When it comes to deciding if your workers are employed or self employed – be sure you are fulfilling all your legal obligations…
Believe it or not, if you pay a nanny, housekeeper, gardener or anyone else who works in your home and both the following criteria apply:
- You hire them and
- They are not already self-employed or paid through an agency
…then you will be treated as an employer by HMRC and be required to operate a PAYE scheme.
If these criteria do apply then this means you have certain responsibilities, like meeting the employee’s rights and deducting the correct amounts of tax and insurance from anything you pay them. Most people will use Payroll Software to do that these days which means more time and expense paying for it, setting it all up and learning to use it. This presumes of course that you know how to use a computer.
My mum wouldn’t be able to even switch one on now but technically she does employ three carers to look after her! Luckily she had the sense to give me Lasting Power of Attorney before she became incapacitated with Alzheimers.
Also be aware that you can’t just make someone self-employed and pay them cash, whether they give you a piece of paper as an invoice or not. In order to verify that they are truly self-employed you will need some confirmatory documentation – ideally from HMRC.
Whether someone is self-employed or not will depend on their circumstances and the tests are complicated. You can find more details and check someone out from here
There are special rules for au pairs, who are not usually considered workers or employees. You can find out more about that here.
You are also classed as an employer if you pay a carer or personal assistant directly, even if you get money from your local council (‘direct payments’) or the NHS to pay for them.
For anyone you employ you must:-
- Provide them with a proper Contract of Employment
- Calculate their net pay according to PAYE guidelines and send any tax and NIC due to HMRC
- Make sure they do not work more than the maximum hours allowed per week
- Pay them at least the National Minimum Wage
- Setup a qualifying Auto Enrolment Pension Scheme and offer it to all new employees even if they do not qualify to be automatically enrolled into it
Your employees (as that is what they are) are also almost certainly entitled to things like:
- Statutory Maternity Pay (SMP)
- Statutory Sick Pay (SSP)
- Paid holiday equivalent to 5.6 weeks a year
- Redundancy pay
- A workplace pension
- Furlough pay if you need to put them on furlough
All these requirements will need to be properly set up/applied.
Of course we are experts at this so if you do need advice or help we are always ready to assist.
About Samantha Rowe
Sam’s title is Operations Manager, but the title itself doesn’t truly convey the variety of what she does for THP. From administrative tasks to payroll, strategic business planning, and office systems and procedures, Sam’s primary skill lies in multitasking.
Sam’s journey began as an office junior with George Nottage (now merged with THP), and she soon learned skills in payroll and bookkeeping, and then gained experience as a PA to the Directors, and as Administration Manager.
At the moment, Auto Enrolment is an area that has a key focus for Sam, and for THP as a whole. “The question I’m asked the most by clients just now is, ‘How will auto enrolment affect me?’ And the answer is, no matter how big or small you are, you will absolutely be affected by the Auto Enrolment regulations. I’d encourage you to start thinking about it now, and to look at your payroll software to make sure you’re ready.”