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Nanny hidden costs(14 Posts)
I'm thinking of hiring a nanny (shared with a friend), and I'm trying to make sure I understand the full possible costs. Some of my questions might seem mean, but I am genuinely not trying to get out of anything - just making sure that this is something I can afford (otherwise I'll choose a different type of childcare). Any help appreciated - I'm a novice at this!
1. On top of Gross pay (i.e. with PAYE and NI contributions), the direct costs I can see are:
- Employers liability insurance
- company to do payroll
- food and activity money for the nanny and the children (do you usually only pay petrol money for activities during the day, or also their commute to your home?)
- alternative childcare on holidays and the days she is sick
Is there anything else I've missed?
2. We'd like the nanny to be Ofsted registered, so that we can use childcare vouchers from our work. If she isn't already Ofsted registered, would you expect the employer to pay for:
- the registration?
- the first aid course? (we'd obviously like her to have that even apart from registration!)
- I think we'll only consider applicants who have a childcare qualification, so that part of the registration should already be OK.
- I'd assume that she would pay for the public liability insurance?
3. I think we would go down the route of having a maximum number of fully paid sick days per calendar year and then just statutory sick pay. Have I understood correctly that statutory sick pay is paid back by the government, since we're a small employer? (We'd also plan to pay her for days off sick for anything caught from the children, but in the contract that would be at our discretion).
4. I read that holiday pay accrues during sick leave, which I'm assuming is all sick leave, not only the paid sick leave - i.e it's unlimited. If the nanny ends up with a long term sickness (e.g. more than 6 months), can we terminate the employment? This is one of the ones that seem mean - but unlimited costs scare me.
5. Another mean-sounding one: if the nanny becomes pregnant, we would naturally have the duty of care of any employer, e.g. paid days for maternity appointments and ensuring her environment is suitable during pregnancy. If she has a pregnancy-related condition which means either she needs lots of extra medical appointments or she has a lot of pregnancy-related sickness, does our usual contract apply regarding the maximum number of paid sick days? I know that would be awful for her, but I can't afford to pay two full lots of childcare for up to 9 months (i.e. her and also replacement care).
6. Reading about maternity regulations, it seems that if an employee isn't able to do the tasks you employ them for, you have to find them other work or pay them fully while they are on leave. I'd expect she could continue to look after the children (two 1-year-olds) during a normal pregnancy (although I'm not sure about lifting them - what would happen with that?). But if she has a difficult pregnancy, e.g. severe SPD, and can't care for them, then would that be sick leave or would I would have to continue to pay her anyway through her whole pregnancy? What can I do to mitigate that - is it possible to take out insurance or something? I know it's not that likely, but again it opens me up to a risk of paying for two lots of childcare for 9 months.
7. After the (hypothetical!) baby is born, I know that I could reclaim any maternity pay from the government, but that holiday accrues and that would be at my cost. That's fine, since I know what the cost of that is.
8. We expect to need a nanny for about 1.5 to 2 years, depending on whether/when either of us has a second child. We'll be up-front with applicants about that time-frame. When we no longer need a nanny, would we have to pay redundancy pay? I read that it is 1 week per year worked. If we did a fixed-term contract (e.g. a year, and then extend 6 months at a time) rather than a rolling contract, am I right to think that we wouldn't need to do redundancy? Do nannies accept that?
Thank you so much to anyone who has made it to the end of the post!! I know that it's a lot of questions, and that it seems mean and nit-picking, but I really need to make sure that I fully understand what I'm getting into.
Mileage is only for mileage done on duty, not travel to/from work.
Mileage rate 45p per mile (this is max amount before it is taxable). You can pay less but you want the nanny to maintain their car to a good standard, servicing is not cheap - my next service will cost £350 minimum. Fortunately some services are cheaper - guess they do different things depending at different service intervals - can you tell I know little about cars!
Redundancy pay would apply of it was fixed term contract to my knowledge, as it is continuation of service. However redundancy does not apply until 2 year point, so you are likely not to get to that stage.
