Babysitter/part-time nanny and minimum wage

[LizzyTea]

I am looking for a babysitter as I return to very part-time self-employed work. From what I understand, the childcare I want could be technically classed as babysitting as we will schedule the hours work as we go along, and the babysitter will be free to accept or refuse the work as she likes.
I have been in touch with several babysitters who advertised on a childcare website, and one that I like tells me that her rate is £5 an hour. It doesn't feel right to pay her below the minimum wage, but if I set a higher hourly rate, am I being more 'employerly'? I have just read that a self-employed person sets their own rates. Also, can anyone point to a helpful source that summarises the difference between classifying her as a self-employed babysitter and a nanny?

There is no specific case law (at least not any I can find) regarding nannies and babysitters in terms of employment status.

The main issue is one of Control. ESM0516
With a Childminder it is clear that a parent does not have control, as the childminder provides a service from their home, under their terms.

When care is at the parents home, control is an issue - as it is not about if control is exercised but it there is a right to exercise it.

In Business On Own Account - is another factor considered. ESM0514
A babysitter could possibly be considered to be in business on their own account but other factors would need to be considered as they don't have stock, premises, staff etc.

Personal Service - ESM0530
Again a nanny or babysitter would usually need to provide the service personally, they are not likely to be able to employ someone else to do it for them.

Mutuality of Obligation - ESM0543 Cornwall County Council v Prater [2006] EWCA Civ 102 In his summing up Mummery LJ said:
“Nor does it make any difference to the legal position that, after the end of each engagement, the Council was under no obligation to offer her another teaching engagement or that she was under no obligation to accept one. The important point is that, once a contract was entered into and while that contract continued, she was under an obligation to teach the pupil and the Council was under an obligation to pay her for teaching the pupil made available to her by the Council under the contract. That was all that was legally necessary to support the finding that each individual teaching engagement was a contract of service.”

Reading that you could conclude that a babysitter or nanny would be under a contract of service, as even when there is no obligation for you to provide work, or for them to accept an offer of work, when work is actually done there is a contract entered into where the babysitter is obligated to care for your child/children and you are obligated to pay them.

Length of Engagement - ESM0548
Not a big relevance. "Where work is offered and accepted occasionally and irregularly there is unlikely to be a continuous (or ‘umbrella’) contract of employment. Instead, each engagement may itself represent a contract of services or a contract for services."

Employment status therefore is very hard to determine when someone works very irregularly for numerous clients. The Big Picture (ESM0556) has to be looked at. Without the existence of Case Law it is hard to know if a babysitter is genuinely self employed, it could vary between babysitters as some may work for the same clients again and again, similar days and hours each time. Others may see a client once every few months, may go for long periods without seeing a client.

It is a grey area... no definitive answer in the case of a babysitter.

In the case of a nanny, it is a bit clearer as they are providing work to the same client repeatedly and the client is able to exercise control, regardless of if they decide to do so or not. The nanny is working for one, possibly two clients... they are not working for numerous clients. So the big picture points more to employment, than self employment.

This may be relevant - CCM6810
Not sure what CCM is... suspect it may be to do with tax credits claims.
"whether the other activities are regular

• does the customer baby-sit or clean for the neighbour every week, does s/he normally provide the service on the same day and at the same time each week? For example, s/he may baby-sit for the neighbour to attend regular evening classes. If the customer only sits in response to an occasional request, it may be no more than doing a favour for a friend."

So when they look at if someone is working enough hours to be able to claim a benefit, if the activity is regular, such as every week, then that is taken into consideration.

£5 per hour seems rather low for someone to provide 1:1 care at your home. 20% of that would go in income tax (if they have other work which is using their personal tax allowance) and depending on the amount of trade their business does they may be paying class 2 and class 4 NI. So the amount they have after taxes and after expenses is some 25%+ lower.

Should you offer more... yes. Does that then make your an employer - No, the amount you pay I don't see as being a factor in determining status, it would be more about them having a number of clients, if it is ad hoc or regular, the bigger picture of their overall work.

You never know how a ruling might go. If you want someone on a regular basis, then they are most likely an employee. If it just occasional, as and when needed and they are not obligated to say they will do it, that they provider similar service to lots of other people, then more likely if it was ever challenged you could claim they were self employed. The more evidence you have the better - so them giving you an invoice, them providing you with their business card, them having adverts running locally. If an inspector would look at that sort of thing I don't know but it probably does not hurt to have such things, as it could help you to say that they considered themselves to be providing you with a service. HMRC will not be wanting every parent to register as an employer due to them occasionally using a babysitter. HMRC would however expect parents to register as employers if they used someone regularly, as is the case with a nanny.

Thankyou Nanny Nick - that's incredibly detailed and helpful. I am hoping to find the same person to cover all my self-employed work, and as I am a private tutor there would probably be some regularity in the hours, but some variation, as pupils start and stop lessons or when my mum comes to visit! So it might be 2 hours one week, and 10 hours on a busy week. I wonder if I should start out on a babysitter basis but if it does settle into a regular pattern, transition to considering her a nanny? If she is a nanny, can I continue to be completely flexible with how many hours work I ask her to do every week?
If I agree an hourly rate of £8 gross, am I right in thinking that the main extra effort of employing her as a nanny would be getting my head around payroll software? Because she should be earning less than £100 a week from us, so we wouldn't be liable for pension or NI contributions?

Yes, doing payroll and doing holiday pay calculation.
Do things monthly if you do have a busy week but then a quiet week, you remain under the monthly threshold for things like NI, Pension.
BrightPay, 12Pay could be looked at. You could outsource to a payroll company, around £15 per month (payable yearly), such as www.nannypaye.co.uk

A zero hour contract could be useful in this situation or you may want to guarentee a minimum number of hours.

Would you not be wanting to find several different people?