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Part-time temporary nanny starting - how to manage employment/contract?
I have a nanny about to start with us - my first time employing a nanny.
She will not be working fixed hours every week; it will vary based on her availability. She will only be with us until the start of September when she returns to college, at which point she will only be able to do the odd Friday, or weekend evening.
I'm more than happy to set her up as an employee, if that is the correct thing to do, but I can't get my head around how to structure her contract, given that she won't have fixed hours per week, and our arrangement will change massively come September.
She has not had an employed role yet, so she is no wiser on the ins and outs of it than me. I run payroll for my own ltd company, so I understand the logistics of that, but I'm not so clued up on setting up a new employee who hasn't previously been employed - will I have to fill out a P45 anyway?
Any advice gratefully received!
Yes unfortunately all wages have to be given to the tax office. Two choices, easiest would be to add her to your company payroll scheme and in her employment contract say you are employing but the company will do the paperwork otherwise you will be hassled with papers from the tax office every month. The option of hiring her privately is very time consuming and after 16 hours per week she may have to pay tax/NI and you will need to pay the company payments to the tax office. She will also be entitled to pro-rata holiday pay but not sick pay unless you agree to it. She will need a contract of employment regardless. The paperwork is just something you don't need with a small child around. Been there, done that.
Sorry forgot to say she will need P45 but if its her first job you will need to fill a P46 (If I remember right) first to get her started. P35 needed at end of tax year, wage slips every week/month as you want to give.
This is where zero hour contracts are useful. If you need them to work rather than giving them the option to work then you could have a contract with a set number of minimum hours to be worked per month. You would then amend that in September.
You would only give a P45 when she leaves you employment completely.
When starting you would use the New Starter Checklist to establish the initial taxcode. You would do a FPS each time you paid her.
Agree a Gross salary, tax and NI deductions will change quite a bit.
Are they under 21? If so they may have a special NI code.
Talk to your accountant. It may not be a good idea to mix business accounts with personal.
Your nanny is your employee not your company employee so I would have thought that it needs a separate PAYE scheme.
Thanks nannynick that all makes a lot of sense.
I was intending to set up as a new employer - it would be totally wrong for the nanny to be an employee of my ltd company. I had a discussion with my accountant, but they are not very clued up re nanny employment, and couldn't tell me much beyond what I had gathered through my research anyway.
Thanks for the note about under 21s, that will apply in this case.
I'm getting my head around it all, slowly!
More about the NI code for Under 21's - it reduces the Employers NI. No change to employee NI.
Something to keep in mind when looking at your budget, as once they are 21 then the Employers NI amount will increase, though like all National Insurance it is based on the Gross salary being paid at the time.
If your accountant is not great at this stuff, then consider using a nanny payroll company. They charge around £20 a month which may see quite a lot but if you do it yourself, how much is your time worth?
When looking at payroll companies, have a look for which ones will give you a refund on unused months, as your nanny will only be doing a few months and whilst they may continue in September they might not, so you don't really want to be paying payroll admin costs for a whole year if the nanny did decide not to continue and if you subsequently found another solution for the occasional Fridays and evenings.
NannyPaye offers a refund after an initial 6 month period.
PayeForNannies offers a 3-month subscription.
NannyMatters says "could be for a lesser period subject to our agreement."
You will also want to check what additional costs may be incurred if your nanny left and you decided to get another.
She doesn't need to be employed.
She is telling you when she is available, rather than the other way round. You're not giving her set hours, you're asking if she's free on certain days.
If you're concerned call HMRC and they can confirm.
I think I agree that this sounds like the kind of set up where she should be self employed.
If she is setting the terms - ie choosing when she works, that doesn't sound like you are employing her.
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