Childcare fees are a considerable financial commitment. The Home Retail Group Childcare Scheme (“the Childcare Scheme”) as been introduced to provide savings for employees, thus relieving the financial strain of childcare costs and helping with work life balance. The Childcare Scheme enables employees to reduce the cost of various forms of childcare for your children up to the age of 16[1]. The company also recognises that parental choice is important. Therefore the scheme offers flexibility in terms of selection of childcare and in the management of fee payments to the childcare provider which you can select to best suit your needs.
The Home Retail Group Childcare Scheme achieves these savings in childcare costs through a reduction in your gross contractual salary, called a ‘Salary Sacrifice’. The Scheme works as follows:
Examples highlighting the potential savings are attached as Appendix A.
You can choose to reduce your salary by the full amount of any qualifying nursery fees and up to £55 per week or £243 per month for childcare vouchers.
The salary sacrifice requires a change to your contract of employment as you are giving up part of your salary (see later for more detail). This requires a 12 month commitment to the Childcare Scheme although a mid year change can be made as a result of a “Life Change Event. (See question 11 of the FAQ for a list of Life Change Events).
The Childcare Schemes Rules do not form part of your contract of employment. This means that Home Retail Group can amend the Childcare Schemes Rules from time to time and you should therefore always refer to the latest version of these Rules, which will be available on the intranet or on the Childcare Schemes website on http://www.kidsunlimitedargchildcare.co.uk/ or on request from kidsunlimited by telephoning 08000 326 777
kidsunlimited manages the Home Retail Group Childcare Scheme. Vouchers are capped at £55 per week or £243 per month per individual employee. Husband and wife or partners with legal responsibility for the child who both work for Home Retail Group can both join.
If you cant sacrifice sufficient salary to cover the cost of your childcare (either because your childcare costs are greater than the voucher cap of £55 per week or £243 per month or if your salary sacrifice may take you below the Payment Protection Level (refer to P4 for details) you can elect to pay the balance from your net pay. This is referred to as the “Balancing Payment". Of course you need to have sufficient net pay to cover this Balancing Payment.
Employees paid monthly:-
The sacrifice will be deducted on a monthly basis. The monthly salary sacrifice can be:-
Employees paid 4 weekly (13 pay periods per year)
The maximum sacrifice per pay period is £220 (£55 per week)
Employees paid weekly:-
This will be managed in 4 week blocks to synchronise with the 4 weekly paid employees. Start dates will coincide with the 4 weekly pay periods and leave dates should be the end of a 4 week period. The maximum reduction in your gross pay on a weekly basis will be £55 per week.
The deductions will be automatically paid to your childcare provider each month or banked for irregular payments
The Childcare Scheme can be offered to all employees who earn more than the National Minimum Wage (currently £5.52 per hour) and/or more than the Earnings Threshold (£105 for 2008/09). Further details can be found in the Payment Protection Level section on page 4.
Employees must have legal responsibility for the child(ren) to qualify. Others, such as grandparents who do not have legal responsibility of care, cannot apply.
The Government has set a limit on the amount of kidsunlimited Childcare Vouchers you can receive free of tax and NI. This is currently £55 per week or £243 per month
Your gross salary after the salary sacrifice has been made must not fall below the PPL (see below). The excess childcare costs, if the salary sacrifice does not cover your whole amount, can be deducted from your net salary (the “Balancing Payment). Paying through net salary might make paying your childcarer easier but does not benefit you financially.
Subject to the restrictions on voucher value, the PPL and having sufficient net pay, it is possible to have a mix of kidsunlimited Childcare Vouchers and Balancing Payments paid into your carer account with kidsunlimited. This will be known as your Childcare Account and all the payments into it (whether they are Childcare Vouchers or Balancing Payments) will be referred to as ‘Childcare Payments.
The Payment Protection Level (PPL) is made up of National Minimum Wage (NMW) and the Earnings Threshold.
Under employment legislation employers must not pay adult workers at a rate which is below the National Minimum Wage (currently £5.52 per hour). Any reduction in salary as a result of Salary Sacrifice which reduces an employees rate below National Minimum Wage is not permitted and therefore such staff will not be eligible to join the Childcare Scheme.
