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Employing a nanny - through her own agency(31 Posts)
We have (partially) sorted a nanny to look after our 3DC when I return to work in January 2014. We are very happy with her - she was our first CM when DD1 (now 7yo) was a baby; DD2 started with her and then, due to a change in circumstances, she gave up CMing and went to work at local pre-school where she was DD2's keyworker. She also found us a great replacement CM and helped us cover until new CM had space for both DDs.
We now have 6mo DS and, logisitically, it will be easier to have someone come to our home and care for our DC from here. DDs will be able to stay after school for clubs, DS will have 1-to-1 care in the day, DDs will be able to have friends over/go to friends' homes; nanny will do 'nursery duties' and get tea started; she is very sociable and is great at organising activities; she will cover DDs if they are ill on a school day... the only 'downside' is the cost but we figure we are getting a lot more for the money than with our previous, wonderful CM (who has downsized due to her own circumstances so wasn't looking for out DC to return to her anyway).
We have a secure verbal agreement with the Nanny with an agreement to get together soon to put everything in writing (once DD2 is in school full-time - which happens next week).
Anyway, the Nanny runs her own Nannying agency. I originally asked her for advice about the job and she then got in touch saying she actually fancied doing it herself. She will be self-employed through her own agency and we will be covered under her own insurance, she will sort her own tax and she is registered with OfSTED so we will partially pay her in vouchers. She is a qualified nurse (was still working on the Bank when CMing in the early days) and has up-to-date first aid.
We are setting the hours but are happy
- that she sends an alternative nanny to cover any sick days
- that she sends an alternative nanny to cover any (extra) holidays
The position is term-time only. I have worked out the annual hours x hourly rate and then divided the total by 12 to work out equal monthly payments. This is one of the things I first asked her advice about and is one of the aspects she particularly likes (apart from the fact that we are lovely people with lovely children )
I have just been thinking though; what would happen if she was sick and could not provide cover for our DC. Obviously DP (or I) would have to take the day off work and look after our own DC; this is not a problem. But would we pay her? How much?
Also, if she is self-employed through her own agency, would we have to pay her for the 5.6 weeks holidays? She would actually only work 39 weeks a year and would have 13 weeks off, but I have worked it that she is only PAID for 39 weeks' work. Should we be providing paid holidays even is she is self-employed?
If she wanted to book/take any extra days off, again we would be fine to cover her as DP can use his holidays. Again, our first choice would be that she would provide an alternative nanny, but if she couldn't..? I guess she could opt to work any days in lieu but that would be working in the school holidays which is when I don't work so I wouldn't really need her to (but could probably find something to do with a child-free day in the holidays!)
I don't think she can be self-employed, there's a lot more to it than 'sending someone else to cover'. Phone HMRC, they have a helpline where you can explain all this and they'll tell you if she qualifies. Otherwise we could all set up agencies and employ ourselves as nannies!
Hmm Outraged that is interesting. She employs lots of nannies, babysitters, mothers' helps etc through her agency. I figured it was the same as going through her agency to employ a nanny, just that she was the one taking the job.
Many of her contracts are short-term, occasional or for weddings, holiday makers etc. But she also places people for longer term contracts; the employers pay the agency and then she pays the workers, who I guess are her employees and the employers are actually employing her and not the nanny/babysitter etc.
I will look into it a bit more - thanks!
Is the agency going to invoice you for providing a Nanny?
If this is the case you have a contract from a business to provide you with a service. The business invoices you when it can provide the service if it can't provide the service it doesn't invoice.
In this situation if she owns the business as a sole trader she can be self employed as she will have other clients through the agency and you have agreed that she can substitute someone else.
In this case there would b no holiday pay and no sick pay.
No holiday or sick pay.
I would expect the hourly rate to be considerably higher than that you would be offering a nanny you employed, is the hourly rate high compared to usual nanny salaries in your area?
Will the agency invoice you for work done by whichever of their employees they provide? That is how nursery temping works, the nursery pays the agency and the agency employs the worker.
Quite unusual in my view for a nanny agency to employ staff other than office staff. Most agencies are introduction agencies, rather than an employment business. Some though do supply nursery temp staff, so in theory could supply nanny temp staff.
