How the National Minimum Wage applies to a Nanny
A non-residential nanny is covered by the National Minimum Wage and employers
must pay at least the National Minimum Wage for all hours worked
by a nanny. (In some circumstances, where they "live as part of the family and share in leisure activities with the family", for example eating with the family at mealtimes, residential nannies are not covered by the minimum wage regulations.)
PAYE for Nannies monitors all new government regulation
in such areas and will normally advise clients where it appears they may
inadvertently contravene such rules in respect of their employment
of a nanny.
Employer's should note that the National Minimum Wage sets out
the minimum GROSS hourly rates not the net pay rates agreed by
the average rates of pay for nannies in all parts of the country
are above the National Minimum Wage rates so this will not normally
be of concern to employers.
The amount of the NMW is determined by a nanny's age.
From October 2013, a nanny of age 21 or over must receive the
"main rate" of at least £6.31 per hour gross.
A nanny aged 18 to 20 must receive at least the "development
rate" of £5.03 per hour gross.
These rates will increase further in October
2014 to £6.50 per hour gross for employees of 21 or over and £5.13 per hour gross for employees aged from 18 to 20.
If a nanny is provided with accommodation, an Employer can offset
some of the cost of this against the nanny's wage for national minimum wage purposes. It should be
noted however that the maximum allowable offset is £4.91
for each day accommodation is provided (£34.37 per week), rising to £5.08 from October 2014. If a nanny is residential and lives as part of the family, the minimum wage does not apply, so it is not necessary to use the offset.
Please note, only an employee who lives as part of the family (e.g. Eats meals with the family, socialises with the family and friends of the family) is not covered by the National Minimum Wage. All other employees are covered by the National Minimum Wage even if they live-in.
IMPORTANT: Providing accommodation for employees outside the employer's home may well attract a very substantial tax charge. Employers are advised to take advice on this before offering an employee any such accommodation.