Additional details relating to the PPL can be found on page 10.
If you are not able to participate as your salary is below the PPL, you may be eligible for tax credits from the government (See Q17).
Whether you are paid weekly, 4 weekly or monthly, there are two options which may be combined to suit your needs:
If you have 2 or more children you may require regular and irregular payments.
Regular payments are paid in the first week of the month for that month. Irregular payments should be on your childcarers account within 4 working days of your instruction to pay (provided the money is available in the account).
Payment is by BACS and your childcare provider will receive a detailed remittance advice note. Each payment for each child will be made as a separate BACS transfer which will state your childs unique reference as specified by your childcare provider so there can be no doubt that the amount paid is for your childs fee.
Please be assured that your money can only be paid to your nominated carer(s). If kidsunlimited make a mistake in transferring the money, they will endeavour to rectify the situation or they will compensate you for your loss. They aim to provide a secure and error free service.
Agreement forms are available by downloading from the website http://www.kidsunlimitedargchildcare.co.uk/, by calling 08000 326 777, by emailing homeretailchildcare@kidsunlimited.co.uk, or by writing to Home Retail Group Childcare Scheme, kidsunlimited, Summerfield Village Centre, Dean Row Road, Wilmslow, SK9 2TA.
You should complete the agreement form and ask HR, your store or line manager to sign it to confirm your salary and weekly contractual hours. This is to enable kidsunlimited to check that by participating your salary does not drop below the PPL. Once you have completed the top of Form B, it should be passed to your childcare provider to fill in their details.
Both you and the childcare provider must sign the form to confirm that you have received, read, understood and accept the Home Retail Group Childcare Scheme Terms and Conditions.
Once the form has been fully completed, it should be returned to kidsunlimited. You should keep a copy for your records.
Once kidsunlimited receive your form, they will check that your Childcare Provider is registered or approved and that your salary does not fall below the PPL as a result of the salary reduction.
Kidsunlimited will write to you to confirm your participation in the scheme and the first pay date when you will see an adjustment to your payslip.
Deductions must be the same amount each pay period to satisfy HM Revenue and Customs rules. Your gross salary will be reduced by the appropriate amount and a subsequent payment will be made to kidsunlimited.
If you are using a holiday scheme or other form of irregular childcare, you may not always be certain in advance which carer you will be using. You may however join the scheme, nominating the childcare provider you are mostly likely to be using, and then "bank" your money. Since it is acceptable to change your carer at any time you may advise kidsunlimited of the details of your alternative childcare provider at a later date. It is in most circumstances generally advisable to book your nursery or childcare place in advance.
As stated in the introduction to the Childcare Scheme, the scheme requires a 12 month commitment although (for example) a mid year adjustment to a childcare provider fee or change of carer is acceptable. Otherwise, to change or leave the scheme must be justified by a “Life Change Event (see Q11 of the FAQs).
To change your amount or to leave the Childcare Scheme you should contact kidsunlimited. A new addendum to contract will be issued to reflect the change.
You must give at least 2 weeks notice before the start of a payment period to amend or leave the scheme. The leave date must be the last day of a pay period (NB this is the end of a four week block for weekly paid employees).
kidsunlimited Childcare Vouchers can only be used if your care provider is registered or approved as defined by the Government (see below). kidsunlimited performs initial and repeat registration checks but it is your responsibility to ensure that your childcare provider remains appropriately registered or approved. You will be liable for any income tax and NIC contributions if payments are made via the Childcare Scheme to unregistered or unapproved persons. It is also a criminal offence for a childcarer to operate without registration or approval.
It is your responsibility to determine the quality and suitability of your childcare provider.
Registered or approved childcare includes:
* Childcare provided away from the child's own home is required to be registered in England and Wales for children up to and including 7 years, in Scotland for children up to age 16 and in Northern Ireland for children up to and including age 12.
** Childcare provided in the child's own home will not qualify if the person approved to give that childcare is a relative of the child. Relative means a parent, grandparent, aunt or uncle, brother or sister (whether by blood, half-blood, marriage or affinity), and includes step-parents.
