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???

There is nothing changing about SMP recovery (or SPP, SAP etc.), only recovery of Statutory Sick Pay.

Thanks for clarifying MrA.
Still SSP is £2.5k so quite bad enough given the need to pay replacement nanny plus taxes T the same time.
Marginal anyway.
It feels like the last straw.

fwiw, I have had a very helpful response from Carers' UK - no use at all to Nanny employers, I'm afraid, but relevant for those receiving Direct Payments. Broadly, the law covering Direct Payments says Councils should also build in support for on-costs like NI, recruitment, employers' insurance ... and SSP. Now, it doesn't read that they have to reimburse these costs exactly (alas) but it does read as if, should an insurance scheme exist for this new cost, the LA ought* to increase your DPs to cover it.

• ha ha ha. We all know what a fight this is going to be with some LAs. But it's a light at the end of the tunnel.

I contacted the FSB this morning as I hadn't heard about the change, or didn't realise what it was, and I thought I was pretty "plugged in". Here is the very helpful and prompt response...the recovery scheme is (unhelpfully) called the Percentage Threshold Scheme (PTS):-

"Yes unfortunately it is true. We have been lobbying against for some time.

The Governments rationale for abolishing the PTS is that it is complicated and not widely used. They also argue that the current system does little to incentivise an employer to facilitate a sick employees return to work. While it is true that relatively few employers use the PTS, thats because long term sickness absence is relatively rare in small businesses and because of the way PTS is designed - it is targeted at smaller firms with high sickness absence rates (employers cannot recover the SSP equivalent of the first 13% of their monthly employer NI contributions).

Nevertheless, the PTS can be invaluable for small businesses who are unfortunate enough to have an employee or two off on long-term sickness absence. When surveyed back in 2011, 9% of members said that sickness absence cost them >5k over the course of the previous 12 months. Weve stressed this point in our lobbying efforts.

The Government intends to use the savings to help fund the new Health and Work Assessment service - this will consist of an advice line to employers and employees, and a assessment by an Occupational Health specialist at or approaching 4 continuous weeks of sickness absence. DWP argue that this new service will facilitate an employees early return for work, thus saving the employer on SSP costs. In reality however, there will be many individuals who will not be able to return to work but yet they the employer will still have to pay SSP. Furthermore, not all employers will be able to afford to pay for workplace adaptations recommended by the OH specialist.

We have argued that rather than scrap the PTS altogether, the Government should establish a simpler SSP recovery mechanism for small and micro businesses and that this should be loosely modelled on the system for recovering Statutory maternity pay, but with a lower eligibility threshold to target it at small firms. We have written to Lord Freud, the welfare Minister, twice to make this point and more recently have written to the Work and Pensions Secretary, Iain Duncan Smith, and the Business Secretary Vince Cable to attempt to get the government to retain some form of SSP compensation for micro businesses"

Thanks for that. V helpful.
I am still really upset about it.
One of our old nannies in the ended up on extended sick leave through no fault of her own and no way could she return to work.
I had a husband overseas at the time and had to spend a fortune on temps and no spare cash, the additional financial stress would have been the end if I had had to find SSP too.
So we don't get the NI reduction but lose the SSP help.
Do you think this would work as an e-petition?

r3dh3d that's why I thought the councils need to step in. However as its a potential cost versus a necessary cost, I think councils will ignore until the moment there is an actual legal imperative to help disabled people in this situation.

I've had to issue a job offer today for a carer, and I really don't want to knowing it leaves me open to this - I really need to use self employed people now, but I'd already got almost all the way through the recruitment process and desperately need the help.

I do think someone/ a charity needs to take this on for recipients of direct payments. I wish I could make some noise as I'm good at that sort of thing, but I'm disabled and struggling, life is an uphill battle when you're disabled and relying on carers. It's the double bind I keep finding myself in. Hard to be an advocate for change when you can't even wash your hair. Grrrr. Hate this.

I had a look at the report the Gov was acting on...it recommended withdrawal of the recovery scheme because "there was insufficient incentive for small employers to manage sickness absence". FFS, it's like these people work in the public sector or something!! Of COURSE small business owners don't want staff off sick, but we can't MAKE them come to work if they're sick, and there is a lot less malingering in the private sector anyway...so they are most likely...er...SICK, you dumbasses!

