Always agree a gross not net salary working as a nanny
Some advice for parents and nannies
Speaking to a nanny last night it reminded me of the need for parents/nannies, nanny agencies and on line recruitment sites to talk gross. It was a very long time ago that Net was the way to pay domestic staff . The industry needs to catch up as costs rise heavily for a parent if a net is agreed. On top of net there are additional costs such as tax costs, Ni, pension and maybe student loans. I know many reputable payroll companies who help parents reinforce this before agreements are made. The association of nanny agencies, ANA have been active in supporting their members to tell parents a gross salary. It causes a lot of upset if wages are wrong and can mean parents cant afford the nanny they want to look after their children.
Tax and Ni
The parent employs the nanny and they will be an employer and the nanny their employee. A nanny cannot be self employed and work for one person. They are unable to be told by a parent when to be at work and what times to qualify as a self-employed nanny.
One of the major obstacles for parents is that nannies often talk in respect of net salary which is not the true cost. It is vital that parents are aware when a nanny asks for maybe £12.00 an hour they mean in their hand not before deductions are taken away. This often leads to misunderstanding and a great additional cost to the parents in addition.
There are other reasons a parent and nanny need to know their gross earnings:
· If the nanny has a student loan this will affect a net to gross (parents will end up paying the student loan off for the nanny)
· If a previous employer has not paid the correct tax and National insurance this will mean a Nannie's tax code will be greater and the parent will pay this on top of the net pay
· If any changes in government offering lower tax and national insurance the nanny wont benefit if a net is agreed
· Should the nanny seek mortgages or loans it is vital they understand a gross salary and not net
· Pensions now are part of the salary and will be added to any net
We often met nannies who had not been in their jobs long and had lost it due to the parent not being able to afford the nanny. This very often was due to the nanny expecting a net salary agreed at interview and parents quite rightly expecting it to be gross. It is imperative that a gross salary is agreed, and this is in the contract not a net. To be fair to parents they will not know a Nannie's tax code or tax history until they employ them and have a P45. Only then will the true cost of the nanny become clear if a net was agreed. It can mean up to 45% on top in some cases.
So, I would advise any Nanny or parent to ensure salary is in Gross.
There are many sites that can assist and payroll companies that take the hard work out of this crucial part of your relationship with the nanny.
Please view our links or you can research
WWW.way2paye.co.uk or go to .gov about employing nannies
https://anauk.org/ Association of nanny agencies