When to hire your first employee

The path to becoming an employer should be a carefully considered part of your business plan, not a knee-jerk reaction to some recent event. It can be tempting to rush out and hire someone if you’re feeling overwhelmed with work, just met someone you’d enjoy working with or want to pitch for a large contract. While these situations might highlight the advantages of hiring your first employee, it’s important to clarify the opportunity, assess the risks. and plan the best approach for you and your business.

Here are some signs it might be time to employ:

  • You’re struggling to keep up with the demands of your growing business
  • If you paid someone to do admin or basic tasks, you could be earning more for your business
  • You’ve stopped promoting your business because there’s already more demand than you can handle
  • You’re losing business because you can’t deliver in time
  • You can see good opportunities related to your business that require experience or skills you don’t have
  • What you thought was a temporary busy period is turning into steady growth
  • Your financial situation is strong and stable, and you could probably afford to pay an employee even while they come up-to-speed or during an unexpected downturn

What do you need from your first employee?

One way to start planning is to clarify in your own mind exactly what you and your business need from the employee. Here are some things to consider:

  • What tasks do you need them to do?
  • What formal qualifications are required?
  • What decision-making will they be responsible for without consulting you?
  • How many hours a week will it take?
  • Will you need them every week?
  • Are you prepared to train them or do they need to be up-to-speed from day one?

What are the main types of employment

Here’s a quick overview of the different types of employment, to help you choose the one that best suits your situation.


  • Permanent: When you know you’ll have enough ongoing work for either a part-time or full-time role that’s likely to continue indefinitely, and you’d like someone to commit to your business and grow their career with you
  • Fixed term: A full-time or part-time role with a set end date for a reason you can explain, such as seasonal work, a major project, an apprenticeship or a paid internship
  • Casual: Uncommitted paid help if they’re available when you need them


  • Contractor: Someone you hire to complete a specific task within an agreed time. Contractors usually have particular skills or experience, do the work the way they choose and bring their own equipment.
  • Volunteer or unpaid intern: Usually working to gain experience, or to support a charity or cause. This type of help may require training, equipment and supervision, an agreed scope of what they will do, and a written record or reference detailing what they actually did and for how long.

What are the costs of hiring staff

Before you can check the effects of a new employee on your cash flow, you’ll need to get a rough idea of what the employee you have in mind will cost. Here are some examples of potential costs:

  • Recruitment expenses – advertising, agency fees, time lost while planning and interviewing
  • Equipment – from business cards, keys and office furniture to a uniform, tools and vehicle
  • Training – orientation/on-boarding, health and safety, customer service, industry compliance
  • Additional overheads, such as phone, utilities, vehicle
  • Salary or wages
  • ACC annual levy
  • KiwiSaver employer contributions
  • Fringe benefit tax if you’re offering benefits/perks
  • Liability insurance to cover damages resulting from an employee’s actions

To help you get a ballpark idea for most sectors and roles, business.govt.nz has a handy employee cost calculator.

You should also consider consulting an accountant or business adviser to check your estimates are complete and correct, and the plan to employ is financially sound.

How to write a job description

You’ll need to have a clear description of the job before you can draft an employment agreement and advertise the position. The requirements must clearly relate to the job, your business or entry requirements for employee training you have in mind. Otherwise they may be considered discriminatory.

Written to be easily understood by your applicants, as a minimum a job description should contain:

  • Your business name and what you do (your purpose)
  • Type of employment – full-time, part-time, permanent, fixed term, casual
  • Tasks or responsibilities involved
  • Position the role reports to (yours if it’s your first employee)
  • Minimum qualifications or legal requirements
  • Personal skills, characteristics and experience required by the type of work
  • How performance will be assessed
  • Where the work takes place – fixed address, multiple sites, anywhere within a region
  • Hours of work – specific start and finish times, flexibility, as required with or without a guaranteed minimum, overtime hours when required or by agreement, shift or roster work
  • Type of remuneration – hourly rate, annual salary, bonuses, commissions

Understanding employment agreements

You are legally required to have a written employment agreement, also called an employment contract, for any employee. This doesn’t apply to interns, volunteers and contractors.

