CONTRACTUAL DETAILS AND LEGAL OBLIGATIONS OF EMPLOYING A NANNY/NANNYSHARE / MOTHERS HELP

Contracts: All employees have a basic right to a written employment contract, giving details such as hours, place of work and pay.

Insurance

Work Hours

Minimum Wage

National Insurance Contributions

Holiday Entitlements

Sick Pay

Your Nanny's Maternity Rights

Entitlements

Benefits Packages

Confidentiality

Probationary Period

Notice of Termination

Dismissal

Progress Reviews

Insurance: Employers must ensure that they take out Employers Liability Insurance. If your nanny has an accident at work (i.e. your home) and is badly injured, they would be entitled to compensation and could sue you for damages. If you fail to take out Employers Liability Insurance, you could ultimately put yourself at risk of losing your home.

Work Hours: In most jobs, you cannot be forced to work more than 48 hours per week. However, the rules are complicated and differ according to shifts, rights to breaks, working days and so on. Specify in the contract of employment how many hours you expect per week, if that includes baby-sitting requirements (and what they are eg. 2 nights per week), what those work hours are (e.g. Mon-Fri, 9am-5pm) and how much you will pay for any additional hours.

The minimum wage for anyone aged 22 or over is at least £4.85 an hour (from October 2004). Those aged 18 to 21 get a minimum of £4.10. Au pairs do not come under this group.

National Insurance Contributions - If you employ a nanny in the UK and pay her more than £79 per week (tax year 2004-5), you are required by law to register with the Inland Revenue as an employer and operate a PAYE (Pay As You Earn) scheme. This involves paying Income Tax and National Insurance Contributions (NIC) deducted from your Nanny's gross wage (or added to her net wage) as well as an employer's NIC on top of her wage. For more information see Tax and National Insurance.

Holiday Entitlement: The current minimum annual holiday entitlement is four weeks, including bank holidays. There is a qualification period of 13 weeks continuous work for these entitlements. Your contract should specify whether or not you expect your nanny to go on holiday with you.

Statutory Sick Pay (SSP): exists to provide employees with some sort of compensation or earnings replacement when they are sick. It is paid to the employee (in this case the nanny) by the employer (you).

• To qualify: Employees must be earning more than £79 a week (before deductions of National Insurance and Income Tax). They must have been sick for more than four days including bank holidays and weekends. They will have to provide you with a letter from a registered medical practitioner. They can claim SSP from you for up to 28 weeks of illness, after which they may qualify for Incapacity Benefit. The qualifying days for which you would be paying SSP would be the normal working days (e.g. Monday-Friday).
• How much: The statutory minimum you will have to pay is a flat rate of £66.15 (2004-5) a week, however some employers may choose to run a more generous scheme. For example, you may choose to pay their basic salary for up to two weeks. Any such decision is entirely at your discretion but should be clearly outlined in the contract of employment.
• Claiming it back: As an employer, you are able to claim back some of the sick pay you have paid your nanny from the Inland Revenue.
  1. You will already be keeping track of all your National Insurance (NI) contributions for each tax month. For example, say you have paid £100 in NI contributions over last tax month.
  2. From that amount, deduct 13%. e.g. deduct 13% from £100 = £13.
  3. Add up the total SSP you paid your nanny over last tax month. Say you have paid the flat rate SSP (£66.15) for two weeks to your nanny, i.e. total of £132.30p.
  4. Simply deduct £13 from the total SSP (in this case £120.40p) = £107.40. This is the amount you can claim back from the Inland Revenue. You have to put that amount into your yellow payment booklet (P30BC) and send it off to IR. You will be reimbursed by cheque.

Maternity rights: All pregnant women are entitled to take time off (paid) to attend antenatal appointments, made on the advice of a doctor, midwife or health care visitor. Women may be asked to show their employer a certificate from a registered health practitioner confirming the pregnancy. They are also protected against any detriment or dismissal on the grounds of their pregnancy.

• All pregnant employees are entitled to 26 weeks' ordinary maternity leave, which can start 11 weeks before the baby’s due date.
• A woman must take at least two weeks' maternity leave after the birth of her child.
• Entitlement to maternity leave is regardless of the length of employees' service. But the employee must notify her employer (preferably in writing) no later than the end of the 15th week before her baby is due.
• In addition to the 26 weeks ordinary maternity leave, pregnant employees who have completed 26 weeks continuous employment by the time they are roughly six months pregnant are entitled to additional maternity leave of 26 weeks after the ordinary maternity leave - hence a total of up to 52 weeks – or one year.
• Statutory Maternity Pay (SMP):
• To qualify: To qualify for Statutory Maternity Pay (SMP), the employee will have been working for you for more than 26 weeks before what is called 'the qualifying week' begins - namely 15 weeks before the baby is due. Therefore a total of 41 weeks employment with you is needed for a woman to qualify for SMP. Her earnings must also be above the Lower Earnings Limit for National Insurance Contributions.
  The employee must provide her employer with a form (known as MAT B1) from a registered medical practitioner, which confirms pregnancy and gives an estimated due date.

