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A guide to employing domestic staff in the UK

Posted on 09 September 2020

High Net Worth Individuals (HNWI) who have homes in the UK will often engage personal and domestic staff to work - and often live - alongside them at home in order to manage their busy domestic and business arrangements. These individuals often form close relationships with the families they work with, and vice versa. However, there are risks to be managed, particularly given the unparalleled access domestic staff may have to both business and personal affairs. Here is a summary of the key considerations when engaging domestic and personal staff:

Hiring

It is important to consider at the outset the reality of the working arrangement and ensure that it is appropriately reflected in a robust and comprehensive contract. The relationship is often that of employer-employee but in some circumstances, the individual may be an agency worker, self-employed, worker or au pair. These are important distinctions as different employment and tax rights and protections will apply depending on the individual's status.

It is crucial to ensure that the individual has the right immigration permissions to work in the UK before finalising any contractual arrangement. Obtaining references and other appropriate background checks will also be important.

The contract of an employee or worker will need to include, among other things, details of remuneration and benefits, working time, notice periods, holidays and sick pay. The parties are generally free to agree the contractual terms, subject to certain statutory minimum rights (examples include minimum periods of notice, annual leave and the National Minimum Wage).

Only a limited duty of confidentiality will be implied into employment arrangements and as such, it is important that the contract contains detailed provisions in order to protect the family's private affairs.

If the worker will be living with the family, HNWIs will may to consider implications around (i) service occupancies, where an employee is required to live in the employer's premises for the better performance of his/her duties; (ii) service tenancies, where the employer provides accommodation to the employee but such occupation is not so closely connected with the employment; and/or (iii) accommodation allowances.

Financial, tax and insurance considerations

Anyone employing an individual in the UK must register as an employer with HMRC, and ensure they have made arrangements to operate PAYE ("pay as you earn") deductions from wages for tax and National Insurance contributions. All employers must obtain employer's liability insurance and may also need to enrol staff for workplace pension.

Data protection and health and safety

Data protection is highly regulated and domestic employers have obligations to protect the personal data that they hold and process in respect of their staff. Relevant contractual provisions and privacy notices (which will include information on how the employer collects and processes the individual's information) should be in place. There should also be systems (such as policies) in place allowing the monitoring of employees and their communications. Health and safety regulations should also be borne in mind when employing staff in the UK.

During the engagement, there are myriad employment law considerations that govern the way you manage your staff. Care needs to be taken when dealing with tricky employee relations matters such as performance management, misconduct and sickness absence; financial matters such as pay rises and bonuses; and the protections against discrimination apply to employees and workers throughout the relationship, regardless of how long they have worked for you.

The rights and obligations of employees on termination are complex, and involve both statutory and contractual rights: relying on the employment contract alone will not be sufficient. Legal advice should always be sought before terminating an employee, but in general terms:statutory minimum notice periods and any redundancy payment will depend on length of service and the reason for dismissal; andall employees with more than two years' service have the right not to be unfairly dismissed, and this will usually require both a fair reason and a fair process.

How we can help

Employers of domestic staff are held to much the same standard as large corporate employers. Without the benefit of an HR department, and with a busy schedule, hiring and managing staff can be daunting. If the basics are not put in place at the outset of the relationship, or if the relationship is not properly managed and ultimately terminated in accordance with UK laws, an employer and their family can be left exposed. Costly, time consuming and worrying Employment Tribunal disputes and HMRC investigations can ensue.

We regularly help our HNWI clients to ensure they have all the appropriate arrangements in place to be a compliant employer in the UK, to protect them and their family, and provide guidance through the life cycle of the employment relationship. We can ensure that you are complying with UK employment laws, tax and other regulatory obligations at every step of the way. We are adept at advising on the management of employment disputes, and if litigation becomes unavoidable we know how to apply appropriate force through litigation, while managing the short and long-term reputational issues for HNWIs and their families. We are one of few firms acting at the highest level for both employers and employees: whether it is an individual bringing a claim in the Employment Tribunal or High Court, or an employer seeking to defend or resolve it. This gives us a unique understanding of and ability to advise on strategies deployed by both sides.

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