Work Permit if their position cannot be filled by a British citizen and if they have your sponsorship. 

Rights

Legal rights safeguard us from exploitation and protect our sense of dignity. For that reason, it’s important to consider the rights of your employees.

When you employ someone with a contract, they take on the employment status of a ‘worker’. In which case they’re entitled to holiday and sick pay, at least twenty minutes of rest break per day, a workweek of no more than forty-eight hours a week and protection from discrimination.

Equality

In 2010, the UK government passed the Equality Act, which protects an employee from discrimination based on religion and belief, age, race, gender, pregnancy and maternity, sexual orientation, or disability.

As an employer, it’s important to familiarise yourself with this law, and also the different types of discrimination people can face in the workplace. 

• Direct Discrimination: This refers to overt mistreatment based on who you are. If you give a male employee more hours because you prefer to work with males, this is direct discrimination
• Indirect Discrimination: Indirect discrimination is harder to spot because it can occur even when you’re treating each of your employees the same way.

For example, rejecting a suitable candidate because you think their responsibilities to their children may affect their work performance counts as discrimination, which is punishable by law.

You’re Ready to Start Hiring

Now that you’re at the end of this article, you probably feel a little more confident about hiring your first employee. Here we’ve provided a short outline of the retail recruitment process. The best way to learn, however, is to get out there and actually do it. Good luck with your recruitment journey.