Self-directed support Factsheet 8

Transcription

1 Self-directed support Factsheet 8 Becoming an employer If you regularly directly pay an individual to provide support for you (rather than pay through an agency), this normally means you are their employer. There are definite benefits to this arrangement, for example: you are able to hire the person you want, which may be someone you already know you have more flexibility and control over their hours and the things they do for you you don t pay agency fees. However, if you decide to employ someone, there are some responsibilities involved. For example, when choosing the person who will provide support, you should: check they have the right to work in the UK make sure they have a legitimate National Insurance number think about carrying out a Criminal Records Bureau (CRB) check and getting references from previous employers. Once someone is working for you (or more than one person), you will need to: make tax and National Insurance contributions on their behalf provide a contract and make sure this complies with employment law (an example contract is available separately and on the People First website) make sure your employee has safe working conditions and is adequately trained buy liability insurance keep financial records for inspection by the Council and HM Revenue and Customs. However, you do not have to become an expert to manage these responsibilities advice and help are available. There are local organisations who can advise on all aspects of becoming an employer and help set this up in the simplest way possible to meet the necessary requirements. If you are concerned about the ongoing responsibility of paying tax and National Insurance, the Council can put you in touch with payroll companies who will deal with this on your behalf. Direct Payments Factsheet 8 Royal Borough of Kensington and Chelsea May 2011 Page 1

2 You will be responsible for managing your employee and their work This will mean explaining the tasks to be carried out, making sure they are done properly and keeping a record of hours worked. If there are problems between you and your employee, you will need to follow the correct process for dealing with them, as set out in the employment contract. You will also need to make other support arrangements during times when your employee is on leave or sick. What about self-employment? In many cases a person being paid to provide you with regular support in your home would currently be classified by HM Revenue and Customs (HMRC) as employed. If your care worker wants to be treated as self-employed, this is not something they can simply choose. There are rules about this and only HMRC can decide. It is your care worker s responsibility to check if this is within HMRC rules. If not (or if there is any uncertainty), you must treat them as an employee. Bear in mind that if your care worker is self-employed under false pretences, there could be serious legal and financial consequences and penalties. For more information contact HMRC (contact details below). Direct Payments Factsheet 8 Royal Borough of Kensington and Chelsea May 2011 Page 2

3 Some frequently asked questions about becoming an employer Question Answer Comments Can I employ someone if I only have a small personal budget? But it may not be the best option as there is also quite a lot of work in becoming an employer, whether you are hiring someone for one hour or 20. There are also costs involved which will impact significantly on a small budget. Buying support from an agency may therefore make better sense. Can I pay in cash? Do I have to deduct tax and National Insurance from my employee s wages? Can I hire someone who is receiving benefits? Can I employ a family member? No You must pay your employee through bank transfer or cheque, so there is an official record of the payment. Unless you are paying your helper less than 110 per week and they do not have another job (see below for more details on this). If you do need to deduct tax and National Insurance, you can get a payroll company to deal with this on your behalf but you will have to pay for this service. (Please see above for information on selfemployed status). If your helper is on Employment and Support Allowance, Incapacity Benefit, Severe Disablement Allowance or National Insurance credits they can earn up to 20 a week without it affecting their benefits and you won t have to deduct tax or National Insurance. But - earning more than 5 a week could affect the amount of Income Support, Housing Benefit or Council Tax Benefit they get. But they must not be living at the same address as you (other than in exceptional circumstances). Direct Payments Factsheet 8 Royal Borough of Kensington and Chelsea May 2011 Page 3

4 If you decide to become an employer - practical things to do Recruiting There are various ways you can recruit staff. You can use the internet, Job centre, local shops, newspaper, libraries or supermarkets, etc. A number of support organisations can help you with this as well as the Council s Self Directed Support Team ( ). These are things you need to consider when recruiting a personal assistant: 1. Job applications 2. Advertising 3. Job descriptions 4. Reference letters 5. Interviewing Legal responsibilities You are responsible for ensuring that the people you employ have the right to work legally in this country. This means that you have to check that the right documentation is in place which means that your potential employee has: 1. A working visa 2. Letter from the Home Office 3. Stamped passport Payroll As the employer you have a responsibility to your employee. You are responsible for making sure the Tax and NIC (National Insurance Contributions) are paid to HMRC on behalf of your employee. You can manage your own payroll online with HMRC by registering online or by contacting the Helpline on , 8am to 8pm, seven days a week. You ll need to do the following tasks: 1. Register as an employer 2. File your employees earnings 3. Pay your Tax and NIC returns 4. Complete your end of year filing You may choose to use a payroll company to help you manage these tasks. You can get advice from our local support organisations or the Council s Self Directed Support Team. Liability insurance It is essential that you take out liability insurance in case your employee has an accident whilst working for you. This will ensure that any tribunal costs or compensation to your employee will be covered. Direct Payments Factsheet 8 Royal Borough of Kensington and Chelsea May 2011 Page 4

