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

[nexusseven]

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???

What happens to disabled adults paying carers (with direct payments via the council).

Is there any exemption? Or are councils going to recalculate their hourly rate, which is supposed to include both a set hourly rate for the carer, plus money for the disabled person to pay for emergencies, job advertising, insurance, employers national insurance contributions etc.

This would kill me if it really is happening. I plough in £1000s of my own money to even get anywhere near the level of care I've been assessed as needing. I will be bankrupt or deteriorate massively, or both unless this additional employer responsibility.

Oh dear.

Miscellaneous Assortment: I think any impact for you would depend on whether you are the direct employer of the individual. Fr

Oops sorry clicked too soon....
From what you describe it sounds like you buy the service from the council by paying them an hourly rate (and the hourly rate will then include a contribution to the council's overheads of employing the carer eg NI, sick pay etc). If this is the case then there shouldn't be any difference from this measure, as larger employers aren't usually eligible to reclaim SSP (unless a very large proportion of their employees are all off sick at once which is pretty unlikely with an organisation that size).
If the council contract the service from other providers and those are much smaller employers I guess it could have an effect, but then the council could just shop around for a cheaper contract.
Worth asking, but don't panic would be my guess.

Good luck!

This is statutory sick pay? Do legally employer have to pay it then?

Well there you go - Osborne is a stealthy fucker just like Gordon was.

Government will argue that if you can afford a nanny then you can afford this. Forgotting that if people are just about affording a nanny they will will think twice as extra costs creep in. Thus reducing the number of nanny jobs available.

Hiring a nanny gives them a job and gets both parents back into work = win for the economy.

Like misc, I employ a carer - for my disabled child. I employ the carer directly, though a (small) % of her cost is covered by the council - the law says the council should try to fund this sort of arrangement in preference to employing their own staff. So tbh nannies will be the tip of the iceberg on this one: there is an entire army of part-time carers out there looking after the elderly and disabled, and unlike Nanny employers you can't brush it off as a "lifestyle choice" or say they can afford to pay. These are not people with savings, yet they will somehow have to fork out for replacement carers while paying sick pay at the same time.

The impact on this group will surely be out of all proportion to the money saved?

R3dhd3 blimey yes could be. When you say you emplopy the carer direct, do you currently have to administer PAYE, SSP, maternity pay etc? And are there agencies that help with that sort of thing (as there are for nannies?)

From the telegraph:

"DWP has scrapped the relief because it feels the rebate does not provide an incentive for employers to get sick employees back to work.
The money “saved” is earmarked to fund a new Health and Work Service being set up for small firms. Any worker off sick for more than four weeks must be referred to the new body."

The Health and Work Service apparently advises people how to go back to work.

"Ministers say employers will save money overall by having fewer staff off sick."

So the good news is that because you won't let your nanny have sick leave, you will save money.

Or in other words, the government has saved money by no longer allowing small firms to recover statutory sick pay costs.

Misc and R3: have googled a bit and looks like misc is right to worry. Yes if you are the direct employer, rather than via an agency, then looks like you will be liable. I haven't seen any references to exceptions (yet!), and the promised Health and Work service doesn't exist yet (I heard October
maybe?)

I didn't know direct payments for adults w disabilities could be administered like that. So the logical next step would be to ask whether the council will be adjusting the hourly rate to cover the additional risk of SSP (or perhaps set up some kind of contingency fund across all people receiving direct payments in their area to be bid for if/when the need arose, which would probably make more sense: sharing the risk rather than attempting to account for it at an individual level?)

Yes, Nexus, I am her employer in exactly that sense, and that is how Direct Payments work. (Part of the point of it is to remove council overheads by getting the recipient to take on employer responsibilities: the tradeoff is that you get exactly the service you want, so for many it is worth it.) The local authority let me reclaim employers' liability insurance, but they don't let me reclaim payroll costs from the agency. I produce monthly pay slips, pay tax and NI and administer SSP (at present!) If there were an insurance scheme to cover this (as there is, for instance, to cover contractual sick pay if you are a larger employer) then I'd cheerfully buy into it as another cost of employment. But I can't see that happening unless, as you say, the local authority organises it or buys into it on our behalf: it's just too small an amount of money from too small a group of people to be worth the setup and marketing costs to an insurer trying to market it directly.

I can see why you would be annoyed, but this isn't a tax any more than the recent change in housing benefit rules was a 'bedroom tax'. Withdrawal of a benefit or subsidy isn't a tax.

It's still pretty hard on small employers to have to find SSP and I think it is a poor decision for a supposedly pro-business government.

15 years ago there was not much market for nanny public liability insurance, whilst some nannies may have known about it, I expect many did not. Roll on a fee years and the Childcare Approval Scheme I think made insurance a condition, though I could be wrong on that. Certainly the Ofsted Childcare Register did make nanny public liability insurance a requirement. Yet there will be many nannies out there who do not have insurance, as they are not needing to have Ofsted registration.

So the smaller insurers, those who specialise in childcare insurance, may well look at offering a policy. However the figures need to work both for the insurance broker, the underwriters and the the parents. The direct payments market makes their overall market bigger, as it means the policy can be suitable for small employers who have a nanny, or a carer, or indeed it may be suitable for any business that has just one employee.