• How much: SMP is paid for 26 weeks. For the first six weeks of leave the employee is entitled to 90% of their average weekly pay. This amount is worked by calculating the average amount that they earned in the eight weeks leading up to the Qualifying Week. Claimants are expected to provide pay slips going back for more than a year to calculate the amount due to them.
  After the first six weeks the employee is entitled to a minimum of £102.80 for the following 20 weeks. Some employers choose to run more generous schemes. For example, you might pay the full salary for the first six weeks and then half of that amount for the remaining period. Any such decision is at your discretion but should be clearly outlined in the contract of employment.
  Claiming it back: As an small employer, you should be entitled to claim back the full amount (100%) of what you have paid out in SMP, plus 4.5%.
  
  Entitlements: You should make clear in your contract of employment what your nanny would be entitled to as your employee.

• Claiming it back: As an employer, you are entitled to claim back the full amount (100%) of what you have paid out in SMP plus 5%. There are two ways of doing this:
  1. The most common and easiest way is to use your yellow booklet (P30BC). Fill in columns 7 & 8 with the amount you have paid in SMP (this will be recorded on your tax and PAYE forms). Send it off to the Inland Revenue and you will be reimbursed by cheque.
  2. If you are finding yourself in a difficult financial position (e.g. because you have had to employ another nanny temporarily and have to pay her NI contributions on top of your other nanny's maternity pay) you can get an advance from the National Insurance office. Write a letter to your local NI office explaining your situation and they will be able to give you an advance by cheque. Or you can request to have a deduction from the NI contributions you are paying for your temporary nanny.

Entitlements: You should make clear in your contract of employment what your nanny would be entitled to as an employee with you.

1. Car - You should state whether you require them to use the car for the transportation of your children. If so, whose car do you want themher to use? If it is your own, specify that you will reimburse the petrol, pay for the additional insurance, note that you always want the children to be in their car seats etc. Specify whether or not they can use the car for their personal use. If they want to use their own car, specify who will pay the added insurance, who should provide baby seats, how the car's expenses will be handled and so on.

2. Accommodation - this will obviously only apply to a live in nanny. Specify where the nanny will be staying, if they have use of their own bathroom and how the bedroom is equipped, for example, does it have its own television or telephone line? If there is access to a telephone, who pays the bill?

3. Meals - Specify how many meals your nanny is entitled to per day.

Benefits package: These are optional perks, which you might want to include in addition to the salary in your nanny's contract. For example, you could offer a gym membership, use of your car, or payment for evening classes. You may want to add one when you review the contract. In some instances, it might just help you hold on to a nanny you really like.

Other clauses

Confidentiality: It is important to include a confidentiality clause in your nanny's contract, as a few recent high profile cases have highlighted. Your nanny is very much part of your family and will obviously have access to almost all aspects of your life, personal and professional. A confidentiality clause doesn't mean that you don't trust your nanny; it just assures protection for you and your family for the period during and after your nanny's employment with you.

Probationary Period: It is wise to have a probationary period in your contract. You may not like the new nanny's style or work habits and they may dislike certain things about your home or rules. The probationary period gives both parties the chance to try each other out and decide whether or not you want to continue the relationship. You may want to include a period of one month.

Notice of termination: This is an essential clause to include in your contract. There are two ways of defining what the period of notice of termination is. One is the period agreed to by both you and your nanny and set out in the contract. For example, you may both want a two month notice period - to give you time to find another nanny or them time to find another family.
If you don't have a contract, the notice of termination period is defined by a legal minimum:
The employee can give the minimum of 1 weeks notice, unless the contract sets out a longer period, in which case, that is the notice period that must be respected.
The employer must give at least one weeks notice after a month's employment; at least two weeks notice after two years employment; at least three weeks notice after three years employment and so on up to a maximum of 12 weeks. Again, however, if the notice period agreed in the contract is longer, that is the notice period that must be respected.

Circumstances where the notice of termination period does not apply.
There are certain circumstances where the notice of termination bears no validity at all. A huge volume of case law exists in relation to discipline and dismissal and it is not possible to cover all of it here. However, it is every employee's right (subject to the qualifying service requirements) not to be unfairly dismissed.

The circumstances in which an employer could sack an employee on the spot:
1. An employer can sack a nanny on the spot if they commits an act of gross misconduct or a serious breach of contract. An example of an act of gross misconduct would be physically or verbally abusing a child. An example of a serious breach of contract would be changing the terms of employment without consultation.
2. An employer is entitled to sack their nanny on the spot and 'pay in lieu of notice.' , that is give their nanny payment instead of the notice period. This could occur if:

• The correct notice period has been given but the employer does not want the nanny to serve it. So, if you had given your nanny four weeks but wanted them to leave immediately, you would pay four weeks wages even if they were not coming into work anymore.
  
