HIRING: 10 things you should know as an SME employer

As an entrepreneur, you know your business best, but as you scale, you won’t necessarily have the time to do it all on your own.  Bringing in the right partners is critical to grow and support the business- especially when it comes to managing your people.

Payroll, compliance and SARS requirements might sound foreign, so this month we’ll guide you in setting up payroll as your staff contingent grows. We have collaborated with our friends at HR Studio, to address some of the most common questions for SME’s.

10 things you should know if you are wanting to hire or have hired employees.

1. Do I have enough staff to be doing a formal payroll? What if I pay my staff cash? Do I have to give them payslips?

If you have employees, you need a payroll. A payroll system will take care of your payslips and legal requirements. Even if you pay your employees cash, they will need to contribute towards UIF, PAYE, SDL and relevant deductions per industry. SARS states that 21 days after employing your first staff member, you should register for PAYE.

2. Do I have to give the staff contracts?

Under common Law there is no requirement for an employee to be provided with written particulars of employment. However, section 29 of the Basic Conditions of Employment Act requires that certain written particulars of employment must be provided to the employee. This does not apply to employers who employ less than five employees. With that said, having a contract in place helps define expectations for both parties. 

3. Should I be reviewing staff performance? How often?

While not a requirement in terms of the law, it is highly recommended particularly when it comes to incentives and bonuses. It is advisable to conduct performance reviews at most twice a year, to evaluate an employee’s performance and to establish whether the employee will be eligible for a performance bonus. A performance review will give employees a clear understanding of their roles, duties and responsibilities, as well as the company’s expectations.

4. Do I have to give employees leave?

Every employee is entitled to 15 days annual leave per year in terms of the Basic Conditions of Employment Act 75 of 1997. Should an employee earn below the working threshold, they are entitled to overtime payment if they are required to work overtime. Employees also should have compassionate leave of 3 days per year and 30 days of sick leave per 3 year cycle as per BCEA.

5. Do I need a code of conduct?

According to the Labour Relations Act (LRA) Schedule 8 & Section 3, ‘all employers must adopt disciplinary rules that require the standards of conduct required from their employees’. It is highly advisable that you formulate and implement a code of conduct that outlines the types of conduct that are encouraged and prohibited by the employer.

6. What should I be registered for, as a SME who employs staff?

7. What should be present at all offices in terms of legislation for employees?

Temperature check, sanitizer, COVID health posters, BCEA posters, Employment Equity Act posters and the capacity of people allowed per office. There must be a separation of 1.5m to work between each employee’s workspace and staff should wear masks when walking around the office.

8. Should I submit reports on legislative requirements such as employment equity and skills development?

You should compile and implement an Employment Equity (EE) plan if:

  • You employ 50 or more people,
  • You employ less than 50 people, but your turnover exceeds the amount listed in Schedule 4 of the EE Act,
  • You have been declared a designated employer in terms of a collective agreement.

9. How do I manage workplace discipline as an Employer?

It is highly advisable that you consult with experienced HR Consultants and Labour Consultants prior to initiating any disciplinary measures against employees. Alternatively, employ a manager that also has HR experience to deal with such situations, however, it may inevitably get to a stage where you will have to engage with an HR or IR consultant in the cases of serious/habitual transgressions. Such experts will ensure that all legal procedures in terms of labour legislation have been complied with to avoid any potential risks.

Failure to comply with legal procedures when disciplining an employee can result in serious consequences at the CCMA or Labour Court.

The CCMA is an independent body created to resolve labour disputes between employers and employees.

The Department of Labour website gives good guidelines if you need guidance with any labour issues.

10. When should I be consulting an HR expert? And when should I be looking to hire an in-house HR team member?

As the business expands it’s advisable to consult with an HR expert to ensure that your business is compliant with all legal requirements and that certain procedures and processes are implemented to provide structure to the business. An in-house HR team member is required when your divisional managers can’t absorb HR functions. This needs to be carefully considered as an internal HR can be quite costly for an SME or moderate size business. So, in short SME’s can hire internal HR at the employer’s discretion if there is a business need for it if the business can afford it and if the headcount warrants it

If you have found, while reading through these 10 questions, you are a bit overwhelmed, feel free to contact HR Studio for some specialist expert advice to put your mind at ease.

Peter Magner

Peter Magner

Peter is an avid trail runner and sports enthusiast. He has a passion for people and technology and uses these skills to help grow Iridium Business Solutions. He currently heads up the Sales and Marketing for the company, whilst also managing a team of Cloud Accountants. In 2019, he was fortunate enough to be selected as one of the SAICA Top 35-under-35.