I would not put any paid sick days in the contract but for your cost calculations it is a good idea to consider how many days you would pay before SSP would need to be used.
Would not worry too much about long term sick, maternity, until those things happen. It is hard to plan for. Keeping in mind that holiday pay accrues during maternity pay is a good idea though as you are right that it is not reimbursed via statutory payments.
no redundancy at end of fixed term contract but nanny may not accept it - this seems to have lots of answers
I disagree. Whilst a fix term contract automatically ends on the agreed end date, if it is extended then redundancy pay can become a factor.
There was a change in legislation in October 2002 which meant that if contract was renewed or extended after this date and the fixed-term employee has at least two years' continuous service, they will be entitled to statutory redundancy pay.
The Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 - for those who want to look up the legislation.
The end of the fixed term contract is a dismissal on grounds of redundancy, so if there was continuous service of 2 years or more then redundancy pay would apply.
If using fixed term contracts, look at UK based university websites, specifically at their HR documents as many make them available. You will find things like procedures for ending a fixed term contract, which may be useful to read so you know how to end it correctly.
Personally I would avoid using a fixed term contract unless you know the exact end date of the contract. Just use a normal contract instead and have quite a short notice period on it.
There may be more recent legislation, been a while since I worked in HR. Would doubt that any changes over the past 11 years have removed the right to redundancy pay for fixed term employees whose contract length meets the criteria for redundancy pay. Happy to be corrected though as always useful to update knowledge even if I no longer do recruitment/HR.
Christmas present for nanny
Birthday present for nanny
Overtime payment, if you are late home and can't give time off on another day.
Cost of creating a contract between you and the other family.
Agree a Gross salary, not Net.
Don't forget extra household costs such as the heating being on all day in winter, and wear and tear which could be quite a bit with two young babies in the house.
Cindy - That's good to know that redundancy pay doesn't kick in until 2 years service. But I'm afraid I can't help worrying about long term sickness etc! I know I can't really plan for it, but at the moment it feels a bit like signing a blank cheque - which I might not be able to afford. I want to know what I could end up being liable for in order to make the decision about whether to get a nanny or not.
You can't claim all the Maternity pay back, only SMP element so you have to make up to 90 percent of usual wage out of your own pocket for 6 weeks (as well as pay for someone to cover). Also have to pay any bank hols missed when on mat leave in addition to accrued annual leave.
I think that a bigger risk is the nannyshare aspect - how will you coordinate annual leave? What will happen if one of the four parents involved is made redundant or becomes ill or even pregnant earlier than planned?
Sounds like having a nanny is not for you. Have you looked at other childcare options? Unless you need a really early start time or really late finishtime a childminder or nursery may be better for you as then you do not have employer responsibilities.
If someone was on lomg term sick would that be SSP only and covered by statutory payments?
Google: Hmrc E14
That will get you the employer guide to SSP. Looking at page 33 it seems that you may be able to get 87% of it funded, though I am not fully sure.
SSP is for max of 28 weeks.
Talk to a nanny payroll company, perhaps they can put your mind at rest about how often long term sick happens and how employers with only one employee can claim funding for most of the amount.
What are you comparing? Nannny/nanny share with childminder, or nanny/nanny share with nursery?
Nursery would normally provoide things like nappies, so you would save this if you went with nursery.
Nursery and childminder would normally provide all meals and drinks so you would save this if you went with nursery or childminder over a nanny.
If you went with nursery, you wouldn't be paying for things like toddler groups, classes , soft play etc that a nanny or a childminder might want to take your child to.
We have a nanny. Other additional things are cost of heating a house all day that you wouldn't have if you went with a childminder of a nursery, cost of nanny and child's food and drinks, cost of activities, cost of petrol to get to these activities or visits to nanny friends' houses, any additional toys or arts and crafts or whatever materials that your child would be using at home during the day, Christmas and birthday gifts for nanny, any bonus you might pay nanny etc.
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