Are you paying her personally or are you paying her agency? Is her agency a limited company?
Is the agency a limited company? Nursery agencies I can think of are all ltd companies, wonder if that makes any difference to if someone was running it as a sole trader.
Thank you for your replies - this is all interesting.
As I said, we are going to sit down next week and discuss the ins and outs of this and how it will work. There are certainly some points her that i will have to make sure we cover to make sure everything is proper and legal.
As for the hourly rate, all I know is it is higher (about £2ph) than another nanny I know but I can't say I know too much about the going rate for nannies here. We looked at what we would expect to pay someone and factored in costs like employer's NI and tax. What she is after is at the top end of that but still affordable and, if it is all legal, then suits us to not have to sort PAYE and insurance etc.
She is definitely an employment business rather than an introduction agency (although when I originally asked her advice I was kind of hoping she would introduce me to someone interested in the job as well as to tell me if anyone would be interested in such a job IYSWIM).
I guess the job is 'sort-of' temporary as initially it will be from Jan to August 2014. We will then set up another contract for the following academic year if everything is working well.
Thanks again - lots more questions on my list of stuff to discuss in more detail next week.
Sorry, I am not sure of the difference between Ltd company and a sole trader. How will this affect us?
I am not sure 'what' or 'which' her agency is but it is something I have added to my list of things to find out!
Cost wise, perhaps compare with nursery temp staff.
£14 per hour of which the employee ends up with £8.27 Gross, so will have tax and national insurance deducted from that.
The billed fee to the hirer is a lot higher than what the worker gets, as the agency has to pay employers national insurance, provide paid holiday entitlement, advertise their services, run payroll, pay rent on premises, phone line rental, website costs, pay their accountant, all sorts of costs.
having looked up the difference between an limited company and a sole trader, I should think she is a sole trader (but will check).
is this a good thing or a bad thing with regards to the likelihood of her being self-employed?
Not sure how the Ltd company thing will make a difference but if it is a ltd company then you are paying the company, not the individual. So that I think would help if HMRC investigated, as you could claim that you were paying a company to supply you with temp staff, they just happened to supply the same person most of the time.
The agency works on a range of different 'membership packages'. The Gold level includes having "has one main nanny who is always available" and [the parents] "have none of the inherent problems of employing direct" so supplying the same person most of the time is one of the things we would be paying for, I guess?
Getting back to the job itself,
If you will pay a fixed monthly rate but the work is being done over 39 weeks, then what happens if they don't turn up to work, or send a replacement? You will have paid but not got the service. So make sure there is some provision in the terms of business for there being a refund is service is not provided.
What happens if you decide to end the agreement mid way through the academic year? Or if they decide it isn't working out and want to end the agreement, or cease trading?
Cindy your first point was exactly what DP and I were discussing this evening that got us thinking of so many things we still need to clarify when we put it in writing. We were trying to work out what we wanted to happen if we had to cover as no nanny/replacement was available. We were trying to work out how quickly a refund would/could/should be made - or whether it would be easier to have a 'discount' the following month which we would be in charge of..
And yes, we will have to come to some form of arrangement just in case it all goes horribly wrong during the academic year. Of course, we do not expect it to but figure we need to sort it in case it happens rather than try to sort it at the time when things may have got awkward or whatever as we can't see a reason for the agreement breaking down (but acknowledge that it could on either side for whatever unforeseen reason).
Thank you so much for your thoughts and advice this evening. I have a growing list of things we need to discuss in more detail and to make sure everything is fair and legal. Your help is appreciated as we are new to this...
A concern - if she was doing work for you say Mon-Fri, 8am-6pm how would she also be able to run the agency? Would you let her make business calls during time she was doing work for you?
Legal wise I think this could be a grey area, HMRC may take a look at the big picture of all the work the person does and from that form a conclusion that it does all fall under self employment. However they might view some things as being self employment and others, like a regular commitment, to be of employed status.
Are you happy to take the risk? HMRC may never know about it, may never investigate. If however they did investigate, then you could be liable to a fine and back payments of employers NI.
