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glossary

Jargon explained

Being an employer, especially if you are doing it for the first time, getting your head around unfamiliar jargon, abbreviations and acronyms can be baffling if you’re not used to working with them every day. Here you can find a list of the ones that you’re most likely to come across in your role as employer, with brief explanations of what they mean.

Please note that this is just a very brief overview for you to refer to and where relevant, links are provided where full and detailed explanations can be found that may include Acts of Parliament, exemptions or additional rules.

Pertaining to employment law
Auto Enrollment - Workplace pension schemes that will become mandatory for all employers to provide for their employees by 2018 (the final staging period). When the employee contributes to their pension scheme the employer does too. Employees can choose to ‘opt out’, however their employer must still have a scheme set up should they choose to ‘opt in’. It is illegal for employers to try and persuade their employee/s to ‘opt out’. This is known ‘inducement’ and fines can be imposed if caught.  
Disclosure & Barring Service  DBS A government body which processes criminal records checks that prevent unsuitable people from working with children and other vulnerable groups of society. Replaces the Criminal Records Bureau (CRB) and Independent Safeguarding Authority (ISA).  
Employers Liability Insurance -

Mandatory insurance all employers must have in place by law to cover themselves should any injury or illness (as a result of work) befall their employee/s while they are at work. Fines can be inposed if caught employing without it in place. (Not to be confused with ‘Liabilities’.
See further on.)

 
Employers Payment Submission EPS An electronic submission sent to HMRC to notify them that no payments will be made to employees during a given period. These can cover up to six months where no payments are made.  
Full Payment Submission FPS An electronic submission sent to HMRC on or before the nanny's pay day. The FPS will contain information about the nanny including National Insurance Number, date of birth, address and all of her earnings to date. It must be sent using RTI compliant payroll software.  
Gross Wage - The amount the employee has earned prior to Tax and NI being deducted  

Her Majesty’s Revenue and Custom (Inland Revenue)

HMRC The government authority that ensures the correct tax is paid at the right time, whether this relates to payment of taxes received by the department or entitlement to benefits paid HMRC website
Lower Earnings Limit LEL The lowest amount an employee must earn (before tax) before they qualify for state SAP, SMP, SSP, SPP and basic pension rights.  
National Insurance and National Insurance Contributions NI and NIC
Contributions paid to the HMRC to build up entitlement to certain social security benefits, including the State Pension - deducted from the employee by the employer on the HMRC’s behalf if a PAYE scheme is in place. The type and level of National Insurance contributions paid depends on how much is earned and whether the earner is employed or self employed. NICs stop being paid by the employee in the year the employee reaches State Pension age, although the employer continues to pay. National Insurance at Direct Gov
National Insurance Number NINO Every employee over the age of 16 should have a National Insurance Number which is a personal account number with the HMRC. This number ensures that the Tax and NICs paid is recorded on the employee’s account at the HMRC. It also acts as a reference number for the whole social security system.  
National Minimum Wage NMW The legal minimum an employer can pay an employee. Note that there are exemptions, for example, there is no NMW for under 16’s. For full details visit the links provided to the government websites. NMW at Direct Gov

