Stealth tax on working parents? Little publicised change from April means families with Nanny could face £2500 bill for statutory sick pay *in addition* to replacement childcare costs

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This must be a candidate for a Mumsnet campaign!!

Employing a Nanny is about to get much riskier. Previously, as a micro employer, families could reclaim Statutory Sick Pay from the Government if Nanny needed time off work through illness or injury. From April this will end.

So if Nanny has the bad luck of falling seriously ill, needing an operation or breaking a leg, families will need to foot a bill of up to £2,500 in SSP in addition to the cost of replacement childcare.

NB the cost is the same even if Nanny is part time: SSP is a flat rate to all those earning over £109/wk.

The change has been really badly publicised. Obviously it's bad news for all micro-businesses, and is just starting to attract some adverse comment amongst accountants, eg:

www.accountancylive.com/statutory-sick-pay-reforms-%E2%80%98catastrophic%E2%80%99-small-firms

But no-one seems to have picked up the serious implications for nannies and their employers. Financial liabilities for families, and therefore likely fewer jobs for nannies. Overall a serious blow to childcare options for working families.

What can we do about it???

If insurance was possible how much would you pay per year? Are you thinking 40, 60, 80, 100, more?

Remember though from April 2014 there is a new change coming in where you no longer have to pay the first £2,000 of national insurance for all employers (this is per employer not employee) so you will infact BE SAVING £2000 per year from April 2014.

If your nanny is not sick then you will be better off. If your nanny is sick then you'll have to foot the bill for the SSP but how likely is it that she is going to have so much sick time every year to incur £2,000 of SSP.

I didn't know that either chasdingle.

see here

www.hmrc.gov.uk/budget2013/employers.htm

so most people employing nannies are generally going to be better off !!!!

It's not a tax. It's a cut in benefits. Quit whining, you're not on the street or visiting a food bank.

Have they brought in the requirement for employers to contribute to Nannies' pensions yet?

auto enrollment is gradually being phased in with the larger employers first and smallest last. At a guess it will be around 2019 (can't be bothered to check exact date) when most people employing nannies have to comply.

I believe that there will be an exemption from the £2k employment allowance if the Class 1 liabilities arise from a person who is employed (wholly or partly) for purposes connected with the employer's personal, family or household affairs

So nannies/domestic staff won't count basically. None of it is written in stone yet. It's (the employment allowance) going to be introduced sometime this year but the withdrawal of recoverable SSP is happening much sooner.

I think we'll see a lot more people being let go from small businesses within their first year for mild sickness tbh.

Chasdingle: no unfortunately people employing nannies are excluded from the national insurance allowance.

www.telegraph.co.uk/news/politics/10622751/Middle-class-families-denied-2000-nanny-allowance.html

So for the purposes of SSP we are a business, but not for NI relief.

BTW I have no problem with the pensions auto enrolment thing - that's a predictable and (relatively) smaller scale cost to factor into the overall decision of whether to hire a nanny. (It starts from 2015-2017 depending on when the nanny contract starts btw www.nannytax.co.uk/auto-enrolment-pensions). It's also relative to the amount you are paying the nanny, whereas SSP is a flat rate so if you have a part-time nanny you're just as exposed as with a full time one.

It's not a question of whether the nanny has £2500 of SSP every year - just once is enough to push many families (and other micro businesses) into severe difficulties. That's why the ability to reclaim was there in the first place - to share the cost of an unlikely but financially serious event for people creating jobs. I would imagine many older nannies and/or those with any history of health problems will now be disadvantaged when looking for employment - which means they'll end up signing on and costing the state more.

It's not a cut in benefits. The nanny still gets SSP, as she should. But now the employer pays instead of the state. That's a very big burden for ordinary individuals to take on - the whole point of having large employers and the state meet this is that they can spread the risk so that it's negligible for any one organisation whereas for individuals it would be a huge and unpredictable burden. To load this onto single individuals is asking for trouble. I guess the only solution is to ensure for it but I haven't seen any insurers offer this yet.

Will it stop people employing a nanny, stop people starting a small business... I don't think so.

It will stop me from employing a nanny.

yes of course it will. £2500 of unforeseen costs are not sustainable for most families or people who run very small businesses who are looking at starting to hire one or two people.

Joinyourplayfellows - does that mean you have other childcare options? Thus now more likely to choose that option, or will it prevent you returning to work?

Likewise, it will stop me from employing a nanny.

I am shocked, this is a big financial risk, yes I do have other options, I us a financial spreadsheet which I update to compare. I consider taking personal leave, temporary employment etc to cover sick from nursery. I employ a nanny but the cost has been slightly more for a nanny but worth it for the benefits, this extra risk could be the tipping point

Parents who currently pay their nanny in full on the first few days of sickness may well stop doing that as the money will be needed to cover the SSP if nanny is off for a long time.

What sort of risk level is there?

A nanny being off on sick leave for less than 4 weeks... certainly quite likely, may vary from being off a day to being weeks.

A nanny being off on sick leave for 4 to 8 weeks... yes, likely to happen in event of a break to a bone. How long is a cast on typically?

8 to 12 weeks - certainly possible.

A nanny being off on sick leave for over 12 weeks... is that a less likely situation? Cancer treatment could involve 3 to 6 months off work.

Repeated occasions of sickness - certainly could happen, could break a bone and then break another one (or the same one).

Do you feel there are different risk levels to the amount of time off that someone may have in a 1 year period? If so, maybe the insurance industry would look at that and come up with something for the longer periods for which underwriters may consider is a risk they can cover.

SSP for 2014/15 tax year is £87.55 per week. So 8 weeks would cost the employer £700.40, 12 weeks £1050.60
NICs LEL goes up to £111 per week/£481 per month. A nanny working one day per week may earn enough to qualify and would get the full £87.55 of SSP as far as I understand things.

Do all you nanny employers only offer ssp then?
Whenever I have been a nanny my contract always includes 6 weeks full pay, 6 weeks half pay and then ssp would kick in. This has always been the norm.
Same with maternity leave. 3 months full, 3 months half pay, they regular maternity.

As a nanny I have never has sickpay beyond SSP written in a contract.

I offered my nanny 4 weeks sick pay and then SSP

She is leaving us next month and we are getting an au pair

My payroll agency haven't alerted to me these changed either

I've had 2 weeks sick pay in my contract, but most nannies I know have ssp only. I've certainly not seen a nanny contract with 6 weeks sick pay and have never seen a contract for a nanny with enhanced maternity pay.

Surely as a nanny you agree to the contract though? I simply say this is what I expect, happy to sign and work if you agree, happy to work elsewhere if not. Iv always had the enhanced sickness and maternity. Never taken more than the odd day sick over all the years so never needed. However I can't afford to break a leg and not get paid.

The standard contract supplied by the payroll agency only provides for SSP and SMP. As an employer I could not afford to pay 6 weeks full sick pay or enhanced materinity pay as well as pay for an emergency nanny. In practice I have paid full pay to my nanny for the handful of days she has been off sick (and have taken annual leave to cover childcare for those days).

But even if you get full or half sick pay, that will be inclusive of SSP which your employer will have previously claimed back from HMRC.

Paying sick pay plus an emergency nanny would cripple me financially. Employers who do that must be very wealthy. My nanny costs me over half what I take home each month.

I always assume that a nanny will have income protection insurance if their income is vital, as should anyone really.