What are your employment obligations when taking on a carer?

There seems to be a general misconception that carers working in a private home can be self-employed. In most cases, carers should be treated as employees.Older and disabled people also acquire employer status when using the Direct Payments or Personal Budgets they have received from Social Services to take on someone to help with their daily needs such as cooking, washing, dressing, driving etc.

Some care agencies advertise that the permanent carers they recruit for their clients are self-employed. However, if the carer is being paid directly by the person requiring the care, or by a member of their family and not the agency, then it is likely that they will need to be employed.

When is a carer not an employee?

• Where the person taking on the carer contracts directly with an agency and a rate is paid to the agency for use of that carer. This is most likely where a temporary carer is required. The carer will then normally be an employee of the agency who will operate PAYE on their behalf.
• When a series of carers is provided by an agency on a rotation or ad hoc basis. In this case, if the agency does not employ them, the carers may be eligible for self- employed status.
• When a part-time carer is appointed who works ad hoc hours and has other clients. In this case, there may be scope for the carer to be self-employed.

When must a carer be treated as an employee?

Employing a permanent or live in carer brings with it the same obligations as for any business taking on an employee. By law, therefore, an employer will need to account for PAYE and National Insurance Contributions on the salary paid to the carer.

If I have to employ my carer, what does this entail?

Before taking on a carer, an employer must:

• check if the person can work in the UK
• have employer’s liability insurance
• register as an employer, or pay someone else to do it on their behalf (even if they pay the employee in cash)

In addition, the employee:

• must have an employment contract
• be given payslips
• not work more than 48 hours per week, unless they have signed an opt out agreement
• be paid at least the National Minimum Wage (currently £6.50 per hour gross for those aged 21 and over)

The carer will also entitled to employment-related benefits, if they meet the eligibility requirements. These include:

• Statutory Maternity Pay
• Statutory Sick Pay
• Paid holiday
• Redundancy pay
• Pension payments in accordance with auto-enrolment

Employers cannot ask their employees to become self-employed

A carer’s salary may be quoted gross. I.e. PAYE and Employees NI are deducted from the salary and the net paid to the carer, or the salary may be quoted net of deductions (i.e. the amount they wish to receive in their hand). It is the employer’s responsibility to pay over to HMRC, PAYE, Employees National Insurance and Employers National Insurance, in addition to the net salary paid. Expenses paid and benefits provided on behalf of a carer, in addition to his or her salary, may be liable to a separate charge to Tax and National Insurance.

What is Employment Allowance?

Since April 2015, an employer of a carer is entitled to Employment Allowance, which is a deduction from the amount that is required to be paid to HMRC in respect of the Employers National Insurance of an amount of up to £2,000 per annum (£3,000 from 6 April 2016). Also, an employee who is under 21 is no longer required to pay Employees National Insurance.

What do have to do regarding HMRC?

Under rules called Real Time Information (RTI), every Employer has to make a submission to HMRC online each time that the employee gets paid. So, for example, if your carer gets paid every Friday, you have to submit your pay and tax details to HMRC every Friday. Failure to make more than one submission a year on time will result in a fine of up to £100 for each late return.

What about employee pensions?

Auto-enrolment is the term to denote the introduction of legislation to reform pensions by giving a vehicle for every employee to be automatically enrolled into a pension scheme and this will include carers.  It is has been introduced to try and encourage more people to save for their retirement.

All employers operating in the UK will have to enrol their employees automatically into a qualifying pension scheme sometime between now and October 2017 (at a date specified by the Pensions Regulator), where the individual:

• Is aged between 22 and state pension age

• Earns more than the minimum earnings threshold per annum
• Is not in a qualifying pension scheme (i.e. one set up by the employer, which complies with the new requirements).

Contributions into the scheme will be required by both employer and employee and the minimum percentages will be phased in over a period commencing with 1% for employer and employee up to October 2017, rising to 3% for employer and 5% by employee by October 2018.  Employers will be able to delay the date they enrol their employee into a pension scheme by up to three months.

If HMRC catches up with an employer who has failed to declare their employee for tax purposes, or has tried to maintain that he/she is self-employed, then HMRC will seek redress from the employer and the employer will be liable to pay the correct Tax and National Insurance Contributions and interest and penalties. There is no legal right to seek repayment from the carer.