The biggest change to pensions for 100 yearsHouseholds with home help guide

Auto Enrolment guide forhouseholds with home help

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Auto Enrolment guide for households with home help

If you are a household employing or making use of services such as nannies, gardeners, cleaners and carers, you may be oblivious about your legal obligations to your staff and will consequently be falling foul of the Workplace Pension rules.

As a household, it’s unlikely you are a registered business or entity which also means that you won’t have received any correspondence from The Pensions Regulator about what you need to do.

Warning: If you don't pay your staff through a PAYE scheme, your Staging Date is 1st April 2017. This is the date when your Auto Enrolment duties start.

So the real question is ‘Do I need to offer a Workplace Pension to my staff?’

In order to answer this question, it’s important to understand the definition of ‘staff’ or the description The Pensions Regulator uses for staff is a ‘worker’.

Staff or a worker could be subjected to automatic enrolment if they: • Work under a contract of employment

(an employee) • Have a contract to perform work or

services personally (i.e. they cannot send a substitute or sub-contract the work, unless they are unable to perform the work e.g. due to sickness)

• And are not undertaking the work as part of their own business

Staff or a worker could be • Full or part-time• Permanent or temporary or casual• On ‘zero hours’ contracts • A contractor considered self-employed

for tax purposes • Agency staff • Staff seconded overseas• Home workers

Age thresholdsThe age of your staff will determine what they are entitled to.• Aged 22 to State Pension Age (SPA) must

have a pension, subject to their earnings• Aged 16-21 or SPA to 74 have the right

to opt-in to a pension, subject to their earnings

The other dynamic is the level of remuneration paid to this person:1. £192 per week (£10,000 per annum) or

more must have a pension 2. £113 per week (£5,876 per annum) up to

£192 per week have the right to opt-in to a scheme (optional)

3. Less than £113 per week have the right to join a scheme (discretional)

See opposite for some example scenarios to illustrate how you might be affected and where you might be required to set up a scheme for staff.

Households with staff and carers run the risk of falling foul of Auto Enrolment rules

Workplace Pension Auto Enrolment is a piece of well-intentioned legislation which affects every employer in the UK, but the legislation also affects households who have staff.

The Auto Enrolment legislation requires employers with at least one member of staff to set up and enrol eligible staff into a workplace pension. This includes those who have hired help at home. Failure to comply could result in fines.

THE NANNYScenario 1 Natasha is a self-employed nanny working for the Smith family. Natasha is full-time, aged 22 and is paid £200 per week. She does not work for any other families. Natasha works unsupervised and when she is on holiday or sick, its not easy to find alternative cover.

Answer: Natasha is a personal services contractor, aged between 22 and SPA, and is considered to be a worker who must be auto enrolled into a scheme. The Smith family will need to set up a scheme to auto-enrol Natasha and make contributions.

THE NANNYScenario 2Nadine provides nanny services to the Taylor family. Nadine, aged 30, is supplied to the Taylor family through Share the Care Ltd. Nadine only works for the Taylor family and is paid £220 per week by Share the Care Ltd. The Taylor family do not pay Nadine for her work, they pay Share the Care Ltd.

Answer: Nadine earns over the threshold of £192 per week, but she is not paid by the Taylor family but by Share the Care Ltd. Nadine is self-employed, aged between 22 and SPA, but is not considered a worker in terms of the Taylor family and therefore the Taylor family do not need to set up a scheme and auto-enrol Nadine. Share the Care Ltd are responsible for Nadine's Auto Enrolment duties.

THE CARERScenario 3 Colin is retained as a carer to assist with an elderly relative living with the Jones family. Colin is supplied through an agency and is 52. He provides similar services for other families. Although the service he provides is unique, if he is sick or on holiday, the agency are able to provide an alternative carer to cover his work at an additional cost to the Jones family. He is paid £150 per week for the daily services he provides.

Answer: Colin, although supplied via an agency, he is paid directly by the Jones family for his services via PAYE scheme, he also gets pro-rata paid holiday. Colin is considered to be a worker and based on his pay from the Jones family, and his age, has the right to be opted-in to a scheme (optional).

The Jones family will need to put a scheme in place and offer Colin the right to opt-in. Only if Colin chooses to opt-in, will the Jones family will need to make contributions. As Colin is paid via a PAYE scheme, the Jones family will have a Staging Date for when their duties start.

THE CLEANERScenario 4 Caroline is a cleaner for the Williams family. Caroline is supplied via an agency with a committed number of hour’s work each week, which are sometimes extended to cover additional cleaning requirements as needed. Caroline is paid on an hourly basis at £8.50 per hour, but earns a minimum of £85 per week from the Williams family, often increasing to £150 per week. Caroline is 28 years old and is paid by the Williams family in cash each week. Caroline also works for a number of other families.

Answer: Caroline is self-employed, aged between 22 and SPA, and based on her pay threshold at £85 per week she earns less than £113 per week, but still has the right to join a scheme (discretional). When she earns £150 per week, even once, she moves above this threshold and has the right to opt-in to a scheme (optional). If Caroline opts-in the Williams family will have to set up a scheme and make contributions.

THE GARDENERScenario 5 Gavin provides gardening services to the Brown family one day per week. His daily rate for these services is £250 per day. Gavin bills the Brown family on a monthly basis and they pay him directly for his services. Gavin works for other families each week and is 43 years old.

Answer: Gavin has a registered business for his gardening services and therefore is not considered a worker which means the Brown family do not need to set up a scheme, even though Gavin is above the pay threshold and aged between 22 and SPA.

If you are using household services and the individual is considered to be staff or a ‘worker’ then you do have responsibilities to communicate with them. There are some strict guidelines in both the content and the timing which you need to get right. This applies regardless of whether the person must have a pension, is discretional or optional.

You may be thinking this is confusing and complicated. Husky can make this very easy and help you understand whether you have any obligations and answer any questions you may have. T: 0800 044 8114 E: sales@huskyfinance.comwww.huskyfinance.com

About Husky Finance Husky Auto Enrolment is a workplace pension service designed specifically for small and micro size employers. The service allows small businesses to compare pension providers based on their specific needs.

The service takes care of the ongoing administration required to assess a workforce accurately, calculate contributions, and ensure small business schemes remain compliant at every payroll with the lowest effort possible.

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