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Paid childcare

Discuss everything related to paid childcare here, including childminders, nannies, nurseries and au pairs.

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Original poster

Nanny wants a net wage contract

36 replies

SouthLondonDaddy · 22/10/2019 11:54

We are hiring a nanny. She seems great - the only problem is that she wants a contract that guarantees her a NET salary.

Do you have any recommendations on how to explain to a person who doesn't understand how taxes work why agreeing a gross salary is fair and is not an attempt at messing with her?

I'm not after a technical explanation (I don't need that, I am familiar with the details) - I am after some communication tips on how best to convey what is a banal concept to me but what seems very obscure for her.

We said no way, we'll guarantee a gross salary, but we cannot be held responsible for unpaid taxes, student loans, or any other changes to her tax situation which would be beyond our control and which would affect her taxes.

We have tried to explain why it's sensible for both parties, and we have also tried to explain that, since this year she has been unemployed until now, her net pay will be higher this year and lower the next - banally, this year a greater % of her income will fall under the tax-free band, simply because she won't have been working the full 12 months.

She will have none of it. She just does not understand how taxes work; all she understands is that her net salary will be lower the next fiscal year, and thinks we are trying to mess with her. I have pointed her to this useful article but nothing
www.nannytax.co.uk/employing-a-nanny/paying-your-nanny/gross-vs-net

Any tips?

The only response so far has been: but all my previous employer agreed to it. Well, that's hardly a valid reason - lots of people do lots of non-sensible stuff!

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BIWitch · 22/10/2019 11:56

Probably not a good sign for the future if you hire her!

Lots of nannies used to work like this, I think, so I can see why she's arguing for it. But inability to understand (or refusal) isn't great.

Lamentations · 22/10/2019 12:00

What else will she be totally unreasonable about? I'd look for someone else.

Original poster

SouthLondonDaddy · 22/10/2019 12:02

I used my parents as an example of the Clapham-omnibus-man : I tried to explain it to them, and they understood absolutely nothing at all! :)

So I am not surprised that someone doesn't understand how taxes work . I am only looking for some communication tips on how to explain it.

OP posts:

Shittiestdayinalongtime · 22/10/2019 12:05

I've been with my current family a long time, but when I started they told me how much net I would be getting. The amount doesn't change, unless I get a pay rise, and I'm still told in net how much it will be.

Original poster

SouthLondonDaddy · 22/10/2019 12:12

" when I started they told me how much net I would be getting. "

What does your written contract state? Does it guarantee a NET salary?

If so, that was poor judgement from your employers, because they end up liable for a number of things beyond their control which would affect your tax status: student loans, unpaid taxes, previous employer messing up your payslips and calculating taxes incorrectly, etc.

Also, with a net contract you do not benefit if, in a new fiscal year, the tax-free allowance increases.

OP posts:

Shittiestdayinalongtime · 22/10/2019 12:18

To be honest, I haven't had a new contract since I started. But it works for us, they pay all my tax, pension etc and I know what I'm getting.

Shittiestdayinalongtime · 22/10/2019 12:22

This is my second family and I've been with them 11 years now, it works for me and them, I know I get paid well for my job either way. The first family paid a net wage too.

Original poster

SouthLondonDaddy · 22/10/2019 12:36

"To be honest, I haven't had a new contract since I started. But it works for us, they pay all my tax, pension etc and I know what I'm getting."

You haven't answered the question: so does your contract explicitly state a NET salary?

Can I "use" you as a benchmark?

How would you feel if an employer wanted to give you a gross contract, for the reasons I explained above? Would you understand it? Would you feel cheated? Why? Do you understand the points I tried to make?

Thanks

OP posts:

ChelseaCat · 22/10/2019 12:42

Direct her to CAB?

Blubluboo · 22/10/2019 13:41

Honestly I would basically say Gross pay or you move on. If she doesn't want to understand your reasoning then there isn't much more you can do. It will be her loss as she will be without a job for longer! I feel sorry for parents who don't realise the impact of paying their nanny a net wage can have on their finances.

Comefromaway · 22/10/2019 13:46

Just say no. It doesn’t bode well for the future.

nannynick · 22/10/2019 13:47

I've been trying to explain this to nannies for over a decade and there is nothing I have found that works if they can't understand that their personal tax situation affects what they get paid. They just want x amount take home and don't see things like student loan being their issue. If your prospective nanny is like that then I'm afraid you will need to keep looking.

They need to be able to understand that changes to taxation will change the amount they get as take home pay, as more or less will be going to Government.

It helps if they have worked in a nursery, shop, any size of business as they would have been paid a gross salary before.

