As more families look to arrange care at home for children, elderly relatives or family members with additional needs, live-in carers and nannies are becoming an increasingly common solution.
Social care has moved firmly up the political agenda, with Prime Minister Andy Burnham recently placing reform of the social care system at the centre of the UK Government's policy programme and calling for a more integrated approach to care provision. Against that backdrop, many families are exploring ways to provide support at home rather than through residential care settings.
While these arrangements can provide continuity, flexibility and reassurance, they also create legal obligations that are sometimes overlooked. What often begins as an informal family arrangement can, in practice, amount to a straightforward employment relationship with all the responsibilities that brings.
A family home is not just a workplace. It’s also a private living environment. As a result, families often need to consider issues that go well beyond a standard employment contract.
Who is the employer?
The first question is often the most important: who actually employs the carer or nanny?
Where a family recruits an individual directly, pays their wages and oversees their work, the family is usually the employer. That can trigger obligations relating to PAYE, National Insurance, pensions, employment contracts and employment rights.
Using an agency doesn’t necessarily remove those responsibilities. Some agencies simply introduce candidates, while others employ and supply workers themselves. The contractual arrangements should clearly identify who employs the individual and who is responsible for what.
In some situations, particularly where care is funded through a personal injury award, clinical negligence settlement or trust structure, it may be sensible to consider whether employment should be managed through a separate legal entity. Employment, tax and private client advice should be obtained before deciding on the appropriate structure.
Families should also undertake the same basic checks expected of any employer, including references, right-to-work verification and, where appropriate, Disclosure Scotland or criminal record checks.
"Live-in" does not mean "always working"
One of the most common difficulties with live-in arrangements is the distinction between living in the home and working in the home.
A live-in carer may reside in the home, share family meals and spend their non-working time there without those periods necessarily counting as working time. However, the position becomes more complex where the individual is expected to remain available, particularly overnight.
Contracts should clearly define working hours, rest periods and any on-call arrangements. Vague expectations can result in disputes about pay, working time and responsibilities.
Families should also consider practical household matters, such as use of vehicles, visitors, access to private areas of the home and general household expectations.
National Minimum Wage – not so easy!
A common misconception is that accommodation and inclusion in family life somehow replace the need to comply with minimum wage legislation.
That is not the case.
The historic exemption for many domestic workers who were treated as members of the family was removed in April 2024. Now, most professionally employed live-in carers and nannies will be entitled to receive at least the applicable National Minimum Wage or National Living Wage.
This means families should assessing working hours carefully. A salary that appears generous may not be compliant if the individual is regularly working long hours, including overnight duties.
Minimum wage breaches are often accidental, not deliberate. Problems arise where working time isn’t properly recorded, payroll arrangements are not updated, or deductions are made without understanding the impact on minimum wage calculations.
Maintaining accurate records of hours worked, and payments made can end up being essential.
Accommodation requires careful treatment
Accommodation is frequently one of the attractions of a live-in role, but it cannot be a substitute for wages.
The value of accommodation that can count towards minimum wage purposes is strictly limited under statutory accommodation offset rules. Families cannot simply deduct the market value of a room from salary and assume this meeting minimum wage requirements.
The employment contract should therefore deal separately with salary and accommodation arrangements.
It is also important to consider what happens when employment ends. The agreement should make clear that occupation of the accommodation is linked to the employment and that the right to remain in the property ends when employment terminates. This can help avoid disputes and reduce the risk of unintended occupancy rights arising.
Pension obligations are often overlooked
Families employing staff directly may also need to comply with automatic enrolment obligations.
Depending on the employee's age and earnings, the family may need to assess eligibility, enrol the employee into a workplace pension scheme and make employer pension contributions.
Many families find that using a professional payroll provider is a sensible way to ensure these obligations are met.
Clear duties and expectations around privacy
Live-in carers and nannies often become deeply involved in family life. That makes clarity particularly important.
Job descriptions should specify the duties expected of the employee and identify any limits to the role. Disputes frequently arise where responsibilities gradually expand beyond what was originally agreed.
Equally important is confidentiality. A live-in employee may have access to highly personal information about family finances, health matters, children's routines, travel plans and private affairs.
Well-drafted contractual provisions can help protect confidential information while also setting expectations around photographs, social media use and sharing information about children or vulnerable family members.
Getting the arrangements right
A live-in carer or nanny can provide invaluable support to a family. However, these arrangements sit at the intersection of employment, tax, pensions, property and private client law.
Taking advice at the outset, putting appropriate contractual documentation in place and ensuring compliance with key employment obligations can help families avoid costly disputes later and allow the focus to remain where it belongs: on providing effective care and support.
How we can help
Our Employment team advises families on the legal and practical issues involved in employing live-in carers and nannies, from contracts and working arrangements to pay, pensions, accommodation and confidentiality.
If you are considering employing a live-in carer or nanny, or would like advice on an existing arrangement, please contact Robin Turnbull or a member of our team.