• The contract stated that the employer can 'pay in lieu'. This means you can sack your nanny on the spot but have to pay for the weeks they would have worked if they had been given proper notice. It is only binding if included as a clause in the contract.

In such cases, as an employer, you would continue to take out tax and National Insurance contributions, as your nanny cannot claim other employment benefits until the end of the time for which they are being paid.

If, as an employer, you want to get rid of your nanny tomorrow, but did not include anything about 'pay in lieu' in the contract, you can give your nanny compensation to cover the pay they would have been given. Indeed, failure to do so can lead to charges of wrongful dismissal. If you choose to compensate your nanny, you will be giving them their basic salary but you would not have to pay tax or National Insurance contribution. Your nanny can sign on as unemployed straight away. They will not receive contributory Jobseeker's Allowance for the time he/she is getting compensation, but will receive their National Insurance credits.

Dismissal
The laws governing dismissal are complicated and often specific to certain circumstances. Whilst it is unlikely that claims of dismissal with regards to nannies would go to an Employment Tribunal, it is best to be aware of the law regarding dismissal. It would be wise to include in the contract the reasons which you would consider sacking your nanny on the spot for. It is also wise to include a grievance procedure in your contract (refer below) as this could avoid unpleasant and protracted battles later if something were to go wrong.

A nanny is fully covered by the terms of employment law and is therefore protected against discrimination, wrongful and unfair dismissal as long as they have been in at least 12 months continuous employment before the date of termination. If you dismiss your nanny, they are entitled to receive, on request, a written statement of the reasons for dismissal within 14 days. If you dismiss your nanny during pregnancy or maternity leave, she is entitled to a written statement of the reasons regardless of how long she has worked for you and whether or not she has requested it.

• Fair Dismissal: would occur if it is proven that your nanny cannot do his/her job properly; there has been serious misconduct on the part of your nanny; there is a specific legal requirement; your nanny reaches 65; you no longer need a nanny, for example because your children are older (redundancy - see below)
• Unfair Dismissal: would occur if you were to sack your nanny for reasons the law defines as invalid or unreasonable i.e. reasons other than those mentioned above. The scope is huge and obviously cannot all be covered here. If your nanny has been with you for at least twelve months, she is protected by employment against unfair dismissal. Your nanny could claim unfair dismissal if: she resigned and did so because of bad treatment by you (known as constructive dismissal); she was not allowed to return to work after maternity leave; she has not had her fixed term contract renewed. However, in certain circumstances, the law would protect your nanny regardless of how long he/she has been with you. Your nanny could claim unfair dismissal if you sacked him/her because: she is pregnant; he/she is of a certain sex, race or martial status; she refused to undertake dangerous or unsafe activities which pose a threat of physical injury; he/she is already taking legal action against you; you dismiss them when they should be suspended on medical grounds.
• Wrongful Dismissal occurs when there is a breach of contract by you, the employer. Examples of breach of contract include: dismissing your nanny without notice or giving too short a notice period; changing the terms of employment; harassing the employee; consistently failing to pay wages etc.
  If your nanny accepts the breach by you and remains in her job, she can still seek compensation from you for the breach of the contract.
  Charges of unfair and wrongful dismissal can be taken to an Employment Tribunal. The claimant has three months from the date of termination to make the claim, during which time you, as the employer, would have to have proof that you acted reasonably in the circumstances.
• Summary Dismissal: You can sack your nanny immediately if, for example, she is caught stealing or hitting children and this is known as summary dismissal.
• Redundancy occurs when you no longer have need for a nanny for your children. In such cases, if your nanny had been with you for over a year and was under 65, she would be entitled to a compensation payment based on age, weekly pay and length of service. This is again something to be specified in the contract.

Disciplinary Procedures, Progress Reviews and Grievance Procedures

There is new legislation covering the disciplinary and grievance procedures. Employee rights organisation ACAS advises the following:

Disciplinary procedures: if an employer is contemplating dismissal – or action short of dismissal such as loss of pay or seniority – they must follow a three-step procedure which involves:

• a statement in writing of what it is the employee is alleged to have done
• a meeting to discuss the situation, and
• the right of appeal

If an employer does not follow the minimum procedure then an employment tribunal may judge the dismissal ‘automatically unfair’. The compensation will increase or decrease – by between 10-50% - depending on whether the employer or employee failed to adhere to the new law.

Grievance procedures: if an employee wishes to use a grievance as the basis of a complaint to an employment tribunal they must first complete step 1 of the statutory grievance procedure:

• step one: inform the employer of the grievance in writing
• step two: meet to discuss the grievance and
• step three: hold an appeal, if requested

For the same reason and to ensure good relations with your nanny, you could think about setting up a sort of appraisal system, where you can discuss, say once a month, how you both think things are going and what, if anything, you could do to improve. This means that both parties are open about any issues, and prevents further problems later.