Why Nannies Need to Say No
Working under the table, what a fabulous old fashioned expression. It suggests an underhand exchange of money with no questions asked. Don’t ask, don’t tell. You take the money and a secret pact is made, binding together employer and employee to keep the taxman out of the story.
This reduces the taxes and responsibilities of the employer benefits so, seemingly, the nanny comes out on top, with more money ending up in their pocket at the end of the week. Or do they?
This sort of tax evasion comes about because of a variety of reasons. For instance, some parents feel, despite government incentives, that they are paying an extra layer of tax as a large portion of their nanny’s salary comes from their post-taxed income.
Is a ‘private’ arrangement dishonest? It may not feel dishonest because it seems like everyone is doing it, that it’s just being financially creative by, “working the system”. Curiously those who do engage in an under the table agreement consider it simply a private deal and tat think calling it tax evasion is a harsh assessment.
The tragedy is that when an employee agrees to be paid under the table the only person being cheated is themselves. Without establishing a tax record, the nanny won’t be able to prove financial stability if they wish to get a mortgage or loan in the future.
From the employer’s perspective, the choice to manipulate the system is bizarre, as it sends out a mixed message to the person tasked with something as important as raising a child. A nanny constantly needs to prove that they are entirely trustworthy and can be left alone, unchecked with a minor.
Nannies who agree to, or are party to, working under the table alter the core tenets of a working relationship with their employer. In any working relationship aside from the contractual agreement trust and understanding is fundamental. Once you introduce illegality to the relationship, honesty is diluted and if any issues were to arise there is no one the employee or employer can turn to.
Sometimes there are horrible pressures to agree to a deal like this or chance not getting the job, but ultimately the risk of getting caught must outweigh the benefits. I learned an ugly truth a long way back. The most likely person to notify the authorities of a nanny’s tax evasion is another nanny.
A sensible course of action was explained to me by a Tax Advisor, “from very early on in the employer-employee relationship the nanny’s input is critical. Nannies need to help families understand that employment taxes fund all benefits and protections that workers need and deserve. If the wages aren’t reported, the nanny is the one who loses out– now and potentially on the run up to his or her retirement years unless the NI shortfall is made up”.
I’m sometimes asked by other nannies that have made past agreements how to untangle themself. Well, the truth is it’s tricky. An honest conversation with the employer is the first step. If after asking to be put on the books the employer refuses, it’s worth considering moving on.
Riverside Cares can help you find a Nanny or new employment. Our expert team can support you in contract writing, police-clearance DBS and referencing. Visit our Find a Nanny page here