Company employing child minder for employee on reduced wage. Implications?

Can anyone help advise if it is illiegal for a company to put a childminder on their books as an employee instead of paying another employee a full wage?

This means that the childminder and company are paying taxes but the place of employment is actually the home of the employee on the reduced wage.

It looks to me like a tax fiddle, and I am pretty sure the revenue would take the same view.

No way that'll fly. For starters there would be a BIK on the employee whose child is being minded, to the tune of the cost of the childminder...

I imagine there could be all sorts of other legal issues, like insurance, health & safety etc..

So while it may not be illegal it certainly wouldn't be a very good, or tax efficient, idea.

I'd say salary sacrifice rules would apply to this.

So how does it work for companies that have creches?
Do all the employees that avail of that service also pay BIK?

(It would seem counter-productive to penalise parents that want to work)

umop3p!sdn said:

So how does it work for companies that have creches?
Do all the employees that avail of that service also pay BIK?

(It would seem counter-productive to penalise parents that want to work)

Click to expand...

http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/other.html#section4
Crèche/Childcare Facilities

Employer-provided facility


Where an employer provides free or subsidised childcare facilities for employees, a taxable benefit does not arise where the childcare facility is provided on premises which -

1. meet certain requirements of the Child Care (Pre-School Services) Regulations 1996, and
2. are made available-
   • solely by the employer
   • by the employer jointly with one or more other participants in a joint scheme and the employer is wholly or partly responsible for either -
     • financing and managing the facility, or
     • providing capital for the construction or refurbishment of the premises, or
   • by any other person or persons and the employer is wholly or partly responsible for either -
     • financing and managing the facility, or
     • providing capital for the construction or refurbishment of the premises.

Independent facility

Where the above conditions are not complied with, e.g. where an employer merely pays for or subsidises the cost to an independent crèche or child care facility, the cost borne by the employer is a taxable benefit and PAYE and PRSI must be applied accordingly. In such circumstances, where an employer makes a block payment to a crèche or childcare facility, the amount paid should be apportioned and treated as notional pay of the respective employees. The apportionment of the block payment should be based on the facts, including the number of children concerned for each employee, and should lead to a result which is fair and reasonable.

Thanks for that mandelbrot.

So it seems that the answer is to make sure that your child care facility complies with 1 and 2 in mandelbrot's post.

Seems very unfair on SMEs that do not have the resources of larger companies. (As usual)

Thanks Mandelbrot!