Employment in the UK is almost always discussed using gross salary agreement, but in the nanny sector net salary agreements have been commonplace. Attitudes are changing slowly, but many nannies and nanny employers are still discussing net salaries.
At The Wages Room we encourage an understanding of what the two different agreements mean, particularly for first time nanny employers, many of whom need to budget very carefully to make employing a nanny possible.
Protection against the Total Cost
Employers who have net wage agreements are committing to paying all of their nanny's deductions that make up the gross wage, regardless of tax code or tax history.
If the employer guarantees net payment they are liable to all of the expense, which can be caused by a decreased tax code, outstanding debt of tax or even secondary employment.
Gross is better for nannies too
On pay day, everyone's primary interest, not just nannies, is how much we are 'taking home' but there are benefits to thinking about salaries in gross terms:
The Tax Free Allowance increases every tax year and net agreements will not see the benefit of this. On net agreements the employer will see the tax saving, not the nanny.
If the employer's Total Cost increases significantly, on a net agreement they may decide they cannot afford to employ the nanny. This may cause a difficult situation for all involved.
Finally, a gross agreement enables the nanny to compare their salary with other professions in the UK, to assess her earning power and consider career options.