What you need to know about nanny redundancy from Taxing Nannies

By their very nature, nannies will normally have a finite life with a family.  Sometimes parents give up work to look after the children, the family may move to another area or children are enrolled into a nursery or start full time school. Inevitably children grow up and there will always come a time when a nanny will no longer be required.

Employers do not always realise that when a family no longer require a nanny, for whatever reason, and the nanny does not give notice of her own accord, then this is a redundancy situation.  Also where the employer wishes to significantly vary the terms and conditions of employment of a nanny, for example from full time to term time, from live out to live in and visa versa, and the nanny does not wish to accept, then this may also be deemed to be redundancy.

When such as situation occurs the employer should always consult with the nanny. This will normally involve:

• speaking to the nanny directly about why you wish to make her redundant
• looking at any alternatives to redundancy (if any other positions exist such as housekeeper.)  Positions must be suitable employment.

If this doesn’t happen, the dismissal may be deemed unfair.  Decisions to make a nanny redundant should always be confirmed in writing.

If there is an alternative job, the nanny has a right to try out the job for a trial period of 4 weeks before deciding whether or not to take it.  The trial period will start immediately after the previous job ends.  If the nanny decides the new job is not suitable, she can give notice during the trial period without affecting any right to redundancy pay. If she does not given notice by the end of the trial period, her right to redundancy pay ends.

When an employee is made redundant and has been employed for two years or more at the date the notice period ends then they are entitled to statutory redundancy pay as follows:

0.5 week’s salary for every year worked aged 18-21

One week’s salary for every year worked aged 22-40

One and a half week’s salary for every year worked from aged 41

From 1^st February 2011 the statutory redundancy cap (ie the maximum weekly pay that is required to be made) £400 gross.  Redundancy pay is tax free for payments of less than £30,000.  An employer can pay more than the statutory redundancy cap if they so wish, provided that it is reasonable within the context of the salary and job performed.

An employee must be given:

• one week’s notice if the nanny has been employed for at least one month but less than two years
• if the nanny has been employed for at least two years, one week for each complete year of employment, up to a maximum of twelve weeks.

The contract of employment may give more notice than this but it cannot give less. The employer should check the contract to see how much notice they are required to give.

If the nanny has been given notice of redundancy, they have the right to paid time off to look for a new job provided that, by the time the notice period ends, they have worked for the employer for at least two years.

The employer only has to pay up to two-fifths of a week’s pay for time taken off to look for another job during the whole of the notice period. This means for a normal five-day week, the nanny will only be entitled to be paid for two days, however many days she actually takes off.

A nanny can be made redundant when she is pregnant, although the employer will need to be able to demonstrate that the redundancy is nothing to do with the pregnancy.  Depending on when the redundancy occurs, the employer may still be required to administer statutory maternity pay even after the employment has been terminated.

Taxing Nannies regularly calculates redundancy payments and assists employers to ensure they comply with their statutory requirements. Contact us for all your nanny tax, nanny PAYE and nanny payroll advice: info@taxingnannies.co.uk or +44 (0)208 888 6847.