What is the definition of an employer?

An employer is any entity that hires people to accomplish a task and pays them for their labour. Employers can be government agencies, nonprofit organizations, educational institutions, corporations, small businesses, or individuals. They define the responsibilities and requirements of the positions they fill and can direct employees to complete tasks according to their standards. However, employers have to respect the terms of their agreements with employees, treat them lawfully, and adhere to governmental requirements and regulations.

How do employers compensate employees?

As an employer, you can pay your employees in a variety of ways, depending on the duration and nature of your working relationship with them. Many businesses use various compensation methods for different employees, sometimes blending them to maximize flexibility and cost-effectiveness. Some key approaches to compensation include:

Hourly wages

You can offer employees an hourly wage that they would accept at hiring. You track the total number of hours an employee works in a week and multiply it by the wage to arrive at the total owed, before taxes. Often, employers have to pay one-and-a-half times employees’ normal wage for each hour they work over eight per day or 40 per week. Employers refer to this increased rate as overtime pay.

Salaries

You can also offer employees a salary, which is a fixed total payment per year that you establish at hiring. The employee typically receives a proportional cut of their salary every week or two. Salaried employees usually don’t receive additional compensation for working over 40 hours a week.

Commission

Commission is a common approach to compensation for paying sales employees. You pay the employee a minimum wage or salary and then give them a percentage of each sale they make. Talented salespeople can benefit from commission pay structures because their income is effectively unlimited. As an employer, you limit your payroll expenses but might face challenges keeping employees since a downturn in sales could drastically reduce an employee’s income.

Benefits

You also might offer various benefits to encourage professionals to work for you. Benefits, while not direct payment, often represent substantial monetary value to employees and can be critical components of their compensation packages. Typical benefits include healthcare spending accounts, retirement, gym memberships, travel expense coverage, and gifts. Decide how much you’re willing to spend on benefits packages and negotiate between vendors to find affordable options that still improve your ability to recruit talent.

How do employers hire employees?

You likely benefit from embracing thoughtful hiring practices that can help you find talented candidates worth investments of your time and money. Typically, employers advertise their openings on job search and company sites or post signage around their physical locations. You also might use a recruiter to locate qualified candidates.

You might use interviews and formal assessments, such as tests, to determine if a candidate’s skill sets are well-aligned with the requirements of the job. You can also check references familiar with candidates’ professional abilities, such as their previous managers, to confirm their resumes contain accurate information. When you decide to offer someone a position, comprehensively explain your expectations and review important information, such as the benefits you offer, to make sure the individual understands the terms of employment. To complete your hires, fill out all tax-related paperwork, collect Social Insurance Numbers, and begin the training process.

What are the types of employment arrangements?

You can expand your team by hiring people in different ways. The most common employment arrangements you might consider include:

Full-time

Employees who work 30 or more hours per week are full-time. They can receive hourly wages or salaries. You might define the benefits you offer an employee depending on whether or not they’re full-time.

Part-time

Employees who work less than 30 hours per week are part-time. They usually receive hourly wages and often work in industries such as retail, hospitality, and service. If your business is in one of these sectors, you might pursue part-time hires to support operations on weekends and after normal business hours. You can withhold some discretionary benefits from your part-time team members, but if possible, you might offer them anyway to recruit talented individuals.

Contracted

Contracted employees enter an agreement with your business to perform a specific task or lend their services for a predetermined period. Technically, these employees usually work for themselves, but as with other employees, they receive payment from you and perform the tasks you ask of them.

Contracted employees often reserve the right to manage their own schedules and decide the methods they use to complete their obligations. This often enables you to devote less energy to managing them than you would other employees. Since contracted employees usually use their own tools and materials, you also conserve further resources.

Temporary

Temporary employees usually work for a staffing agency that you hire to find short-term help. The staffing agency handles the administrative paperwork for the individuals they place, making it easier for you to bring on additional expertise quickly. If a temporary employee impresses you, you can approach them with an offer to join your team permanently.

Internship

Internships give students and other less experienced professionals the opportunity to learn about different industries and organizations. They usually agree to work with you for a set length of time. Some interns receive pay while others perform voluntary work in exchange for the learning opportunities an internship affords. You can also use internships to meet potential full-time hires and evaluate their skill sets.