Nanny share pay & possible limited company

[rachelandthenoodle]

Hi; I'm looking for some advice from people who've been through similar...
We have been sharing our nanny with our neighbours for a few months and she lives in with them. We split the cost 50-50 because she does 5 days with them and 4 with us, but is longer with ours because he doesn’t go to school. Long story short, we just decided it was easiest to split 50-50. The nanny lives in with them, and so we agreed a gross salary based 60 total hours a week at £9 p/hr. that’s above min wage but not if we’re splitting it 50-50. We were advised that the other family were exempt the min wage issue because she’s live in. My nanny payroll company told me this is common and that the best way to do it is to say we split the hours (ie we pay 30 hours at £9, rather than 60 hours at £4.50)... but actually she does work slightly more than 30 hours for us..but this is what we were advised and since the nanny has been happy with it, we thought it was fine. And so we would have continued as is but now the nanny has said she wants to move out in March and so needs her hourly rate to go to £12. We are all okay with that, but when the other family contacted their nanny pay roll company they were told they would have to pay min wage (£7.10 per hour) giving the nanny £14.20 per hour. That’s a lot! And a big jump. It means she’d be grossing over £40k a year, which seems like a huge salary. So we queried it a few times and we seem to now be being given conflicting advice from our two different nanny payroll providers.

Is it really the case that nannies who live out and work for two families expect to be paid over £14 per hour? Or is there something we’re missing? I have spoken to the nanny, and she has confirmed she only is asking for £12. I’m just so confused. It just seems bonkers that if the nanny is very happy with £12 p/h that we have to sack her and start recruitment again just because the government insists she must be paid £14.20 which is twice minimum wage!? 🤯
Is there an option I'm missing?
I guess my next question, if not, is has anyone set up a limited company to pay their nanny on a nanny share? Is this possible?
Thanks!

The very important question is are you talking in net or gross. No one can answer you until we know the answer to that.

Surely the thing you are missing is that the minimum wage is what she she receives per hour, not what each employer is obliged to pay. Imagine if the nanny share were split between five families. Would she be paid 5xminimum wage?

We have a live out nanny share. The two families agreed a salary with the nanny and agreed how it would be split between the families. The nanny receives well in excess of minimum wage. I couldn't tell you whether each family pays more than the minimum wage. It's irrelevant.

Apologies if this is very basic and obvious, but there are three elements to her pay: there's the net amount she received after she pays tax- completely irrelevant for the discussion- there's the gross amount which is her total pay before her personal tax deductions, and then there's the cost to her employer which is her gross pay plus employers taxes. You sound like you're confusing the gross pay she receives, which is the amount that has to be a over minimum wage, which the amount both families pay, which has to include employer taxes.

Deductions because she lives in should be separate.

So when you say 12£/hour, do you mean how much she will receive before deductions, or are you talking about the overall cost of her employment including the taxes you/the other family will pay on her behalf?

What eurochick says. The employee needs to receive at least the minimum wage per hour. Not double or triple.

Hi, thanks for all the responses.

I'm talking about £12 gross per hour; we always agree a gross hourly rate and then work out the rest from there.

We have been advised by the other family's payroll company that we each must pay minimum wage, as we are two separate employers. This also seems to be what the various pay roll websites say:

She needs to receive minimum wage, but you can continue the arrangement whereby you each pay for 30 hours a week surely? then you agree the £12ph and the other family pays 30x£12=£360pw and you pay the same and she isn't getting twice minimum wage but is getting plenty more than minimum wage as agreed.

@ElluesPichulobu that's what my nanny payroll advised, but the other family's payroll company has said that if her contract is to provide more than 30 hours of work in a week for their kids, then she must pay minimum wage for the total hours worked. And since it's is more like 60 hours of coverage for their kids (despite the fact that they're both at school, so she doesn't really work for them during the day except in holidays), their payroll company has said they can't do that. But mine says we can! It's bonkers.

Apparently this is a thing now and I will be implementing it in the future but at the moment I'm on about £12.50 in my nanny share and I can't expect them to fork out minimum wage each.
I think you're being a bit mean about 40k being a large salary. Yes perhaps 40k would be a large salary for someone who works a regular 9-5 job. But we are talking 60 hours a week here. 60 hours is a huge amount of hours and she should be well compensated for it and shouldn't have to lower her rate because you need lots of hours. If she is happy with 12ph then I would do 30 hours each (or work it out properly with how many hours each family are using!)