I wonder if the effect, particularly on childcare arrangements such as the OP's, and the adult carer arrangements, are an unforeseen and unintended consequence of the withdrawal of the recovery scheme. THAT might be worth an e-petition, but for chrissakes do not use the word "nanny"!!!!!

I have now spoken to ACAS via the employers helpline regarding our situation and wanted to let people know how useful they were. They were able to advise me with much more clarity than the payroll company. If anyone else finds themselves in the same situation as us, I would recommend discussing it with ACAS.

Have asked my local disability advocacy charity. I'll let you know what they say...

Just coming back on to this thread to say that I have today received a letter, addressed to me personally, from David Cameron on number 10 headed letter paper telling me all about the employers NIC cut and how pleased I must be about it.

As far as I know, a) employers of nannies are not eligible so this is poorly targeted and b) why the hell is the government using taxpayers money to puff this up? It is full of lines like "For businesses and charities like yours, on the front line of the economy, we know it has been difficult. We came into government with a long term plan to rescue the economy ...thanks to your hard work blah blah blah". And I'm not even eligible, despite my 'hard work'.

Am quite cross.

Can I ask is there still a minimum amount of 111.00 per week? I am intending to employ carers for my disabled child - was thinking of employing two carers for ten hours each per week, this would probably put me just under the 111.00 per week, would this mean that I wouldn't have to pay SSP?

Qangle I got the same letter. I was spitting mad about it. Talk about rubbing it in. Particularly as my nanny has just had a run of sick leave...

What a cock up. If the purpose of the letter is to promote the policy of the current government it certainly shouldn't have been paid for by the taxpayer, a FoIA request would confirm this (I haven't seen the letter otherwise I would have already done it).

In order to be eligible for SSP an employee must earn more than the Lower Earnings Limit, currently £111pw (the rules for averaging and at the start of a job are complicated so you should take advice if in doubt).

It is a scary change. We were supposed to get a nanny on February 27th and surprise surprise - she injured herself. We had not even signed any contracts and I had to pay her Sick pay for a few days. Had to call up ACAS for advice and finally terminated her employment. That's when I came to know of this.. SSP for 3 months..

We had not even signed any contracts and I had to pay her Sick pay for a few days. Had to call up ACAS for advice.

If she had not done any work for you the advice was incorrect.

crappy letter is mentioned in the Daily Mail today

I think the DM is reading this thread.

Sorry for radio silence, been frantically trying to arrange replacement childcare (having to rope in all sorts of favours as paying the SSP and additional childcare would be a real stretch - thank heavens for parents and friends and having some holiday left to take from work) and lobby on this issue. Yep also got the crappy letter.

Have been in contact with FSB, the Association of Directors of Social Services, Disability Rights UK, various other charities, journalists etc. Also written to local MP - nearly two months now and no substantive response. Pretty poor show, but then it's her party's policy so not holding my breath.....

Anybody done any better with responses from MPs?

My nanny goes off at the end of this month for 3 months minimum :-(

I made the point to my MP that more people would just pay cash in hand or give up work and they would lose tax revenue, he says he will put my points to the minister but I'm not holding my breath. He did at least bother to reply though.

So glad children grown up. I remember paying over half my net salary to employ a nanny to enable me to work. Not a luxury as some above imply!

It is not like a business where employing staff is tax deductible. As an ordinary salaried person on PAYE you pay your own income tax and NI tax then out of net income have to cover employers NI, nannies tax and now SSP.

It is really no wonder (we always did the whole thing above board correctly ) why many many nanny employers pay cash in hand. When we were really hammered paying all these costs simply to enable us to work most people I knew were paying nannies cash.

then out of net income have to cover employers NI, nannies tax and now SSP.

I would dispute that you cover the nannies tax. Cost to employer is Employers NI, Nannies Gross Salary, SSP, activity costs & mileage, payroll admin.

Yes, the Nancy's gross salary includes a chunk that goes straight to HMRC. any other employer pays that out of their profits before tax is taken off, only nanny employers pay it out of their already taxed income.