Have you calculated the cost of having them as your employee? Payroll is not that complicated and is made a lot easier now by nanny payroll companies who do most of it for you, for a fee of around £140 a year.
If they were your employee you would have employers NI on top of the gross salary but you would be deciding that gross salary.
www.mranchovy.com/calc/paye201314 will do you a very good calc for the cost, based on 2013/14 tax year. It won't do term time only alas but you could enter in the gross pay as per year to get it to calculate employers NI. For example on 20,000 a year gross, employers NI is around £1697
Just use as a guide, as what actual payments will be will be calculated each pay run and things will change in April 2014.
You must not draw up the agreement. If they are running a business they need to give you their terms of business and you need to agree to those terms.
Different terms with different customers would be permitted, companies vary terms with big use customers, so you could negotiate the terms but I feel you should not be the one to create them. If you did, then it may be seen to be a contract of employment rather than supplying a service.
Perhaps she needs to get professional employment and tax law advice to make sure she can run her business in this way. Her insurers may well provide her with access to legal helplines, plus can talk to local business associations, local HR consultants, accountants.
Hmm - sorry, I just typed a long post but have lost it! (Where is the tired emoticon?)
I think I will get DP to read through this thread to check if there is anything I have missed on my list of stuff to check. If there is any chance of it being 'iffy' then we will return to the idea of employing her direct and sorting tax, NI etc ourselves (with the help of any agency, I expect!) This is what we originally thought we would have to do when we decided that a nanny was the best childcare solution. We thought she was offering an easy solution but we will check it out very carefully.
Thanks again for all your points - I really have listed them in my bullet-pointed list!
Does she have other clients who have done this? Wonder if you could talk to them about how things worked. You are asking them for a reference but during the conversation you bring up if they got a refund for any times when no person was supplied.
Also are you happy that anyone could be supplied? Would you want to meet a few people on her books first? If you did that and none of those were available, then what? Would you still get a refund even if someone could be supplied but you had not met them before?
With nursery temping, nurseries can request their favourite temp but given things are often very short notice, the agency will supply whomever can get to the nursery. The nursery has to trust the agency to have staff who can jump in and take over whatever position needs covering. Nursery staff don't work alone, so there is often at least one member of staff the children still know.
In your situation, your children may not know the person, how will they react to that?
Sorry for all the questions, just things I think of. There does seem a lot to think about here.
I can see there being advantages to this arrangement but there are negatives as well, so you need to weigh things up.
If you are not happy with it being 'iffy' then go for the employment route. You lose having someone cover days nanny is off sick. Your total cost may not be a lot different - create a spreadsheet and list both options side by side, some costs may be the same such as mileage payment rate, though number of miles done may be different as someone self employed could claim for miles to/from your home, whereas an employee can not.
I wonder if the IR35 legislation becomes a factor here?
Must go to bed, have an early start.
Good luck with trying to figure this out.
I think you should avoid this situation to be honest. What it sounds like she is doing is charging you extra by the hour, as agencies do, she will then take her costs out of that, and put it through her tax, and then keep your wage for herself. It's very lucrative, she will have more personal earnings than before. She clearly likes being paid pro rota because it means as a nanny she is paid all year around, where as an agency wouldn't be!
I think in order to protect yourselves, she should be paying on a monthly basis, not as pro rota, that way if she is off and can't find a replacement, which she should if she is running an agency, you won't have to try and be refunded or lose out on money.
I don't think she is doing anything illegal but it's sneaky, it's unlikely that she will declare her wage from you when she is doing her taxes, otherwise there is no benefit to her doing it! You really shouldn't pay for sick/extra holidays, but she thinks you will with your current agreement, so would try to agree to pay in arrears!
By doing the job herself, it also means its one less nanny she has to pay employer tax for, keeping more of the £2p/h for her business, and in turn herself. I would stay well clear, you won't want to be implemented if inland revenue do catch up with her!
I don't see why she would not want the security of being an employee, the paid holiday.
No reason why she could not be employed for this job and self employed in other things.
I would also worry about your lack of control, your ability to insist she does things your way.
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