Create an employment contract

When hiring a nanny an employment contract is very important as it lays out everything that you and your nanny have agreed on with regards to their employment. You should prepare the contract before the start date (most nannies want to go through the contract before the start date) or within 2 months of this date.

The contract should include details about salary, hours to be worked, holiday entitlement, duties and should be signed by both of you. Any changes that are made after this point should be agreed in writing.

Payment

When hiring a nanny, you need to ensure that you are paying them the right amount, and that their tax contributions have been worked out correctly.

Although the nannies that you interview are likely to have their own salary expectations based on their experience, you must ensure that you are paying them at least the minimum wage, even if you are offering them their first role for live-out nannies, this includes nannies that benefit from an annexe or studio with its own entrance.

Since April 2017, the minimum hourly wage has been £5.60 for 18 – 20 year olds, £7.05 for those between 21 and 24 and £7.50 for anyone over 25. These figures are subject to change, so it is important that you remain up to date with them when you become an employer.

Tax contributions

Regarding Income Tax and National Insurance contributions, you may need to register as an employer with HM Revenue and Customs where you can also set up a PAYE scheme if your nanny earns above the threshold.

If your nanny earns £157 gross per week or more, Employee’s National Insurance and Employer’s National Insurance becomes due. If the nanny earns over £221 gross per week, employee’s Income Tax becomes due.

It is also vital that you provide your nanny with a payslip each month which shows how much they have earned and the tax contributions that they have made. You should keep an up to date record of these payments too.

Pension

If you are employing people, even if it is just one employee, you must offer them a pension if they are aged between 22 and retirement age and are earning over £10,000 per year.

To do this you will need to set up a pension scheme as soon as you employ your nanny to keep in line with the legal requirements which came into place on the 1st October 2017.

Insurance

When you hire a nanny, you must ensure that you have sufficient employer’s liability insurance to cover you if your nanny falls ill or has an accident while at work.

It may be that you already have insurance that covers this, but you must check carefully to ensure that this is definitely the case. You can always enlist the help of an independent insurance broker if you’d like some help with this.

Working hours

Legally, your nanny cannot be asked to work more than 48 hours per week unless they have agreed to this in writing. A nanny must be over 18 to be able to agree to working extra hours for you.

You must also offer your nanny that works full-time for you, the equivalent of 5.6 weeks of holiday per year which includes the 8 bank holidays. This is pro rata for part-time nannies and if their normal working day falls on a bank holiday.

Notice of termination

If your nanny wishes to leave their position, or you have decided that you no longer wish to employ them, at least one week’s notice must be given within the first month, and a month’s notice is usually required after this.

However, this is negotiable and should be outlined in your nanny’s employment contract.

We hope that our guide to hiring a nanny legally has been helpful and we would be happy to answer any questions that you have or otherwise to refer you to a professional PAYE company.