Problems will be the cost of the policy and the conditions under which it will pay out. It might not cover short periods of sickness only long periods, such as 3 months plus.

Perhaps if enough people contacted certain insurance brokers (MortonMichel comes to mind as they do nanny and childminder insurance) asking about if they do a policy to cover employee sickness, then maybe they would feel there was a market for it and try to create a product.

Well I'm already in debt to pay for carers, so adding in a potential 2.5k per carer (x3)... That means I'll be screwed.

I wonder what the legal position is? Council have to provide care to the amount they've assessed, so using direct payments is not obligatory... However their standards of care aren't exactly mine, horribly bad alternative in fact. So, I wonder would a council pay out extra to keep an existing DP set up going, or would they let the whole thing collapse and then pay out for more care but direct?

The issue is for me that the council cannot provide care for me as a disabled adult and parent of a preschooler. Which is why I ended up with direct payments. I worry about this alot.

Btw to be clear. Direct payments don't work in the way you described further up.

I am the direct employer for 3 carers, not agency carers, not council carers.

I am wondering whether I'll have to use people who are self employed?

SSP that is reclaimed is currently funded through taxation (ie, from everyone). Provision of a benefit to a third party is generally paid through taxation. SSP to the nanny is just one of those benefits.

Continuing with the benefit but altering who pays for it is an alteration in the tax situation. It would be a cut in benefits if the nanny's SSP was cut (which it isn't, and shouldn't be). It's a new employer tax on the cost of employing people.

TBH it doesn't really matter to me what it is. I do however, pay my nanny out of my already taxed income (unlike companies who employ chauffeurs) which makes this particularly galling. I am very concerned about the situation for those employing carers though. That can't be allowed to stand. The government was all for handing control of these employments to individuals because of lots of buzz words like "choice" and "control". But this could really make people's lives impossible. Who should get representations on this?

The Treasury would be the department to complain to.

CAS didn't have insurance as a requirement, the vOCR did, so is say the shift has been over 10 years and now most nannies will have insurance whether registered or not.

Nannytax already do nannyinsure, they may set up a policy for parents to cover this. Likewise MM have a separate ELI package so they might be able to include it in that.

Can someone explain the insurance point to me? If my nanny has insurance, surely that doesn't get me out of paying her SSP if she falls sick?

Presumably I would need some sort of employer insurance - perhaps that is what nannytax and the others will look at offering?

Nanny has insurance in case a child falls off a climbing frame and is paralyses or burns their arm and can't become a model in later life and it's their fault/they were negligent. You/the child can sue for compensation.

You need insurance in case nanny has an accident in your home, and now potentially to cover the costs of sick pay. Presumably the companies would work out some formula for how much SSP is administered annually, and the payroll companies have this info, and charge a premium that will cover the cost of the average number of sick days per nanny.

Here is the helpful response from the payroll agency I use:

"There is nothing that we are aware of that you can do instead. SSP has to be paid as a minimum if your employee is sick. We do not know of any insurers who offer this. Why not give your insurers a call to ask the question."

I did also call Morton Michael and they did not seem to be aware of the change and had no plans to introduce a policy

I have booked a call with an insurance broker who offer corporate income protection policies but not sure if this will be the right option, or may be very expensive. Will update when I hear back

Well, if anyone was going to cover this, it would be fish insurance (specialists in insuring carers and those who employ them). And they don't, as far as I can see from the policy document.

I've called the payroll company. They confirm that it is precisely as bad as it looks. It's worse for people employing carers rather than nannies - because below a certain threshold SSP doesn't reduce if you work shorter hours. Potentially you could employ someone for a handful of hours a week, and have to pay out ALL of that money in SSP if they are long term ill and have no money whatsoever to pay a replacement.

This is worrying for me. I have a part-time nanny and was not aware of these changes. That is a huge financial risk for an individual employer.

It will definitely push more employers towards using nurseries instead of nannies, which is bad news for nannies.

The thing about insurance against sick pay is surely they'd be v picky about who they covered and how much it cost? So higher premiums for those with characteristics more likely to need time off? Unless any provider had a v large share of the market and could share risk between employers (which is exactly what the previous scheme did?)

Exactly, nexusseven. There must be very few nannies who need to take long-term sick leave. The burden of that should be shared widely (either across all nanny-employers or across all tax-payers as has been the case until now). If it falls disproportionately on individual families, it could ruin some. Nannies are not currently the preserve of the very rich, but could well become so.

The largest payroll provider I know of has 6000 clients. Is that enough to spread the risk? I don't know enough about insurance to answer.

Gosh - so glad I am beyond the nanny stage, but this would have crippled me when one nanny took maternity leave, then another went on long term sick. SSP is indeed a benefit that hitherto has effectively been payable out of taxation (like job seekers allowance etc etc). the employer was merely acting as an agent for the payments (and yes, they are taxable). This change, assuming it is correct, affects only small employers of domestic staff. It won't hit other small employers much because of the NIC 2k "allowance" and it won't hit larger employers because they will have sufficient NICs to cover their SSP payments, although I think there may be some rules limiting their relief.

I will look into this further (in my professional capacity) because I am shocked!

It''ll put me off employing a nanny unless insurance is available.