Collective vs individual employment agreements

Collective employment agreements apply to union members, and are between the employer and a relevant union. There must be at least two employees and at least one employer involved. Your first employee will be the only employee at your workplace, so no relevant collective agreement will exist. The job will only be covered by a collective agreement if you choose to join an existing collective agreement with other employers.

To help you plan ahead, here’s a brief introduction to the three scenarios as they apply to all workplaces.

Collective agreement and a union member

If an employee is a member of a registered union, they will be covered by any relevant collective employment agreement at their workplace, which will be between the employer and the union. It can also include some individual terms that are not inconsistent with the collective agreement, such as flexible working hours based on transport needs or school holiday hours.

Collective agreement but not a union member

If a there is a relevant collective employment agreement at a workplace but a new employee is not a union member, the collective employment agreement must be used for the first 30 days. After that, if the employee has not become a union member they can change to an individual employment agreement.

Individual agreement

If a collective employment agreement does not apply, the employee and employer must negotiate and sign a written individual employment contract (agreement). Since an individual agreement is most likely when you’re hiring your first employee, we’ll go into that one in more detail here.

How to write an individual employment agreement

An individual employment agreement should include detailed information about:

  • The role: Job title, duties involved, type of employment (permanent, fixed term, casual), any trial period
  • Terms: Hours of work, shifts, call-outs, breaks, tools, uniforms, policies and procedures that must be followed
  • Remuneration: All relevant forms of remuneration or benefits, from wages and when they’ll be paid to KiwiSaver and any optional things like expenses, overtime, parking, study entitlement and so on
  • Leave: Whether they will be working on public holidays and ideally covering all the main types of leave
  • General conditions: A section to clarify additional conditions, which may or may not be legal requirements, from health and safety and indemnity to things like social media use, medical tests, alcohol or drug testing, personal protective equipment that must be worn, confidentiality and intellectual property
  • Disputes: How employment concerns should be raised and the process for resolving them
  • Termination: What happens in a restructure or if someone buys the business, redundancy compensation, serious misconduct definition and process, the notice employer or employee must give when ending employment
  • Who and where: Legal names of the employer and employee, and where work can take place. Also, the employee’s declaration around specific information they have read and understood, raised if relevant, been advised of and fully disclosed, plus their legal ability to work in New Zealand

Some of the above are mandatory and others are recommended by specialists. Having a detailed agreement helps you and your employee get off to a strong start and have something to refer to if concerns arise.

The business.govt.nz website has a handy employment agreement builder that covers the above sections, and includes quick tips and common mistakes to avoid.

You could also check in with an employment lawyer, a small business HR/employment relations company or a local business support group.

How to advertise for an employee

The best way to find and attract your ideal employee will often depend on the job and the amount of time and money you have to invest.  Here are some options to consider.

Free ways to find applicants:

  • Contact Work and Income who can match qualified people to your job
  • Get in touch with related training organisations or education providers
  • Let people know directly, but make it clear it’s an invitation to apply not a job offer
  • Advertise through local community noticeboards and online groups

Paid job advertising opportunities include:

  • Online job advertising services
  • Industry magazines and websites
  • Newspapers
  • Recruitment agencies

For help with writing your advertisement, take a look at free guides for advertisers on major online job sites like seek.co.nz and Trade Me. Check out current ads for similar roles to yours.

How to choose your first employee from the applicants

You don’t have to interview all applicants. Using an application form can be a big help in drawing up an initial interview shortlist.

Using an application form

If you’re expecting a lot of responses and won’t have time to talk to them all, you might like to provide a contact email to ‘request a job description and application form’. This would allow you to quickly cover off most of the common questions, outline the process and timing you have in mind, and gather the information you need to begin selection.