BlackAmericanoNoSugar · 22/10/2019 14:10

If she already thinks that you are using gross salary as a means to cheat her/mess with her before she's even started, I think it's going to be very hard to have the mutually trusting employment relationship that you would want to have with someone who's looking after your children. Even if she agrees at this stage to a gross salary she will probably be complaining at every change in her taxes and expecting you to top up any differences. You can't make her understand if she doesn't WANT to understand.

YobaOljazUwaque · 22/10/2019 14:17

She's totally unreasonable. Do you want someone totally unreasonable in charge of your kids? Find a different nanny.

You could say "look the chances are after Christmas there will be a new budget with an announcement of tax cuts to bribe people to stop hating the government - and if you have a set Net salary you don't get a penny of that tax cut, it is just kept by me" - that might help?

swlondonnanny · 23/10/2019 07:36

Well, did you advertise the job with gross wage? And she applied and was happy with it? And now she changed her mind and wants Nett wage in her contract?
Or did you indeed advertise / discuss nett wage and now asking her to sign contract with gross amount in it?

FunnyInjury · 23/10/2019 07:51

It used to be commonplace for nannies to be on net pay arrangements weirdly.
All the ones I know of (work in payroll bureau) changed contracts when auto-enrolment was introduced.

OP, tell her rough net pay on current circus, but with a caveat that this will change if x, y,z or any other material changes occur?

Tbh though you have explained yourself well and I'd worry I was hiring an idiot

Loopytiles · 23/10/2019 07:55

You don’t need to explain it. Tax info, including targeted to nannies, is easily available online.

You’ve made her a reasonable offer, she can accept or decline it.

If your post is a message from her, it doesn’t bode well for her interpersonal skills.

MarieG10 · 23/10/2019 08:09

YANBU. Guaranteeing a net wage is madness. I've never heard of it before. You seem to fully understand it anyway but in essence you would be guaranteeing to take on liability for any other variables outside of your control that could affect her tax code. For example; HMRC decided I had underpaid tax going back 6 years once and adjusted my tax code which hit me significantly during PAYE for the following year. On her request, you would be paying tax under payments going back years.

If she can't get it, then suggest you move on as no one in their right mind would commit to that. Oh and given how totally incompetent HMRC are, having tax arrears is not unusual.

Original poster

SouthLondonDaddy · 23/10/2019 09:50

In the end we told her to get lost, and contacted our second preference, who happily accepted without batting an eyelid.

I am not surprised that some people have zero understanding of how taxes work, BUT she was being totally unreasonable.

She just kept insisting on her position that her previous employer did it this way, so why couldn't we?

She never really answered when I asked her to either show us or quote to us the exact wording of her contract, so I wouldn't be surprised if whatever arrangement she had wasn't fully tax compliant, so to speak.

"My previous employer paid taxes for me". Yes, but what if you have unpaid taxes? This does happen all the times.
"I don't have any other income". Now you don't, but what if you do in the future?
I also tried to explain to her how tax bands work, but it was clear she understood absolutely nothing.

In the end, mutual trust broke completely - she thought we wanted to mess with her, and we certainly no longer wanted someone so unreasonable and so resentful to look after our children.

OP posts:

Lamentations · 23/10/2019 10:15

That's a shame but good to find out now. Pleased to hear you had a back up too.

BIWitch · 23/10/2019 10:33

Good move!

To be fair, back in the day when we had nannies, it was very routine to pay them a net salary. The obvious downside was that as an employer, what we had to pay could vary. And this was before the advent of student loans, which makes things more complicated.

I can understand her reluctance - no-one wants to know that the amount they take home may vary - but her tax situation is not your responsibility, and her unwillingness to even show that she understood you didn't bode well for your future, working relationship.

Good luck with the new nanny.

Original poster

SouthLondonDaddy · 23/10/2019 10:46

Thanks! As far as I know, world class football players are the only other employees who ever demand a net salary!

OP posts:

frogsoup · 23/10/2019 10:57

Lucky escape imo. If someone isn't bright enough to understand what paying tax involves when it is explained to them in the simplest possible terms, I don't think I'd want to give them responsibility for looking after my kids!

SMaCM · 23/10/2019 14:28

Have you calculated the net pay and it's less than she wants? In which case, she might be asking for a higher rate of pay, so the net pay she sees is what she is expecting? Obviously she may still not understand why it might not be the same every month, or change in April, but it's a starting point.

JoJoSM2 · 23/10/2019 20:19

I also think that's a lucky escape. It does take a pretty dim person not to grasp the concept even if not interested in the five detail.

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