Redundancy pay explained
Nannies also qualify for redundancy pay, providing they have been in continuous employment for at least two years.
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.
In order to qualify for redundancy nanny needs to have been in continuous employment for at least 2 years.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 a nanny is entitled to is dependent on her age and the length of time she has been employed. Please refer to the rates and thresholds page to see current redundancy pay entitlements.
As an employee on PAYE, a nanny is legally entitled to these amounts; however the employer is free to pay more than the statutory minimum. No part of the costs can be claimed back from the state. Nanny does not have to pay tax on redundancy payments up to £30,000.
For further information on redundancy pay, please contact Nannytax.