As an employer you must know your legal responsibilities and obligations, including…
- Drawing up a contract of employment
- Registering as an employer
- Setting up and operating a PAYE scheme
- Filing an employer’s tax return.
- Security checks
- Employer’s liability insurance
- Who can work in the UK
1) Drawing up a contract of employment
Any Employee is legally entitled to have a written Contract of Employment within 2 months of starting employment with you.
The written particulars must include:
* Names of employer and employee
* Title of the job
* The date when employment began
* Annual/Monthly or Weekly salary and interval when paid
* Hours of work
* Over time requirements and method of payment
* Sickness entitlement
* Holiday entitlement
* Maternity leave
* Benefits which you are making available to your employee.
* Length of Notice required on both sides to terminate the contract
* Place of work
* Details of disciplinary and grievance procedures
* Auto enrolment of pensions
The Contract of employment is a legally binding document, and both you and your Nanny are obligated to keep to the terms of employment as described in it. These terms can of course be changed at any time by mutual agreement.
(For more information, please visit the DTI website)
As the owner of “Prime”, I am able to supply my Clients with a sample of a generic Contract of employment, as well as of a Grievance procedure, and a disciplinary procedure. All these are in line with ACAS recommendation.
2) Registering as an employer
In order to comply with Inland Revenue rules, if you engage the services of a member of Household staff such as a Nanny, House Keeper or Companion, you are classed as a SMALL EMPLOYER and you will have to register as such with the Inland Revenue, and operate a PAYE scheme.
These obligations also apply:
- If your nanny earns more than the current allowance in total, even if it is spread between 2 part-time jobs
- In short-term employment (i.e. a week or longer)
- To any employment taking place in the UK – irrespective of the country of origin of the nanny or employer.
Failure to register as an employer if you are paying your nanny above the weekly threshold is an offence, which can lead to heavy financial penalties.
(For more information, please see the Inland Revenue website.)
3) Setting up and operating a PAYE scheme.
When you employ someone in the UK, you must pay regular tax and NIC’s on their behalf.
A GROSS SALARY is calculated, which, – after deductions for PAYE & NI – will leave your employee with the agreed NET WAGE.
Every quarter you – as the employer – will be requested to send to the Revenue the TOTAL deducted by you from your employee’s Gross SALARY.
You will also be requested to send to the Inland Revenue the correct amount due for EMPLOYERS’ NI contributions.
Your new employee needs to provide you with a P45, which summarizes pay and tax received so far in the current tax year, so that you can prepare the P11 (deduction working sheet) or complete a P46 to send to the Inland Revenue. If your new employee does not have a National Insurance number your will be required to apply for this. Whenever an employee leaves your employment you are required by law to provide them with a form P45. This enables the next employer to deduct the correct amount of income tax.
(For more information on this, please look at the Inland Revenue website.)
4) Filing an employer’s tax return.
At the end of every tax year, you need to
- Send a return to the Inland Revenue office showing details of your employee’s total pay, tax and National Insurance contributions.
- Send details to the Inland Revenue about certain expenses you have paid to your employee, or benefits you have provided them with.
- Give your employee a certificate showing their pay, tax and National Insurance contributions for the year.
- Give your employee a copy of the information you have given the Inland Revenue office about their expenses payments and benefits provided.
This obligation has defined dates by which you need to complete the returns, and failure to do this can lead to fines.
As these calculations are extremely complex and errors can easily occur, I always recommend my families to use the services of a domestic payroll Agency such as “nannytax” who, for a nominal fee, will undertake all this work for you, including all the necessary paper work involved.
Nannytax contact details: www.nannytax.co.uk / 0845 226 2203 / email@example.com
5) SECURITY CHECKS FOR YOUR EMPLOYEES
These are necessary for Employees who are working with either Children or Vulnerable Adults. Any Applicant with a CRB more than 1 year old should have a new updated one when employed by you.
Since 26th July 2004, amendments to the Care Standards Act 2000 (Establishments and Agencies)(Miscellaneous Amendments) Regulations 2004 brought about further legislation with regards to the portability of Disclosure information. Since this date, Care workers must renew a Disclosure Certificate if they change either Agency, or their Care Position.
At the moment, there is no provision for parents to gain direct access to criminal record information in respect of a person that they might privately employ as a nanny or as a Domiciliary care person.
As your Agency, I can apply (but not pay!) for these for you.
6) It is against the law for an Employer not to have Employer’s Liability Insurance, and you can be fined very heavily for each day that you fail to do so.
7) You must know who can work in the UK.
(Home Office Guidelines)
This is only a brief outline – please see www.ukba.homeoffice.gov.uk/workingintheuk/eea/wrs for more details.
From 1 May 2011, the Worker Registration Scheme no longer existed, and from this date, UK employers did not need to check for “permission to work”.
Any A8 worker in work will be able to access in-work benefits regardless of whether they have registered previously with the Workers Registration Scheme.
(A8 nationals are citizens of the 8 countries that joined the EU in 2004 – Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, and on 1 May 2011, these 8 countries were in the EU for over 7 years and were no longer considered accession states under E.U. law.)
Iceland, Lichtenstein, Norway – citizens of these countries are not members of the EU, but under the European Economic Agreement have the same rights to live and work in the UK as EU citizens. Switzerland: Since June 1st 2002, Swiss nationals have the same rights as EEA nationals within the UK, and they can work without a permit.
A Filipina may also be here on a Domestic Worker Visa, and must be working in the UK on such a Visa for 5 years before they can apply for indefinite leave to remain.