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69% of nannies still have a Net pay contract - how can we change this?(59 Posts)
Was chatting with @NurseryWorld magazine on Twitter and they said that their recent survey found that 69% of nannies were on Net pay.
Parents visiting Mumsnet will know from reading on here that it is recommended that nannies are paid Gross, as then tax calculations can be done and there are no sudden shocks if the nannies tax code changes.
Do you think that Nanny Agencies are part of the problem - in that many agencies still list jobs as Net?
How can this be changed? Should it be changed - as a parent, nanny, or as an agency, do you feel nannies should be paid Gross or Net?
By getting nannytax to change their tune for starters. Their flipping survey quoted net pay! Sample nanny contracts and nanny payroll companies should be encouraging people to quote gross.
The current ANA contract has before/after tax as options for expressing pay which is pretty shocking.
I think nanny agencies are a big part of the problem but they're probably responding to nannies saying 'but what's that net?'. Even if they advertise net they should be pushing gross in contracts (and then they could charge fees as multiples of gross salary and make more money - win win).
I'm a very strong advocate of gross pay. For the nanny it means they benefit from increases in the tax allowance, they can easily produce evidence of their income (therer are threads about mortgages and problems with net pay contracts on some nanny messageboards) and they don't have to worry about their tax code being split between jobs or changing if they lose one of their jobs. For the employer it means they can accurately calculate how much a nanny will cost them regardless of whether they're employing someone with a second job or not and they don't get any nasty suprises like student loan repayments on top of an agreed net salary and their calculations on tax/NI.
Oooh and having gross pay in a contract will benefit nannies because it will help prevent employers paying cash in hand and thinking it's okay. I have no idea how they justify it to themselves but I suspect it's something along the lines of 'well it says net in the contract so I never agreed to pay it so why should I'.
This is good for employers because then they don't run the risk of HMRC's big fines too.
As a nanny currently jobhunting, I've very, very rarely seen a job advertised as gross- maybe two or three times in the 6 years I've been nannying! I have no idea why this is but I've always thought in terms of net, to the point where I'm a little dubious of jobs offering gross.
I honestly don't know what the implications for me would be in looking for gross rather than net. Currently when asked for my rates I say I am looking for £450-500 net per week for a full time job (10-12 hours per day, five days a week), or £9-10 an hour net if thats what I'm asked for. I don't have any clue what this would be gross!
If this system were to change it would either take forever or require something major like a change in the law because I just never come across gross. There is one agency I see advertising gross, SNAP, but they are an agency dealing with special needs children and have different requirements to register so not many nannies would come into contact with them.
You're looking at £600-670gross to get roughly the net pay you want, assuming a normal tax code and no student loan.
However if you signed a net pay contract tomorrow with a figure of £500net you would lose out on the increase in the personal allowance which comes in April. If you signed a contract with £670gross (current equivalent) you would benefit from the increase.
If you say worked 50 hours a week and wanted £500 net, then that's £10 per hour net.
With tax code of 647L that's £13.42 per hour Gross. (Net to Gross calculation thanks to KISTAX.com) Your annual Gross salary would be £34,997 This is getting close to the Higher Rate tax - see Rates: Income Tax Your Net pay is £26,071
In 2011/12 tax year, the personal tax allowance increases to £7475 (was £6475). I don't think the tax calculator does this yet but as this change is £1000 that is quite a lot of income which becomes non-taxable. What difference does this make... well MrAnchovy did an example in this message thread where the difference was 2.75% Perhaps he will spot his name being mentioned and do a nice tax table for us.
2.75% may sound small. It is quite small but every penny counts and by agreeing a Net wage, you are in effect lowering your salary come April 2011 - as your Gross salary will drop, as it needs to keep the same Net salary. (Hope I've worked this out right)
So by agreeing a Net contract, I feel you are losing a couple of hundred pounds of salary, due to the change in personal tax allowance. Will be interesting to see what the actual figure is based on the figures I've used above.
>If this system were to change it would either take forever or require something major like a change in the law because I just never come across gross.
PAYE already requires that employers use Gross pay, doesn't it? MrAnchovy - is there tax law which says anything about salaries being Gross and then tax/ni deducted, rather than Net with tax/ni added on?
No change in laws needed in my view. Would be no point in having legislation specifically for nannies in my view... just complicates things and causes delays.
Samedi - have you ever had any other job? Try to think back as to when you first heard about Net wages. I expect it's either via an Agency, another nanny, or a employer/parent.
Calculator will show changes, nick.
Change the tax code box from 647L to 747L
Yes, I know that makes a change... I'm just not sure it's right as yet. Waiting for MrAnchovy to confirm the calculator will do 2011/12 tax year.
It won't change until a law is passed making it illegal to quote anything other than the gross salary for any employment.
It's so obviously pandering to domestic employers who pay cash in hand ie "This is what you can pay your employee if you're prepare to break the law; as opposed to this much larger amount if you insist on being legit".
