Families understand and talk in gross as usually through their career this is standard practice. In the Nanny industry historically discussing the net salary has been the norm and it's only over the past few years that this has been changing.
Jobs now are usually advertised in gross but we find that Nannies still talk in net terms. Both families and nannies should always agree on a gross salary and ensure the salary stated in your contract is in gross.
So, what is the difference between gross and net salary?
The gross salary is the amount that an Employer pays their Employee before any deductions have been made. These deductions include Tax and National Insurance.
The net salary is the amount the Employee receives after these deductions have been made.
Why is it important a gross salary is agreed upon?
An Employer always knows where they stand with a gross salary and can budget accordingly
The Tax-free personal allowance is the amount of money a person can earn each year, before incurring tax. This allowance is usually increased by the Government at the start of the Tax Year in April.
If a gross salary is in the contract then the Employee will automatically benefit from any increase to the Tax-free personal allowance. This means that your take-home pay increase.
If a net salary is in the contract then the Employer benefits from this increase instead.
When looking to get a mortgage/loan evidence of income needs to be provided. This needs to be a gross amount so if the contract is in net this makes the process even more stressful!
If a net salary is in the contract then the Employer will be liable for any unpaid Tax from previous employment, student loan payments or court orders.
An Employer will be required to pay both Employer and Employee pension contributions. This is means they pay 7% on top of the salary instead of 3%!
At Nanny Scout, we always ensure contracts are in Gross.
If you want to convert a gross salary into net then just check out one of the many Tax Calculators online.
We use Way2paye and recommend them to our Clients too. Karen is incredibly knowledgeable, friendly and always on hand to answer any questions.