NMW at HMRC
Net Wage
- The amount the employee ‘takes home’ after Tax and NIC has been deducted  
Offset Allowance   Used when an employer provides an employee with somewhere to live. It can be taken into account when calculating the National Minimum Wage. The Offset Allowance rate usually changes in October with the NMW rates.  
P14 & P35 - A ‘year end return’ that used to be required from all employers at the end of every tax year showing a summary of the deductions made from employees salaries. Now Real Time Information is in operation, year end returns no longer exist. PAYE forms at Direct Gov
P45 - A document given to the employee when they cease working for their employer. It details the tax code, PAYE reference, NINO, earnings in the tax year, how much tax the employee has paid and the leaving date. The employee is legally entitled to this document upon leaving and the employer should automatically supply it.
P46 - A document a new employer will give to the employee to complete if they do not have the P45 or if they have lost it, so that HMRC can provide a tax code number for new employment. After the introduction of RTI in April 2013 these will no longer be required.
P60
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A document given to the employee by their employer summarising pay and the tax that has been deducted in the last tax year. The employee is legally entitled to this document at the end of every tax year and the employer should automatically supply it to all employees still working for them at the end of that tax year.
P11D
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A document used by the employer to tell HMRC about any ‘benefits in kind’ their employee may have received during the tax year that has effectively increased their income, for example: a company car, private medical insurance or interest free loans.
Pay As You Earn
PAYE
The tax collected from the employee by the employer on the government’s behalf. The employer is responsible for sending the tax on to HMRC. Basics of PAYE at HMRC
Pro Rata
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Meaning ‘in proportion’ or ‘proportional ratio’. For example, a part-timer’s holiday entitlement is calculated exactly, according to what proportion of a full-time job their working hours make up.  
Public Liability Insurance   Optional insurance taken out to cover the policyholder should claims be made against them by members of the public. In the employer’s case it would protect them against mishaps caused by the employee, and in the employee’s case (usually a nanny) it would protect her should anything happen to the children or anything caused by the children.  
Real Time Information RTI A PAYE reporting system introduced by the goverment in April 2013. Employee salary details must now be reported to HMRC monthly or weekly, depending on the pay frequency. Replaces the traditional P14 & P35 year end returns.  
Redundancy Pay
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A lump sum paid by the employer to the employee if they have terminated the employment for reasons outside the employee’s control. To qualify the employee must have worked for the employer for at least two years. The amount to which they are entitled will be based on the employee’s weekly pay, age and continuous employment with the employer. Redundancy Pay at Direct Gov
Statutory Adoption Pay
SAP
Paid by the employer to the employee when they take time off work to adopt a child, for up to 39 weeks. To qualify the employee must have been in continuous employment for at least 26 weeks (by the date the adoption is approved), earn the amount set by the LEL and be matched with a child for adoption by an adoption agency. SAP at Direct Gov
Statutory Maternity Pay
SMP Paid by the employer to female employees who take time off to have a baby, for up to 39 weeks. Statutory Maternity Leave is for 52 weeks. To qualify the employee must have been in continuous employment for at least 26 weeks, prior to Notification Week*, and earn the amount set by the LEL. * Notification Week is 15 weeks before the baby’s due date

SMP at Direct Gov
Statutory Paternity Pay SPP
Paid by the employer to an employee when their partner gives birth or adopts a child. SSP is paid for up to two consecutive weeks and to qualify the employee must have been in continuous employment and earn the amount set by the LEL. SPP at Direct Gov
Statutory Sick Pay SSP
Paid by the employer to the employee if the employee is unable to work due to illness. Can be paid for up to 28 weeks. To qualify the employee must be sick for four days in a row (including weekends, bank holidays and days they would not normally work) and earn the amount set by the LEL. SSP is paid from the 4th day. Employers are not required to pay for the first three days of illness (known as waiting days). SSP at Direct Gov
Tax Code
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A tax code is usually made up of several numbers and a letter. It is used by your employer or pension provider to calculate the amount of tax to deduct from your pay or pension. If you have the wrong tax code you could end up paying too much or too little tax.

The basics of Tax Codes at Direct Gov

The basics of Tax Codes at HMRC

Pertaining to childcare law
Independent Safeguarding Authority  ISA Set up to help prevent unsuitable people from working with children and vulnerable adults. Potential employees and volunteers who want to work or volunteer with vulnerable people will need to apply to register with the ISA  ISA website
General Childcare Register
GCR Administered by Ofsted and made up of two parts – a compulsory and a voluntary part. Nannies are not required to join the compulsory part, but can join the voluntary part of this register (vOCR). Ofsted website
Voluntary Ofsted Childcare Register
 vOCR Nannies registered on this voluntary part of the General Childcare Register will need to meet certain requirements, like holding an appropriate first aid qualification. They must also have training in common skills, like communication with children, young people and families, and they must have public liability insurance.
Office for Standards in Education, Children's Services and Skills
Ofsted
An independent inspection authority that reports directly to parliament. It inspects and regulates institutions in England that provide education to learners of all ages, and also inspects providers of care for children and young people.

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