June 1999
Capital Adventure
New nannies can get so carried away by the thought of their new career that they forget the business basics. Nannytax provides a checklist to help you keep your wits about you
If you are starting your first job as a nanny no doubt you will be preoccupied with getting to know your employers' children, establishing a routine, and developing a working relationship with your employer. But it is also important not to overlook some of the basic points about becoming an employee - especially since your employer may not have employed a nanny before. This means that you are both new to this situation!
So the sooner you get acquainted with the nuts and bolts of being an employee the better. Then when you move on to your next job (hopefully not too soon!) you may even be in a position to advise your employer and help them to fulfil their obligations. By then you will be a veteran employee while they may well be another novice employer!
You are not self-employed
With a few exceptions (these being maternity nannies and some temporary nannies) nannies do not meet the Inland Revenue criteria for being self-employed. Your new employers may suggest that you sort out your own tax and NI but this is not possible and you should refuse. It is their responsibility under UK law to act as your employer.
Your employers' obligations
These include registering with the Inland Revenue as an employer, and operating a PAYE (Pay As You Earn) tax scheme on your behalf. This involves keeping tax records, paying quarterly tax and National Insurance contributions to the Inland Revenue, and completing and sending various forms including an annual summary and declaration. The Inland Revenue provides a Starter Pack for new employers for this purpose or your employers can use a specialist payroll service to take care of all the paperwork.
A contract of employment
Your employer is also required to provide you with a proper contract of employment (after 12 weeks working for them at the latest) which will include such details as your starting salary, hours of work, holiday pay entitlement and their agreement to operate PAYE on your behalf. If they do not provide a contract straight away (i.e. before 12 weeks), they should at [east provide you with a letter confirming the main terms on which you are being employed. Most of the following points should be included in your contract:
A job description
This may be a part of your contract of employment and should make clear what you are and are not expected to do. For example, the issue of your duties as a nanny not being undermined or diluted by tasks which effectively turn you into a mother's help, housekeeper or even a cleaner are best made clear at the outset by you and your employer agreeing on a clear description of your responsibilities. On the other hand a reasonable degree of flexibility may be expected of you, providing that it is not taken advantage of by your employer.
Your salary
Your starting salary should be agreed upon, and your employer should check that when it is expressed as a gross hourly rate it is not below the new National Minimum Wage (NMW) that they are now required by law to pay you. Nannies who live as part of the family in the family home are exempted from the NMW provisions. Nannies for whom separate accommodation is provided and all daily (or live-out) nannies are all included within the NMW legislation. The current NMW rates are £3 per hour for employees aged 18-21 and £3.60 per hour for employees aged 22 and over. Employers providing separate accommodation for their nannies can offset an allowance (up to a maximum of £19.95 per week) against the NMW rate payable.
An annual salary review
While employers do not have to offer you an annual salary review, it is to your advantage to request one and to have this entitlement written into your contract. This will help to minimise any embarrassment about asking for a pay rise at a later date and also reminds your employer not to take your employment for granted.
Net and gross wages
Nannies and nanny agencies frequently quote net wages. But in reality your employers are required by law to pay you a gross wage from which they deduct your tax and National Insurance contribution to arrive at your net wage. Your contract should specify either a gross wage or a net wage on top of which your employer agrees to pay your tax and NI. Your employer should be alerted to the difference between agreeing a net and a gross wage, since the latter is considerably higher than the former, and also includes an Employers NI contribution. Agreeing a gross wage also automatically entitles you to receive the benefit of any tax cuts in future Budgets.
Payslips
It is not that well known amongst parents employing a nanny that they are required by law to provide weekly or monthly payslips to their nanny showing deductions of tax and NI made to arrive at a net wage. These are a reassurance for you that your tax and NI contributions are being properly calculated on your behalf and you may also need them as proof of income when arranging a personal loan.
Holiday pay
All nannies, without exception, are currently entitled to a minimum of three weeks' paid holiday entitlement a year - pro-rata the number of days worked in a week increasing to a minimum of four weeks from November 1999. In addition you are entitled to full pay for all statutory holidays (such as bank holidays) which fall within your normal working week.
Sick pay
You are automatically entitled to Statutory Sick Pay – currently £59.55 per week – after three days absence from work. Any additional pay – either for the first three days absence or thereafter – is at your employers’ discretion. Normally your employer would continue to pay you at your normal rate of pay, but this may depend on how long you have worked for them, what reason you have to be off sick, and how often you are off sick.
Other benefits
Experienced nannies are more likely to be offered extra benefits than new nannies and these could include the use of a car outside working hours, a mobile phone, health club or gym membership and so on. These are more frequently offered to nannies working in Central or Inner London and less often in other parts of the UK. Most benefits are however taxable and you should clarify whether your employers will pay this extra tax for you. Benefits may be attractive and show that you are appreciated, but a fair rate of pay for the job will be a higher priority for most nannies.
Once these important issues are sorted out and clearly defined, you can concentrate on getting into the job itself without being worried by them – oh, and don't forget to enjoy your new job and your new career as a nanny!