Au pair staying more than 2 years

[BelleCurve]

My AP will have been with us for more than 2 years. She is older than a typical au pair and doesn't want to move on, which is great for me and DS.

She is EU national, so there is no visa issue but I feel that I should make her a formal employee as the "cultural exchange" aspect is no longer so relevant.

So, I will need to give her a formal employment contract and pay. She currently works 25 hours pw with accommodation, meals etc included for £90pw. I pay her phone at £10pm and her weekly bus pass at £20 pw.

I already provide her with payslips.

If I change her status to employee (mother's help??) if I understand I will need to pay at least £6.5ph less the accommodation offset of £35.56?

If i still include the phone, food and bus pass, will this be a taxable benefit? I am trying to be fair to her as she has been with us for a while and it would be great for DS to have some consistency, but I don't want to fall foul of the tax implications of a change of status.

Have I missed anything?

Bump for some evening advice

Minimum wage would seem reasonable although there are legal (and fair) ways round that if you want.

As an employee she will be entitled to holiday, sick pay, maternity pay etc.

You will have to pay employers NI.

The phone and bus pass could be seen as a taxable benefit I think, unless she needs them for work? I'm not sure about food...

It seems a lot of faff, for not much reward really. Does she want to be an official employee? If she isn't bothered, I'd just leave things as they are.

If she does become an employee and becomes Ofsted registered you could pay her via childcare vouchers if that is of interest to you. Ofsted registration would be a good thing for her to have as well if she is interested in becoming a nanny/mother's help in the future.

Ok, it does seem like a lot of hassle and she isn't bothered. Maybe it would be better to just give her a payrise.

A payrise could be a good option as long as it stays below the tax threshold.

Alternatively you could offer her some other benefit/bonus. A gym membership? A new TV for her room? A tablet/laptop? Pay for a college course? Give her some money to decorate/personalise her room a bit?

It's nice that you want her to feel appreciated.

I'm afraid you have completely misunderstood the nature of au pair work. Your Au Pair has ALWAYS been a formal employee. It is only by virtue of the pay rate that you have escaped paying NI, Tax etc.

You don't need to pay minimum rate, because she is live in and as such excluded from that.

If there had been any issue due to lack of contract, it would have always gone against you. But she does have a contract, just not written. You should cover yourself ASAP and write it down.

If you haven't given her sufficient holiday pay etc, then you are liable for backpaying it.

I don't think I have misunderstood. According to government advice here an au pair is not an employee.

She has a letter of invitation which described the role, pay, hours etc which would form a contract. She has payslips and I have paid NI contributions when she has worked overtime. She has also received paid holidays.

Bellecurve, you sound lovely. After two years of loyal service, if you can afford it, then I think it would be the most ethical thing to start treating her as a formal employee. If you put things on a formal footing, this means that she is building up a pension pot from the NI contributions for example. You're right in your first post - the minimum you could pay is minimum wage minus the accommodation offset. Treasure your childcarer, and she'll hopefully treasure your children in return, and give so many benefits in terms of her flexibility and loyalty. I would pay her a wage (minus the offset), and forget about paying things like the phone - she will be earning enough that she will be able to buy these things for herself anyway.