Also, how come you are using separate payroll companies for the same nanny share?

Usually what happens is a rate for when she has just one family and a bit extra for when she has both families at the same time.

I think what the payroll company meant is that the nanny can’t be on £12/h on 4 days and then £6/h on day 5 when she only has one child.

I have no experience of nanny shares but if you use just one payroll company, perhaps they could put your names down as joint employers and you could have a separate agreement between you on sharing the cost?

Alternatively, just do a contract for 30h at £12/h each and specify looking after the other family’s child in those hours too.

euro that would never be the case since nannies can only look after 2 families at any given time. So she may work for 5 families over the week but they will only ever cross over 2 families at once.
I really don't think each family paying minimum wage is much. Many nurseries around here are £60-70 and having a nanny is more of a luxury as you are paying for a much more personal childcare experience.

Thanks everyone.

@Iggleonkupsy we use two different payroll companies because we each had nannies before and had signed up separately with different companies. Because we each pay annually for our payroll service, if one of us changed to the other company we'd just have had to pay twice for that year. So we didn't. They both advised us that it makes no difference at all whether we're with one or two different providers.

I have now been on the phone to two more payroll companies and my own, and the advice is:

Yes, it's legit that we should both be paying min wage each for the hours she is working for both of us. That means that Tuesday - Friday for 10 hours she would be on £14.20 per hour, then for the extra one day (12 hours) on a Monday and 2 extra hours each day, she would be on just £7.10 (min). This would mean her gross salary would be almost £40k.

In practice the advice was that most families who share unofficially split the hours and not the hourly rate- ie we would each pay for 30 hours. But that is unofficial practice and not the HMRC approved approach.

I do understand what nurseries charge, and that there are other options and that a nanny is a perceived luxury, but in our case it's a requirement. My other boy going to school 4.5 miles away and there is no public transport and no possibility to move him (this year), so we have to have an option that enables driving. We may indeed have to move back to an au pair plus nursery, but it was just that this worked out so much more cost effectively whilst actually being better for the kids and they really enjoyed being together with the other family's kids. But it is what it is!

They did advise that employing through a limited company would legitimately circumvent this problem, but of course that comes with its own accounting and administrative costs. I may try to look into pricing that up on the basis of £12 per hour gross, but suspect the reality is that we will just have to find a new nanny who is willing to live in!

Ltd company is far too much hassle. In the past it has been possible to setup a PAYE scheme as joint employers. So Mrs A and Mrs B jointly have one PAYE scheme that pays the nanny.

If that can no longer be done then another way may be that one employer employs the nanny in the morning and one employer employs then in the afternoon. Two PAYE schemes, two contracts, with the contract stating that care is for the named children.

NMW rules in my view were not designed for situations like a nannyshare. Is it two jobs or is it one? It's a bit of both so it gets messy!

I'm just wandering where you are based OP? I am a nanny for 1 family with 1 child and I am on £12 per hour. Nanny shares round here (not London) are at least £14-£16 per hour with two separate contracts.

Also if she is working an extra day with one family she should be on at least £12 per hour for that day as that is the hourly rate she specified. Obviously prices will be different if you are in a very cheap part of the country but if you are not then do expect your nanny to run for the hills when she realises she can make the same money with just one family.

Paying her minimum wage for the day she is only with you is absolutely not on and makes you come across as a very mean employer. It's also not on to try and twist things to avoid paying her minimum wage for your half of the nanny share. You state that a nanny is the only childcare option for you but it sounds as though you can't afford one or are too tight to pay out.

Also as a pp stated 40k for 60 hours a week is not a huge salary, especially as you will only be paying half of that.

Please don't take this the wrong way, I'm just trying to give you a nanny's perspective! Trust me if you don't value the work she does enough to pay her a fair wage she will leave and it sounds like you really don't want that!

Agree with Moonbaboon. I'm paid £13 per hour for one family. For two families I would expect more. Negotiating holiday in a nanny share is difficult for a start.
Maybe you are in a cheap part of the country? But agree the day she is only with you should still be £12 per hour not minimum wage.