Employing a nanny: some obligations you need to know about

‘I do not want to be an employer,’ a parent said to us the other day. ‘It terrifies me. There are so many legal things to think about. I don’t know what happens if you get them wrong, and I don’t want to find out.”

Employing a nanny can seem super scary to new parents. But it’s not that difficult -- and there’s plenty of help available. Just take it step by step.

Here’s a brief overview of some things that are helpful to get going.  

 You’ll need to give your nanny a written contract

  • Don’t worry if your nanny starts in a hurry and the contract is not in place from Day 1. The legal requirement is that it needs to be given to a new employee within the first 8 weeks of work.
  • By law, the nanny contract needs to cover certain things including job description, hourly wage, expected work hours, sickness and holiday allowance, and termination. The contract should also make reference to where employees can find the details of other policies relating to their employment.
  • There are some dodgy templates out there, with unenforceable clauses and outdated requirements—so if you get one from a friend or the internet, do make sure your source is good
  • How it works with us: we get your requirements then draft you up a bespoke contract. After checking it meets your needs, you can then use our software to electronically sign it. We also manage the signing process with your nanny, and hold a copy so you’ll never lose it.

You probably already have the right insurance, but you should check just in case

  • You’ve probably already got home and contents insurance. If you do, it’s likely that it already covers injuries to people who might come and visit your house, and that this covers children at your house as part of a nanny share. It’s also likely that it includes some form of employers’ liability insurance for domestic employees. So it may be that you already have all the insurance that you need. Just so you know, employer’s liability insurance is a legal requirement for any employer.
  • However, it is possible you don’t have insurance that covers all of this. We recently checked a few standard ‘home and contents’ policies, and one major insurer didn’t include employer’s liability, for example. So it’s worth giving yours a call, just in case.   If it turns out you don’t already have employers’ liability insurance, no biggie -- you can buy it separately and it doesn’t cost much.
  • On the nanny’s side, there’s no legal requirement to have insurance but many nannies voluntarily take out public liability insurance. This is a requirement if they’re Ofsted registered (which they’d need to be if you’re wanting to pay with childcare vouchers).

You’ll need to pay taxes and pension

As an employer, you’re obliged to run a PAYE scheme, pay tax and national insurance, and provide a pension for your nanny. This means you need to deal with HMRC (for the tax and NI) and the Pension regulator (for the pension).   

If you’re doing a Koru Kids nanny share we’ll do all the paperwork for this for you and you won’t need to think about it much at all. If you’re getting a nanny via some other route, we’d recommend you use one of the many specialist nanny payroll companies. In theory, you could administer your own PAYE scheme and pension but unless you do this professionally we would not recommend it – it’s very time-consuming and not most people’s favourite activity.

Do make sure when thinking about the costs of employing a nanny, you’re taking the taxes and national insurance into account. The taxes can make a difference of up to 60% on the total headline cost so it’s important to understand their impact. (You’ll also have compulsory pension costs but these are much lower, roughly 1-3%).

Parents often ask about sick and maternity pay obligations, so here’s some headlines of how each of these work.

You have to pay your nanny after 3 days of being sick  

  • We’ve written a whole blog about sick pay, so if you’re having trouble sleeping, check it out
  • The short version is this: By law, you have to pay your nanny when she’s sick on days she normally works. But you only have to do so after she’s been sick for four days, and you don’t have to pay for the first three days she’s off. These are legal minimums, so if you want to pay more, you can    
  • As part of the Koru Kids service, we will administer your nanny’s sick leave and make sure the pay is done correctly and in line with your contract

If your nanny becomes pregnant, you need to pay maternity leave

  • A baby is a wonderful thing, isn’t it? However…. Much as you are delighted for your nanny, when she tells you she’s pregnant, you may also be a teeeeny bit thinking about your own situation.
  • You probably know already that employers must tread carefully around pregnant women, who have special legal protections. For example:
    • You’ll need to give your nanny leave to attend antenatal appointments
    • If your nanny is off work due to pregnancy-related causes, this mustn’t be counted as sick leave
    • As her due date approaches, you may need particular advice on sickness and when official maternity leave starts
  • The idea of maternity pay for nannies often worries parents, who fear they might be required to pay both for their original nanny and also for the replacement nanny. Don’t fret - that’s not how it works. Employers reclaim maternity pay from the government, so you will not be out of pocket. (Koru Kids can administer this for you.)
  • There’s no denying that if your nanny gets pregnant, it will cause you inconvenience.  However, there are bright sides! A pregnancy in the household is a joyful thing. Your children will be fascinated by her changing state. If your nanny can take them along to her midwife appointments, it could be a fascinating learning experience.

Hopefully, it’s liberating rather than overwhelming to learn a bit more about what becoming an employer requires. The main challenge is getting the paperwork right, which is where we come in. We’ll take on as much of the admin as humanly (and digitally) possible.

Like thousands of parents before you, take it one step at a time and it’ll all be fine... Just like parenting itself.