Home help asked for pension - please advise!

[Mumstheword82]

Hello,

I have someone who comes to clean / help with the kids one day per week. She is paid £100. She has asked me if she could work an hour or so extra to raise her pay to just over £116 so she can get a pension which she could opt to pay more into herself. I don't mind doing this for her but just want to check if this leaves me subject to other extra charges? My understanding is that she would also be entitled to maternity pay for 90% of her weekly salary for up to 28 weeks but HMRC covers this. She could also get sick pay for 28 weeks which I would have to pay. Is there anything else?

You would need to register as an employer, run payroll, provide the pension scheme. Provide a written contract of employment. As you have already identified, there is maternity and sick pay to deal with. There would also be redundancy pay after two years employment if you decided you no longer needed the role. Entitlement to paid holiday.

Can she not open a pension scheme herself as someone who is self employed? I think that should be possible to do. www.moneyadviceservice.org.uk/en/articles/pensions-for-the-self-employed

Thank Nannynick. I have already set her up with Nannytax etc so she gets payslips etc even though it is only for £100 and therefore no NI I think or tax. I hadn’t thought about the redundancy pay and holiday pay
which she is presumably due anyway? Unless the threshold of £116 also applies for those...

£116 Is the Lower Earnings Limit for 18/19 which brings in qualification for certain state benefits, including state pension.

Lower earnings limit

The amount of earnings that allow an employee to qualify for certain state benefits (such as qualifying years for thebasic state pension). The lower earnings limit is set each tax year by the government. Even if an employee earns more than the lower earnings limit (LEL), he is not required to pay primary, class onenational insurance contributionsuntil his earnings reach theprimary threshold. In the 2018-19 tax year, the LEL is set at £116 a week. See alsoupper earnings limit.

If she wanted a pension she can set one up independently of you, just sets up her own personal pension.

You don't have to auto enrol for employees earning under £10k pa.

@Mumstheword82 I don't think there is a minimum threshold for redundancy pay. Statutory Redundancy Pay calculator

Paid holiday would apply for anyone who is an employee Statutory Holiday Calculator.

For the Pension you are under threshold for auto-enrolment and if they opt in you could use the Qualifying Earnings method of calculating contributions. As they earn under £116 gross per week, the Pension Regulator says "If they ask, the employer must provide a pension scheme for them, but the employer doesn’t have to pay contributions into a pension scheme."
NannyTax will have more information to help you with holiday calculation, redundancy (if/when that occurs) and pension setup.