Please help with nanny and holiday pay !

[whyismysoullost]

Hello,

I am in such a mess. We have recently hired a new nanny and I'm completely new to the whole set up regarding Pay role.

I am using PAYEfornannies as they have been excellent whenever I have queries but as you know, they cannot give personal advice.

1. I don't know whether I should take pay annually or pay her on the basis of how many hours she worked but this will accur a 12.07....

• she will be working 12 hours a week in December, 9 hours in Jan-June then 12 hours in July again.

2. Holiday pay: The nanny is off for 4 weeks in December and is coming back in early January. This is fine as we are away during this time. However, PAYEfornannies said as she wouldn't be accuring enough hours till December. She will only be entitled to 4.7 days of paid holiday (that's if we take the annualised pay agreement).

I don't think 4.7 days will be enough for paid holiday anyways. But I need your advice in regards to how many days or weeks should I pay her during the holidays whilst we are both away.

What did you agree with her?

Normally we would pay the nanny if we are not providing the opportunity for her to work (we'd be going away anyway and she has no choice in the matter). If she asks for the time off, it comes out of her holiday allowance or unpaid leave if her holidays aren't enough (assuming you're happy for her to take extra leave).

Did you discuss this at all? If you just agreed to her taking the leave you're in a dicey position - I'm in Ireland but I think the UK tax year runs April to March, if you can let her use holiday days she'll earn in the first quarter of 2020 that might help? Not sure about tax implications about using leave from another tax year though...

I think she needs to take most of the December as unpaid leave if she hasn't accrued enough Annual Leave. If not you will be paying her in advance for work she hasn't done yet and if she leaves or goes off sick any time before about April you may never actually get what you have already paid for.

Obviously this isn't a full time job, with only 9 hours a week for half the year and barely much more than that at other times. Rather than having a formal leave-booking system it is more normal with those kinds of jobs to just pay for hours worked month by month. You can then factor in holiday pay as part of payroll. A full time role of 35 hours per week is entitled to 5.6 weeks Annual Leave, which is 0.1077 hours of Paid Leave per Hour Worked. So if she works 36 hours in a month she has earned 3.88 hours of Paid Leave, so you pay her for 39.88 hours of work and she is deemed to have taken her Annual Leave at some point during the many many working hours when she wasn't working. Obviously she can take time off by mutual agreement with you if she wants to go see her mum/have a complete break/travel the world but that's unpaid because she has already been paid for her holiday entitlement.

Remember that whilst everyone has the right to Annual Leave, employers do have the right to say when that Leave can be taken. She is not entitled to take December off as paid leave and you have no obligation to pay her in advance.

I'm still a bit confused.

She's going back to another country to see family and we only just hired her last week so I strongly presume it was booked months ahead. Which works as we are away whilst she is.

Are you saying I shouldn't pay her holiday play in December, what about in January ? She said prefers her holiday to be paid in December

That’s about right you accrue them as you go

I agreed a number of weeks up front for her to take holiday and then paid her monthly, regardless of if she took any holiday or not. If we didn't need her due to our holidays then it was bonus time off for her. This way she got a set amount each month and could plan her holidays. For the first year she accrued holidays, so if she left within the first 12 months I'd have either given her money back for holidays not used or taken it out of her last pay packet.

So if she hadn’t arranged to go home what would you do? Would you pay her? I think that is the crux of this.

She will need to have worked for you for 3 months before she is entitled to a full week holiday.

Unfortunately the gov.uk holiday entitlement calculator is down for maintenance but based on a 12 hour week for every week she works she accrues 1 hour 17.5 minutes holiday for every week she works for you so to accrue a whole week (12 hours) she needs to have worked for you for 9 weeks.

Our nanny is term time only and accrues holiday each day that she works (roughly 1hour of holiday per day worked - not exactly that but we've got a spreadsheet set up that works it out based on exact hours worked)

When we get to the end of a half term our nanny decides whether she wants it to be paid during the break or saved up for next time.

We discussed this before our nanny started working for us and it is laid out in the contract. The other option is to add the holiday pay onto her basic salary, so it is divided equally over the year and she doesn't get paid extra when taking leave.

Either way, I would be very wary of her using/being paid for holiday that hasn't been accrued yet.

I would say you need to have a discussion with your nanny, make a decision and then write it into the contract.

I agreed a number of weeks up front for her to take a holiday.... what do you mean by this ?

Ok, I'll do the accrue holiday 12.08%.

Is everyone staying that they wouldn't be paying the nanny whilst she's on holiday. PAYE said I can choose to pay her for the weeks she's off..

We are in the process of writing up a contract with the payroll company.

Sadly OP the 12.07% calculation is no longer correct - that’s why the government pay calculator has been “down for maintenance” for several months (since the Harper Trust v Brazel case) - because they have no idea how to now create an accurate holiday pay calculator!

There are two separate issues to consider - holiday accrual, and holiday pay.

Accrual might still work at 12.07%, but pay does not - not for employees that work variable hours and at different times of the year.

You have to calculate holiday pay based on the average previous 12 weeks earnings (not including weeks not worked) - so holiday might accrue over the year, but actual pay would be different depending on when the holiday was taken - ie during/after either a 9 hour week or 12 hour week.

You also need a contract that clearly outlines when the annual leave year runs from/to (which is up to you) and how pay is calculated.

If you decide your leave year runs 1 Jan-31 Dec (for example) then she’d have to agree to take unpaid leave if she hasn’t accrued enough holiday.

If she would have enough holiday over the whole leave year then you could allow her to take it and remove it from her allowance for the year. If she resigns before she has accrued it and has overtaken leave, you need a suitable repayment clause in the contract to deduct it from her final wage.

It’s incredibly complex - you need a company that know what they’re doing!

It's hard to get into the mindset of being an employer, but you really need to approach this as if she has an ordinary desk job - if you decide you don't need her, you can't just decide not to pay her (assuming she is a regular employee contracted for specific hours).

In my experience you have to be 100% clear when you agree holidays - it sounds like you didn't discuss it with the nanny, who may assume she'll get paid leave as you didn't mention it may be unpaid at the time.

In your shoes, depending on how hard it was to find a nanny, I would decide what I'm willing to offer (dip into next year's holiday she will accrue, unpaid all the way, whatever) and talk to her. This also depends on whether she asked not to work, or if you are travelling anyway so would not offer her the opportunity to work in any case as said above - in the latter case you have to bear the cost as she did not opt to take the time off herself.

The legal answer may be that you don't owe her anything, but is that fair and will it result in a happy nanny?