Net or gross?

Net vs. Gross Salary: Understanding the Benefits of Gross Salary for Nannies

When hiring a Nanny, one of the essential considerations is how to structure their salary—whether to agree on a net or gross amount. Understanding the differences between net and gross salary is crucial for both families and Nannies to ensure a smooth and fair employment experience.

Net Salary

A net salary refers to the amount a Nanny takes home after deductions, such as income tax, National Insurance (NI) contributions, and pension contributions have been subtracted from their gross earnings. While Nannies may traditionally discuss their wages in net terms, it is important to recognise that agreeing on a net salary can lead to potential challenges for both parties.

Gross Salary

On the other hand, a gross salary represents the total compensation a Nanny receives before any deductions. By agreeing on a gross salary, families ensure that the Nanny's earnings are calculated transparently and accurately.

Benefits of Agreeing on a Gross Salary

• Transparency and Clarity: A gross salary arrangement provides complete transparency for both families and Nannies, avoiding confusion about the actual wage being paid.

• Simplified Payroll Management: Opting for a gross salary allows families to handle the necessary tax, NI, and pension contributions as the employer. This simplifies payroll management and ensures compliance with employment laws.

• Protection of Nanny's Employment Rights: Nannies have the same employment rights as any other employee, including entitlement to holiday pay, sick pay, and maternity leave.

• Agreeing on a gross salary helps families fulfil their obligations as employers.

• Avoiding Unexpected Tax Bills: A gross salary arrangement helps families avoid unexpected tax bills, as the necessary deductions are already factored into the agreed-upon amount.

At Absolute Childcare, we support gross salary agreements

At Absolute Childcare, we highly recommend agreeing on a gross salary with your Nanny. We understand the importance of a fair and transparent employment arrangement for both families and Nannies.

As part of our commitment to providing comprehensive support, we offer full payroll and pension services at a cost of £275 per year plus VAT. With our assistance, families can rest assured that all payroll needs are taken care of efficiently and accurately.

Conclusion

Agreeing on a gross salary benefits both families and Nannies, offering transparency, compliance, and peace of mind. At Absolute Childcare, we prioritise the well-being of both parties and strive to facilitate a positive and successful working relationship.

Our comprehensive payroll and pension support ensure that your Nanny's compensation is handled with professionalism and precision, leaving you free to focus on what matters most, providing the best care for your children.