Redundancy pay explained

There is a lot of confusion in the nanny industry on the issue of redundancy. Many nannies, parents and nanny agencies assume that because of the unique circumstances that exist between a nanny and her employer, she doesn't qualify for redundancy pay. But providing she meets the requirements she is entitled to redundancy pay just like any other employee.

Does she qualify?
To qualify she must be 18 or over and have at least two years continuous employment. This means that she must have been working for the same family, without any breaks, apart from maternity, sickness and unpaid leave, for at least two years. She must also be working as an employee under an employment contract and have a PAYE scheme set up. This does not mean that she needs to have a written contract, as some employers unfortunately don't provide this. She is still considered an employee working under a contract even if there is nothing in writing.

If the employer's circumstances change and they no longer have a full-time job for their nanny, perhaps due to the children attending school full-time or one of them working part-time, and they want to employ a nanny on a part-time basis, they are required to first offer the "new" position to the existing nanny. If she chooses not to continue working for them under the new conditions she is still entitled to redundancy pay, unless she is on a fixed term contract.

She will also qualify for redundancy pay if the family moves to a different part of the country, providing there is no relocation clause in the contract.

How much?
If the nanny is between 18 and 21 she qualifies for half a week's pay, or £165, whichever is lower, for every year of continuous employment. If she is between 22 and 40, she qualifies for one week's pay, or £330, whichever is lower, for every year of continuous employment, and if she is between 41 and retirement she will qualify for one and a half week's pay, or £495, whichever is lower, for every year of continuous employment.

As an employee on PAYE she is legally entitled to these amounts; however the employer is free to pay more than the statutory minimum at your discretion. No parts of the costs can be claimed back from the state. Nanny does not have to pay tax on redundancy payments up to £30,000.

Please contact Nannytax if you wish to clarify any of the above points.