A law change would remove a lot of the incentive to do this, as the amount saved would be reduced to the amount of employers' NI.
i blame the agencies - many advertise jobs in nett
i have only ever accepted gross in my contract... for the past 10 years.
really had to argue it with one family, who said "nannies are always paid in net" but i stood my ground too and was paid gross.
I nannied for man years and never once was I told the gross pay. I don't understand why a nanny would be.
'I don't understand why a nanny would be'
erm....for all the reasons listed above?!
I agree with the gross pay in contracts thing, but tbh I like jobs being advertised as net and I like thinking about my salary in net terms. It's easier on my brain and I don't begrudge paying my NI/taxes as much!
Maybe a net and gross figure could be given by nanny agencies/job ads?
Ooop north I always see gross pay so as such have always been paid gross, but I have lately been seeing net pay being advertised. I would also agree a gross wage.
>It's easier on my brain
Hope you are not saying that you are a bit thick and thus need things to be made simple for you? Other jobs are not advertised as Net, so why should nannying?
Even other jobs in Childcare are not advertised as a Net wage. Look at nursery jobs, they are Gross annual salary often. Example Job Search: Nursery Nurse
>Maybe a net and gross figure could be given by nanny agencies/job ads?
Yes, that could be a work around but has been used by some agencies for many years. Hasn't stopped other agencies only posting jobs as Net and hasn't stopped some nannies only thinking in Net terms.
The Net figure changes depending on someones circumstances anyway, so it wouldn't be the figure someone actually got... just an indication if there taxcode was the most typical.
'Hope you are not saying that you are a bit thick and thus need things to be made simple for you? Other jobs are not advertised as Net, so why should nannying?'
Yep. That's exactly what I'm saying . Maybe all jobs should be advertised as net?
'it wouldn't be the figure someone actually got... just an indication if there taxcode was the most typical.'
That's good enough for me...and it should be 'their' not 'there'
In my experience nannies ASK for their pay in net terms. It means they lose out from tax benefits but gain from higher taxes which, lets face it, we've had more of than reductions in the last 12 years I've been employing nannies...
Apropros of nothing, I've just increased my nanny's salary to reflect the outrageous cost of fuel...
We've always hired our nannies on the basis of a gross salary, but I've always had to work backwards from a net salary quoted by the nannies to get to that figure. It's all a bit a mystery to me how then when I put the (annual) gross pay in the contract, it get signed, as presumably it is not a familiar figure ?
To be honest all the rest of the workforce gets a gross annual salary and we all work it out by ourselves how much this will mean in net, nannies shouldn't be any different ?
I don't deal with agencies that quote in net, but that means that I can't use any of them... Once I quoted a gross salary to an agency (I stressed it was gross) and they told the candidate it was net, and much unhappiness ensued. I have found that generally agencies and nannies don't want to know about tax and expect me to explain it to them (so I have to be a tax consultant as well as the employer...)
What net pay is depends partly on your tax code and on your total income since April, including other jobs, which, as a part time employer, I may not know about. eg if the job is nanny's second job, then it is automatically taxed at 20%. That's a lot more tax than if you use the £6470 (or whatever) allowance. So, even giving an "approximate" net figure is difficult because I may be out by 20% (...and yes I know this is simplified).
If nannies want to be employed legitimately and have their tax paid, they should not just say "I don't know anything about tax" and leave the work to the potential employer, they should educate themselves and help the employers figure it out.
Agree. Forums like this educate both parents and nannies.
An agency being told a gross figure then advertising it as net is disgracefull. Agencies should know all about tax, many seem to recommend NannyTax (I do wonder how much commission is paid) though would be better to tell parents about several options, including doing PAYE on their own, as well as with help from payroll companies.
I have always worked in gross and will do to interveiws that offer net wages with a gross figure in mind. I also tell agencies i work in gross. and really think they should start educating the nannies on their books who don't understand.
With the internet and tax calcultors its really not that difficult!
I'm beginning to conclude more and more that it is the agencies that need to change. Do you agree?
Reasons why I think it is the agencies that need to change:
1. A nanny looking for their first job is likely (in my opinion) to approach agencies. At this point they first come across how nannies are typically paid.
2. Agencies advise parents. So a first time employer of a nanny is being told by an agency how to do things. Not all parents will question what they being told.
3. Agencies advertise jobs in magazines, newspapers and online. Those job ads are read by nannies looking for work, so if they keep seeing Net Pay figures they may assume Net Pay to be normal (where as non-nannying jobs pay Gross).
I can't imagine that there is any nanny that is able to say that they have:
never been to an agency
never seen a job advert by an agency
never contacted a parent who hadn't ever contacted an agency
I expect one, or more of those situations has happened. So if the agencies say Net Per Week, then nannies and employers assume that is how things are done.
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