Unlike registered childminders who are usually self-employed, and nursery workers who are employed by their nursery, nannies are employed by you directly to care for your children. This means that you will become their employer and be responsible for their tax and national insurance contributions, as well as their holiday, sickness and any maternity pay. You will also have an obligation to provide a workplace pension.
It's vital to have the correct types of insurance, including employer’s liability insurance. Contact your insurance company for more information.
Nannies, if they live out or are provided with separate accommodation, are entitled to receive at least the national minimum wage. When deciding how much to pay your nanny, you need to bear in mind:
- their experience and training
- how many children they will be caring for
- the hours you want them to work
- the area in which you live
- whether they will live in your home
- if they will receive “benefits in kind” such as the use of a car.
There are regulations covering the payments of benefits in kind, and employers should be aware of any special tax provision they need to make. There is advice for employers at www.hmrc.gov.uk.
Having a properly written and signed nanny contract is vital and forms part of your responsibility as an employer. You and your nanny should spend time reading the contract together carefully before signing. Note a date on which to review the contract – usually every six to 12 months.
PACEY produces a template nanny contract designed by solicitors which you can complete with your nanny at the beginning of the arrangement.
Automatic enrolment was introduced in 2012. Larger employers were the first to put their staff into pension schemes and contribute towards them. Now, smaller employers are required to help their employees save for their retirement.
This means that if you directly employ at least one member of staff, you’ll need to set up a pension scheme and make sure that you have a payroll process in place which meets the requirements of automatic enrolment.
So if you employ one or more people to care for your children, automatic enrolment duties will apply to you. If your nanny is aged 22 or over (and under state pension age), and you pay them over £192 a week or £833 a month, you’ll need to provide a pension for them.
The Pensions Regulator can provide you with full information about your responsibilities, including the date by which you should be prepared. The step-by-step guide to automatic enrolment has been designed to help employers complete the 11 steps of the automatic enrolment process. You can then create your action plan for automatic enrolment, which will help you work out what you need to do and when you need to do it by.