Guide

11-step checklist for hiring employees

Hiring employees can be time-consuming, but get it right and they’ll become your most valuable asset.

A 'We're hring' sign on the front door of a small business

Hire the right person for the job

To make life easier, here are 11 steps to help with hiring employees. You can also read more in our Hiring guide.

1. Create a clear job description

Make sure you are clear about the type of person you want to hire, the skills they require and the amount (or the range) you are willing to pay. Throughout the hiring process, keep an accurate record of each candidate, including their strengths, weaknesses, expectations and interview notes. You’ll need to refer to this again when selecting your preferred candidate.

2. Determine who is doing the recruiting

How much time will it take to recruit each new employee? Think about all the tasks involved including:

  • writing the job description
  • advertising the job (online and offline)
  • communicating with prospective candidates
  • answering questions about the job and your business
  • interviewing and screening applicants
  • communicating with unsuccessful candidates

You may not have time to do all of this. It might be more efficient to outsource some or all of these steps to someone in your team or a recruiter.

3. Ensure each employee has a Social Insurance Number (SIN)

The SIN is a 9 digit number that you need to work in Canada or to have access to government programs and benefits. Employees can get a SIN from Service Canada.

You are required by law to get a valid SIN from your employee within 3 days of an employee beginning work. Best practice is for you to get the SIN after an employment contract has been accepted and prior to the employee’s start date.

  • For all employment documents record the name and SIN exactly as they appear on the SIN card/letter
  • SINs should be validated by the payroll program to ensure no mistakes in data entry

4. Maintain accurate tax records

You are legally required to keep proper tax records for six years from the end of the last tax year they relate to. It’s important that you keep them safe, secure and easily accessible. Your accounting software should be able to do this for you.

5. Understand your obligations

In many cases, your new employees may not understand all the things that need to be done unless you help them out. Don’t expect them to already know everything – even if they’ve had similar jobs in the past.

In addition to all the job-related information a new employee needs to learn, they also need to make sure they have provided the completed payroll related forms.

Here’s the documentation you need from your new employee:

  • New Hire form that provides a social insurance number, birthdate and address information along with payroll set-up information such as the start date, salary, job title, and department
  • Completed Federal and Provincial TD1 forms
  • A VOID cheque or direct deposit/pre-authorized debit info sheet

6. Remember key dates and tasks

There are so many things to remember when you’re running a small business. Your new employee should make your life easier. But when they first begin, you may find your workload increases while they are coming up-to-speed with everything.

A good way to remember some of the most important dates is by using some of the freely available online tools that let you sign up for reminders.

Enroll for My Business Account to receive email notifications. The Canada Revenue Agency (CRA) will notify you when you have mail to view in My Business Account and when important changes are made on your account.

7. Understand the rights of your employees

All employees have rights that are protected by legislation. Federally regulated employers are covered by the Canada Labour Code and Provincial/Territorial regulated employers are covered by the Employment/Labour Standards in their jurisdiction.

Employment/Labour standards regulate the minimum requirements an employer must provide to an employee. An employer can provide more than the minimum as part of the employment contract.

Some of the common items covered by Employment/Labour standards are:

  • Minimum wage
  • Hours of work, overtime, rest periods
  • Vacation pay
  • Statutory Holiday pay
  • Legislated leaves like Maternity/Paternity/Parental and Compassionate Care
  • Termination pay

Make sure you understand all the basic rights for your employees. If you are in Ontario, there is poster legislation requiring you to post the Employment Standards Act information for your employees.

8. Obtain Workers’ Compensation insurance

What happens if your employees are injured at work? It is a requirement for most industries to have workers’ compensation for your employees. This provides wage replacement and medical benefits to your employees if they get injured at work. The Meredith Principles underlie most workers’ compensation legislation in Canada.

Each jurisdiction has its own laws and its own government agency that administers workers’ compensation.

9. Set up a payroll system

Your options when setting up your payroll include:

  • doing it all yourself
  • outsourcing the setup to your accountant or bookkeeper
  • outsourcing to a payroll service

Look for accounting or payroll software that:

  • makes it simple to stay compliant
  • can pay your employees efficiently
  • files reports with the Canada Revenue Agency (CRA) and Revenue Québec (RQ)

10. Keep a file for each employee

It’s important to keep up-to-date and accurate records for all your employees so that you can use them to figure out their pay and entitlements. You will also need records to give to your employee or their union/representative, or a regulator if requested.

Each employee’s file should include their:

  • full name, address and contact details
  • emergency contact details
  • a signed copy of their employment contract
  • tax details
  • preferred payment method and details
  • any other important information about them

The employee’s file should not include a copy of their SIN documentation. Consider using an HR system that includes these features. These records must be kept after the employee has left according to the jurisdictional legislation.

If you’re not sure about what information you can and should collect for each employee, contact your Employment Labour Standards board.

11. Be clear about goals and expectations

Even if you have just one employee, it’s important that you define and agree on what is expected of them from day one. They should already have a good idea about this from the interview process.

The reverse is also true. Let them know what you will provide in return. This is a professional relationship and it should be based on mutual trust, respect and honesty. The better you treat your employees, the harder they will work for your business.

Your employees are your most valuable asset – choose wisely

Whether you’re hiring one employee or several, it’s important to follow the steps above. And don’t forget to think about how you will retain and reward excellent work. There are many ways to do this other than salary and wages, for example incentives and non-financial rewards.

Remember that your employees are your company’s most valuable asset. Good people are hard to find. And hiring can be time consuming and expensive.

If you get the process right, you’ll ensure you hire the right people. And if you look after your employees, they’ll stay with you longer and your business will perform better.

For more hiring information check out our Hiring guide.

Disclaimer: Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.

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