Taking care with confidentiality

It’s essential to protect the privacy of anyone who shows interest or applies. Your application form could ask how they would like to be contacted. If they’re not available, never leave a message with others. Anything you send to them should be marked as confidential. Don’t contact their employer or anyone else without the applicant’s permission. You must not share any information they provide unless you have their permission to do so. Even accidental mistakes around confidentiality can put you in breach of the Privacy Act.

How to run applicant interviews

Consistency and fairness are important. And don’t forget that the goal is to let applicants show you their true potential. That means they need to feel relaxed, safe and respected. Here are some tips to get you started.

  • Give plenty of notice and choose appropriate interview times, so they can make arrangements to be away from work or other commitments
  • Choose a quiet, comfortable location that lets them maintain privacy as much as possible
  • Let them know what the interview will involve, where it will be, who will be present, how long to allow and what they should bring with them
  • Leave good gaps between interviews, so there’s no chance of applicants overlapping and losing their privacy
  • For all applicants, use the same set questions and short assessment tasks; these should be relevant to the job
  • If they don’t answer clearly or you don’t understand, ask them to clarify – that way you’ll get a chance to see beyond potential nervousness to their true potential
  • Prepare a set of success criteria based on the job description, then score each applicant on them immediately after each interview; write notes to help your later selection
  • Consider inviting another competent person to sit in on the interviews and provide their scores, so you can compare to check for misunderstandings or unconscious bias
  • Give applicants a chance to ask questions and prepare your answers to likely questions ahead of time
  • Don’t agree to requests for special conditions (such as flexi-time or car parking) until you’re sure you’d include them in the employment agreement – ask for time to think about it if you need to
  • Resist the temptation to offer someone the job on the spot
  • Let all interviewees know what the next steps are and when they will hear back from you
  • Double-check the contact method they want you to use and whether it’s still OK to contact the referees they provided in their application form

How to make an offer of employment and reach agreement

Once you have identified who could do the job and who best met the requirements in the job description, it’s time to check at least one reference. This can be particularly valuable in confirming your decision and for managing your new employee.

When you’re ready to make an offer to the successful applicant, let them know you’d like to meet to present a formal offer and draft employment agreement.

At the meeting, provide a written offer letter and copy of the employment agreement. Let them know they have the right to seek independent advice before making any response and agree on how much time that can take.

Tell them that means they can reject the offer, accept the offer and employment agreement, or let you know if they’d like to accept the offer but want to discuss changes to the proposed individual contract. You must consider and respond to any changes they suggest, but you don’t have to accept them all.

If you reach agreement, you should both sign a final offer of employment and employment agreement. The final offer should probably include an acknowledgement from the employee that they were given the opportunity to seek independent advice before signing.

How to let unsuccessful applicants know

It’s important to let applicants know they were unsuccessful and thank them for applying. Again, make sure you use an agreed contact method.

You must continue to maintain confidentiality for all applicants. If you’d like to keep any information they provided, you must get their permission to do so and make every effort to keep it secure. Otherwise you can let them know you will destroy the information provided on a particular date, to safeguard their privacy, but are happy to return it to them if they let you know how they would like that done beforehand.

Tips for starting your new employee

Before your first employee starts, you must register as an employer with Inland Revenue.

Your employee’s first day will set the tone for your ongoing relationship, so put time into planning ahead and being available.

The first step should include a thorough health and safety briefing, evacuation procedures and the provision of any safety equipment. Provide a tour of facilities, such as bathroom and lunch area.  Make sure they have emergency or absence contact details, and clarify their hours and break times.

Start them on manageable tasks, ask how confident they feel about doing them, provide any necessary training, and work alongside them to help and lead as required. Give them the opportunity to continue independently, but be readily available. Make time at the end of the day to debrief, check how they’re feeling and thank them for their work.

To learn more

For more information on becoming and employer, see: