Is a Nanny an Employee or Self-Employed
Employee Status of a Nanny
In the UK, the distinction between an employee and a self-employed contractor is crucial for determining employment rights, tax obligations, and other legal responsibilities. The key factors in determining employment status include the level of control exercised by the employer, the mutuality of obligation, and whether the individual is integrated into the business.
In the context of nannies, they are typically considered employees rather than self-employed contractors because they usually work exclusively for one family, are subject to significant control (e.g., working hours, duties, and how tasks are performed), and are integrated into the household.
Relevant Case Law
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497
This case established the three key tests for determining employment status:Control: The employer controls how, when, and where the work is done.
Mutuality of Obligation: The employer is obliged to provide work, and the worker is obliged to accept it.
Personal Service: The worker cannot delegate their work to someone else.
Nannies typically meet all three criteria, as they are required to perform their duties personally, are subject to the family's control, and have a mutual obligation to work.Autoclenz Ltd v Belcher [2011] UKSC 41
This case emphasized that the reality of the working relationship, rather than the written contract, determines employment status. If a nanny is treated as an employee in practice (e.g., controlled by the family, paid regularly, and integrated into the household), they will likely be considered an employee, even if their contract states otherwise.Hill v Harris [1965] 2 QB 601
This case involved a governess who was held to be an employee because of the level of control exercised by the employer and the personal nature of the work. This is analogous to nanny arrangements, where the family typically controls the nanny's duties and working conditions.Barry v Midland Bank plc [1999] IRLR 581
This case reinforced the importance of control and integration into the employer's business. Nannies are often integrated into the family's daily life and are subject to the family's control, further supporting their classification as employees.
Practical Implications
Tax and National Insurance: Families employing nannies are responsible for operating PAYE (Pay As You Earn) and deducting income tax and National Insurance contributions.
Employment Rights: Nannies classified as employees are entitled to statutory rights such as the National Minimum Wage, holiday pay, sick pay, and protection against unfair dismissal (after two years of service).
Written Contract: It is advisable for families to provide a written employment contract outlining terms and conditions of employment.
In summary, UK case law and employment practices consistently support the classification of nannies as employees due to the control exercised by the family and the personal nature of the work. Families should ensure they comply with employment law and tax obligations when hiring a nanny.
Submission that can be made in the ET
Using the case law and principles outlined above, the following arguments can be made to demonstrate that a nanny is an employee rather than a self-employed contractor:
1. Control (Ready Mixed Concrete v Minister of Pensions and National Insurance [1968])
The family exercises significant control over the nanny's work, including:
When and where the work is performed: The nanny works at the family's home and follows a schedule set by the family.
How the work is done: The family directs the nanny's duties, such as childcare routines, meal preparation, and other household tasks.
Specific instructions: The family may provide detailed instructions on how to care for the children, what activities to undertake, and other responsibilities.
This level of control is characteristic of an employment relationship, as the nanny is not free to determine how they perform their duties.
2. Mutuality of Obligation
There is a mutual obligation between the family and the nanny:
The family is obliged to provide work (e.g., childcare during agreed hours).
The nanny is obliged to accept the work and perform the duties as required.
This ongoing mutual obligation is a hallmark of an employment relationship, as opposed to a contractor who can pick and choose when to work.
3. Personal Service
The nanny is required to perform the work personally and cannot send a substitute to carry out their duties.
This is a key indicator of an employment relationship, as self-employed contractors typically have the right to delegate work to others.
4. Integration into the Household
(Barry v Midland Bank plc [1999])
The nanny is integrated into the family's daily life and routines:
They work exclusively for one family.
They are often treated as part of the household, with their work being central to the family's functioning.
This level of integration supports the argument that the nanny is an employee rather than an independent contractor.
5. Reality of the Relationship
(Autoclenz Ltd v Belcher [2011])
The reality of the working relationship, rather than any written contract, determines employment status.
Even if the nanny is described as a "contractor" in a written agreement, the actual working arrangements (e.g., control, exclusivity, and personal service) will determine their true status.
In most nanny arrangements, the reality is that the nanny is treated as an employee in practice.
6. Exclusivity of Work
Nannies typically work for one family and do not provide services to multiple clients simultaneously.
This exclusivity is more consistent with an employment relationship than with self-employment, where contractors usually work for multiple clients.
7. Provision of Equipment and Resources
The family typically provides all the necessary equipment and resources for the nanny to perform their duties (e.g., toys, childcare supplies, and access to the family home).
This is another indicator of an employment relationship, as self-employed contractors usually provide their own tools and equipment.
8. Regular Payment and Tax Arrangements
The nanny is usually paid a regular salary or wage, and the family is responsible for deducting income tax and National Insurance contributions under PAYE.
This is consistent with an employment relationship, as self-employed contractors are responsible for their own tax arrangements.
9. Case Law Analogies
(Hill v Harris [1965])
In Hill v Harris, a governess was held to be an employee due to the level of control exercised by the employer and the personal nature of the work.
This case is directly analogous to nanny arrangements, as both involve childcare providers working in a domestic setting under the control of the employer.
10. Statutory Employment Rights
If the nanny is classified as an employee, they are entitled to statutory employment rights, such as:
The National Minimum Wage.
Paid holiday leave.
Sick pay.
Protection against unfair dismissal (after two years of service).
The existence of these rights further supports the argument that the nanny is an employee.
Conclusion
The arguments above demonstrate that a nanny is likely to be classified as an employee under UK law due to the control exercised by the family, the mutuality of obligation, the requirement for personal service, and the integration of the nanny into the household. These factors, supported by case law such as Ready Mixed Concrete, Autoclenz, and Hill v Harris, make a strong case for the nanny's employment status. Families should ensure they comply with employment law and tax obligations to avoid disputes or penalties.
