Childcare: parental concern

Easing the burden of childcare on staff can help businesses attract and
retain staff, and according to HMRC research, 30% of employers offering
childcare schemes to their staff said they had identified a positive effect on
absenteeism. Here are three you might want to consider offering.

Childcare voucher schemes

Government-backed childcare voucher schemes allow businesses to exchange up
to £55 of an employee’s weekly pay (£243 a month) for the equivalent value in
vouchers, which can be used to pay a childcare provider for any type of
registered or approved care for youngsters between the ages of 0 and 16 years.

Jonathan Davis, a consultant at employment consultancy PES explains: ‘These
vouchers are free of tax and National Insurance Contributions, and can save each
parent up to £1,195 per annum. Employers running childcare voucher schemes also
reap the benefits, saving up to 12.8% (£373 per employee, per annum), in NIC
savings alone.

For employers, the cost of setting up and running a scheme varies from
provider to provider. Most charge a service charge based on a percentage of the
voucher volumes ordered by the company – typically 6% to 8%. Voucher providers
typically supply marketing materials, detailed payroll schedules and a helpline
service for employees.

Lynne Keeble, childcare manager at Accor Services, warns that employees may
not be better off if they already receive tax credits. ‘Companies need to make
sure staff have the tools to make informed decisions about the tax implications.
It’s not for everyone,’ she says.

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Workplace Nurseries/Creche

Workplace nurseries can generate savings for employees as they are free of
tax and national insurance provided the nursery complies with HMRC regulations.
Workplace nurseries tend to be set up by large employers, or employers who have
a large number of staff at a particular location in order to fill the nursery.

First Direct uses Kids Unlimited to operate workplace crèches at its two
facilities in Scotland and Leed. Nicky O’Brien, HR business partner at First
Direct explains: ‘The whole philosophy of the company is very family friendly.
It’s a real benefit as a staff attraction and retention tool – it makes people
think twice before leaving.’

The subsidized nursery means staff pay below commercial rates for places. The
crèches are open from 7am to 6pm and are open all year round except Christmas
and New Year. ‘There’s not much of a waiting list. Because we have a lot of part
time workers, we can usually accommodate most parents.’

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Emergency childcare

Parents whose regular childcare has broken down, have a last minute work
commitment, don’t have relatives to help out or simply realise that they want
help for the day can now find a nanny or nursery place when they need it.

Government figures show that parents who work have childcare breakdown
problems on average nine times a year and 89% of them had to take some time off
work as a result.

One provider,, allows parents to book childcare from
between three month and just an hour before it is needed.

Venetia Wickham, operations manager at Emergencychildcare, explains: ‘The
cost of childcare varies but typically it’s £50 for a day at nursery, £7 per
hour for a childminder and £16 per hour for a nanny.’

For corporate clients, set up of the scheme costs £5,000, plus a £6,000 to
£12,000 annual management fee which includes reporting, a branded website for
staff to book childcare, and promotional materials.

‘One of our clients, law firm Olswangs, pays 50% of the cost of childcare up
to a value of £200,’ Wickham says. ‘It’s cheaper than staff not being able to
come into work.’

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