Holiday pay, sick pay and a pension when you are a self-employed carer

Gov.uk's guide to employment status puts it in one line: somebody who is self-employed does not get holiday or sick pay when they are not working. What you have instead are the terms of the contract you agree with each client, and on PrimeCarers that is the written agreement between you and the family. It covers notice, cancellation, bank holidays and substitution, and it says nothing about paying you for time you do not work, because that is not how self-employment works.

This is also why comparing a self-employed hourly rate with an employed wage is not like for like. What care workers are paid in the UK has the employed figures with their sources, and what carers earn on PrimeCarers shows what reaches a carer after our commission. The difference between the two has to pay for everything in the right-hand column above before it is extra money. Self-employed or agency? weighs the two arrangements side by side if you have not yet decided, and the rest of the guides for working carers are on carer resources.

There are two ways to do it, and they come to the same thing over a year. The first is to keep your rate as it is and move a fixed share of every payment into a separate savings account the day it arrives. 12.07% is the share that pays for 5.6 weeks off, and it is the same percentage gov.uk tells employers to use when working out holiday for staff on irregular hours. On a 30-hour week at £20 an hour, that is £57.93 a week, and after 46.4 working weeks it has built up to about £2,688.

The second is to set a rate that already includes the holiday. Charging about £22.41 an hour instead of £20 for 46.4 weeks brings in what £20 would over a full 52. You still need to put the difference aside, because it arrives in the weeks you work and is spent in the weeks you do not. You can also combine the two, with a rate set with holiday in mind and a smaller share of each payment saved.

Your rate is yours to set, and it is what a family sees and pays. A higher rate is not free: families compare carers nearby, and a rate well above the local range may mean fewer enquiries. How much to charge as a self-employed carer goes through setting a rate that covers your costs, and the earnings calculator on carer resources shows what a given rate and week leave you after our fee.

The holiday money is still income. Tax and National Insurance are due on everything you earn, including the share you saved for your holiday, so the pot is not a tax-free fund. Set your tax aside as well. Handling tax and money responsibilities covers the rates and the record keeping, and how to pay tax as a self-employed carer covers registering and paying.

If you work live-in, the pattern is different, because live-in carers usually work in rotation with weeks off between placements. Those weeks off are unpaid in the same way, so the same saving applies to the weeks between placements. Live-in hours, breaks and time off covers how the time off is agreed.

The thread running through all three is your National Insurance record. Once your profit is £7,105 or more a year, Class 2 is treated as paid for you, and gov.uk counts Class 2 towards New Style ESA, Maternity Allowance and the State Pension. Below that, nothing goes on your record unless you choose to pay voluntary Class 2 at £3.65 a week. A carer who is building up clients slowly, or who has a quiet year, can end up with a gap in the record that only shows when they need to claim. Class 4 National Insurance, the one charged on profits over £12,570, does not count towards any benefit.

For Maternity Allowance, gov.uk says HMRC will contact you after you apply if you have paid fewer than 13 weeks of Class 2, and that you can top up then and have the payments increased and backdated. It is simpler to have the record in order before the baby is due.

Universal Credit has rules of its own for self-employed claimants, including how it treats a month with low earnings. Universal Credit when you are self-employed covers those rules, so this page does not repeat them.

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Each year you are self-employed with a profit of £7,105 or more counts as a qualifying year without you doing anything, because Class 2 is treated as paid through your Self Assessment. The years to watch are the ones below that: your first year, a year cut short by illness, or a year when you worked mostly for an employer and a little for yourself. For those, voluntary Class 2 at £3.65 a week is the cheaper option. The other kind of voluntary contribution, Class 3, costs £18.40 a week and counts only towards the State Pension, where Class 2 also counts towards New Style ESA and Maternity Allowance.

You can usually pay voluntary contributions for the past 6 years, and the deadline is 5 April each year. Before paying anything, check your State Pension forecast on gov.uk. It shows your National Insurance record, any years that do not count, and whether paying to fill a gap would raise your State Pension. If it would not, do not pay.

A personal pensionSection titled A%20personal%20pension

The full State Pension is £241.30 a week, and a personal pension is how a self-employed person adds to it. You choose the provider, you decide how much to pay in and when, and you can pay a regular amount or a lump sum when a good month allows it. Gov.uk's guide to personal pensions explains the types and advises checking that a provider is registered with the Financial Conduct Authority or the Pensions Regulator.

The government adds tax relief. With most personal pensions, if you pay in £80, the provider claims £20 from the government and £100 goes into your pot. If you pay tax above the basic rate, you claim the extra relief on your Self Assessment return. Relief applies to contributions up to 100% of your earnings in the year. Gov.uk's page on pension tax relief has the detail. We do not recommend any pension provider or product. MoneyHelper offers free, impartial pension guidance, and a regulated financial adviser can look at your own circumstances.

1. 1

   Tell each client as early as you can

   Weeks ahead for a holiday

   The contract sets a minimum notice of 48 hours for hourly care, and 7 days for live-in care once you have worked 168 hours with that client. For a planned holiday, giving far more notice than that lets the family arrange care they are comfortable with.
2. 2

   Decide whether to send a substitute

   Your right under the contract

   You may send another suitably qualified carer in your place. The client can object on reasonable grounds, such as the substitute's qualifications, safety or right to work. You arrange and pay the substitute, and they are not your employee.
3. 3

   Keep the work on PrimeCarers

   The carer terms

   Any work for a client you met through PrimeCarers, including work done by a carer you bring in, is booked and paid through PrimeCarers. Do not arrange a substitute to be paid in cash or outside the platform.
4. 4

   Share only what the substitute needs

   Confidentiality

   The contract limits what you pass to a substitute to what is reasonably needed for the client's safety and continuity of care.

When you are ill, the contract recognises that you cannot always give notice. Leaving without the notice period is treated differently when the reason is illness or a serious emergency, so tell the family as soon as you know. The visits you do not do are not paid, which is why the savings buffer in the section above matters.

A client cancelling on you is a separate matter. Under the contract a visit the client cancels is payable in full, except for unplanned hospitalisation, illness, or another reason you and the client agree, and you can waive part or all of it. That protects you against a lost day at short notice, but it does nothing for your own holidays or sick days.

If you are ready to set a rate that pays for your own time off, you can register as a carer on PrimeCarers and choose your rate when you set up your profile. If you would rather see what is available first, see the carer jobs open near you.