Take care - employing a nanny isn't child's play: Andrew Bibby examines the pitfalls of child-minding arrangements

----------------------------------------------------------------- Experienced nannies: net earnings 1992 Pounds per week Average Low High Live-in nanny, central London: 134 80 200 Outer London, Home Counties: 116 80 150 Other towns and cities: 104 70 140 Country: 103 70 140 Daily nanny, central London: 171 100 200 Outer London, Home Counties: 147 90 200 Other towns and cities: 127 90 155 Country: 125 90 160 ----------------------------------------------------------------- Source: Nursery World -----------------------------------------------------------------

LIKE Zoe Baird and Kimba Wood, President Bill Clinton's two choices for Attorney-General who were both obliged to withdraw their nominations for the post, many British professional women have made child-minding arrangements that fall foul of the strict letter of the law.

Working parents often feel grateful just to have made a half- reasonable childcare arrangement. However, as Lucy Daniels, of the Working Mothers Association, points out, a decision to use a nanny or child-minder at your home normally raises employment, law and income tax issues.

'It is very, very unusual that a nanny can claim self-employed status,' she says. In other words, parents find themselves legally in the position of employer.

'Parents don't understand the complexities of being an employer. Very often it is their first time in that position and they ignore their responsibilities.'

In law the nanny has a right to a written employment contract, at least within 13 weeks of starting work. Ms Daniels argues that a formal written contract helps both sides, reducing the opportunity for misunderstandings.

'Parents can find it difficult to mention if they are not happy about something, and small problems can blow up into big problems,' she says. 'It is better to have a clear contract from the start.'

Her own organisation and the nursery nurses' trade union, the Professional Association of Nursery Nurses, have both produced model contracts.

These agreements include clauses covering, among other things, expected hours of work, holiday entitlement, sickness arrangement, confidentiality and disciplinary procedures.

The WMA and PANN are among a number of childcare and nursery nursing organisations that participated in a meeting last month at which a new grouping was established to push for higher standards. This body, which goes by the suitably Mary Poppins-ish name of the Nanny Umbrella, also argues for a national registration scheme for nannies.

At present nannies do not necessarily need qualifications and, unlike registered child-minders, are generally not covered by the Children's Act.

Efforts by organisations within the Nanny Umbrella to professionalise the position of nannies may be thwarted partly because parents know that informal arrangements are cheaper.

As employers, however, they have the legal responsibility for deducting tax and National Insurance due through the Pay As You Earn system. The present minimum weekly wage for operating PAYE deductions is the National Insurance threshold of pounds 54.15.

Louise Davis, principal of the long-established private Norland College for nursery nurses, understands the high cost of childcare for working parents. She estimates that a higher-rate taxpayer may need to earn an extra pounds 16,000 simply to pay, after tax, a nanny's modest wage of pounds 130 a week.

However, she encourages her students to understand their employment rights, pointing out that a nanny without National Insurance contributions will be penalised if she needs to draw unemployment, sickness or maternity benefit. 'Tax evasion is not condoned, and nurses should not be coerced into it.'

According to Kay Grant, who nannies for one-year-old Georgia Trapp in Dulwich, south-east London, the advantages of a legitimate arrangement more than offset any financial disadvantages.

'I could be earning a heck of a lot more,' she says, 'but I do realise we have to pay for things.

'It is important to me because I would like to think when I retire that I could draw some pension. I would rather have everything above board.'

The Inland Revenue operates a little-known simplified deduction scheme (also known as the 'Q' scheme) within the PAYE system for use by people employing domestic staff paid less than pounds 8,500 a year. However, not all tax offices will necessarily draw it to parents' attention.

'The tax office wasn't very helpful or efficient,' said one parent after trying to set up a PAYE deduction card for a nanny.

Another issue is insurance. Legally, parents employing nannies should have employers' liability insurance.

'Parents should check their household insurance,' says Sue Wasmuth, of the Pre-Select Staff Agency. 'Some policies include cover for employees working in the household, some don't. But the nanny should also get professional indemnity insurance for herself.'

Nannies belonging to PANN are automatically provided with pounds 1m indemnity insurance cover.

Model contract and leaflet, 'How to Keep Your Nanny', free from Professional Association of Nursery Nurses, 2 St James' Court, Friar Gate, Derby, DE1 1BT (tel: 0332 43029).

Working Mothers Association, 77 Holloway Road, London N7 8JZ (071-700 5771), annual membership pounds 12.50, also produces a model employment contract ( pounds 2.50) and book, 'The Working Parent's Handbook' ( pounds 4.50), both free to members.

(Photograph omitted)