A registered childminder, nursery or childcare scheme is one that is registered
Approved care in the UK is administered by the Department for Education and Skills (DfES) through the Sure Start Unit. It is a voluntary scheme for approving childcare providers and enabling parents and employers to check if a carer is approved. This scheme provides recognised national status for individuals providing childcare that are not otherwise required to be registered and the childcare is provided in the child's own home or, for children aged over 7, on other domestic premises. This process will apply in particular to nannies or au pairs caring for children in their own home.
Relatives of the child will not be able to apply. A relative of the child means a parent, grandparent, aunt, uncle, brother or sister whether by blood, half-blood, marriage or affinity.
A national helpline is available during business hours on 0845 767 8111. The Sure Start Approval Scheme can also be accessed at the following website:
www.childcareapprovalscheme.co.uk
If you live in Scotland, Wales or Northern Ireland, there is no approval process currently in place.
If your pay falls below the PPL, the reduction will not be applied. If you are in SMART Pensions and the childcare scheme, and only one reduction can be made, SMART Pensions will take priority. As soon as your salary rises above the PPL, the childcare deductions will commence again. You are given the option each year, by the Pensions Department, at April to review whether you wish to change your commitment to SMART Pensions.
Participating in the childcare scheme will NOT reduce any pay-related benefits you receive from the Company, for example bonuses, future pay rises and life assurance.
We use the term ‘base salary to describe your pay before taking account of any childcare or SMART Pensions adjustment. Your base salary will continue to be used to calculate:
Mortgage reference letters will also refer to your base salary.
Entitlement to some State benefits, such as statutory sick pay, incapacity benefit and job seekers allowance are based on the amount of National Insurance that has been paid. Therefore to protect employees, the Company has set a Pay Protection Limit (PPL) and your pay each pay period will be tested against this.
The PPL will be reviewed annually each year in March and October in line with the review of the Earnings Threshold and National Minimum Wage rates. If your pay falls below the PPL during any pay period, deductions will stop until your pay exceeds the PPL again.
This means that we can ensure that employees whose state benefits could be affected by the scheme can be opted in and out of the scheme as appropriate.
In December 2004 Argos introduced SMART pensions for members of the Final Salary Scheme. The intention is to extend this to members of the Money Purchase Scheme from 1st April 2006, (this will be communicated separately). For Homebase employees, the intention is to introduce SMART pensions for both the Money Purchase Scheme and the Final Salary Scheme from the 26th March 2006.
SMART Pensions is also a salary sacrifice scheme. If you participate in SMART Pensions you will stop making your normal pension contributions to the pension scheme. Your contractual gross pay will be reduced by the amount that you used to pay into the pension scheme. Instead, the Company will pay an additional amount equal to your normal pension contribution, directly into the pension scheme. As a result your take-home pay will increase because you pay less National Insurance.
You will be able to participate in both SMART Pensions and the Childcare Voucher Scheme providing you meet the eligibility criteria and participation does not take you below the PPL.
If you are only able to participate in one scheme, then you can choose which scheme to participate in. If you are in both and subsequently only one reduction can be made, then SMART Pensions will take priority.
Tax Credits are a form of government childcare support provided by HM Revenue & Customs. The level of payment you are entitled to depends on personal family income. To find out if you are eligible for tax credits, call 0845 300 3900 or log onto http://www.taxcredits.inlandrevenue.gov.uk/. Further information is also available on the HM Revenue and Customs (HMRC) website www.hmrc.gov.uk/childcare
If you are eligible for or currently in receipt of tax credits, you need to be aware that sacrificing your salary to pay for childcare (for virtualvouchers or participating nurseries) may impact on your entitlement to tax credits.
For a precise calculation of Tax Credits entitlement or tax and National Insurance advice contact HM Revenue and Customs or visit www.hmrc.gov.uk
The Childcare Scheme will remain in place subject to continuing HMRC approval. In addition, if tax, national insurance or the regulations on childcare provision change, or it is no-longer viable for the Company to operate the scheme, we reserve the right to withdraw the scheme.
Neither kidsunlimited nor Home Retail Group are qualified to give financial advice. Some may feel it to be advisable to seek independent financial advice before joining the Childcare Scheme. kidsunlimited can discuss the relative benefits of joining the Childcare Scheme but cannot be held liable for the financial consequences of you joining the Childcare Scheme.