5 1. You should check your home insurance to see if liability cover is included in your existing policy. 2. You can get advice from our local support organisations or the Council s Self Directed Support Team. Contracts As an employer you need to ensure that both you and your employee understand and agree to the terms of employment. This means that you should both have a written and signed contract to which both of you should adhere to. The terms should include: 1. Job description 2. Code of conduct 3. Hours of work 4. Holiday, sickness, maternity, paternity and retention entitlement 5. Grievance procedures An example contract is available separately, and on the People First website. Criminal Record Bureau (CRB) checks Although it is not compulsory for you to carry out police checks on your employee, it is a security precaution which is highly advisable to all employers. You can either find a CRB agency yourself who can do this check or you can ask the Council s Self Directed Support Team to help you with this. Health and safety You have a duty to ensure that your employees are safe at work. You can get further details from an independent support organisation that can provide you with a booklet or guidance about health and safety inside the home. See Factsheet 6 for more information on support brokers. Training If there are any specific training requirements, you need to ensure that the training is provided before employment starts. 1. You should approach your local authority about support and advice around training needs. 2. Support organisations will be able to support you with locating training options which are available. Tax and National Insurance Contributions As an employer, you are responsible for running a PAYE (Pay As You Earn) system where necessary. This is the system for calculating the tax and National Insurance (NI) contributions an employee owes, and for deducting the correct amounts from their wages. The diagram below shows when PAYE is needed. Direct Payments Factsheet 8 Royal Borough of Kensington and Chelsea May 2011 Page 5

6 Is this your employee s only job? No You do need to run a PAYE scheme. Are they earning less than 97 per week? You do NOT need to run a PAYE scheme BUT you do need to keep records of their hours and payments made. Are they earning between 97 and 110? You do NOT need to make Tax or NI contributions. You DO need to fill in a PAYE deductions sheet to show how much your employee is earning, as earnings of 95 and upwards contribute towards your employee s state pension. Are they earning more than 110 per week? You DO need to run a PAYE scheme. A simplified HMRC scheme is available if an employee earns less than 160 per week it s less form filling and the tax tables are simpler. Useful contact numbers and websites If you are interested in finding out more for yourself about the possibility of using your personal budget to pay an individual to provide support, the following contacts and websites provide relevant information. Business Link practical advice for businesses , HM Revenue and Customs - information on Tax and National Insurance and registering as an employer (New Employer Advice Line), UK Border Agency - advice on right to work in the UK (employer s line), Direct Payments Factsheet 8 Royal Borough of Kensington and Chelsea May 2011 Page 6

7 Being the boss - useful information from a disabled employer of personal assistants, Direct Gov- information on everything from benefits, to becoming an employer, to tax. Summary Becoming an employer can work very well for some people, as we know from some of our existing service users, who are enjoying the benefits of a highly flexible and personalised service. However, these benefits only really come into play on a personal budget of at least 50 per week. Below this level, the money is not normally enough to pay the helper to take on any additional tasks, beyond meeting basic needs, and covering the overheads of being an employer may also be a problem. Regardless of budget, you may be put off by the responsibilities involved in being an employer, or the fact that this is not such a cheap option when all the add-on costs are taken into account. Using a self-employed helper may seem more attractive but it is difficult to find people who are legitimately set up in this way. You need to be aware of the potential financial risks you face if your helper turns out to be falsely selfemployed. For many people, particularly those on personal budgets of under 50 per week, buying care from an agency (whether through a direct payment Visa account or a service we arrange on your behalf) may currently be the best option. However, for people with a direct payment of more than 50 a week and with the desire to do so, the scheme can work really well. Direct Payments Factsheet 8 Royal Borough of Kensington and Chelsea May 2011 Page 7