An uneven playing field, with plenty of risk all around

I know I’ve written about this before, but the imminent report to government of the Productivity Commission inquiry into future options for child care and early childhood learning has had me thinking about the issue again: the problem of the ‘underground’ cash-in-hand in-home child care industry.

Yes, the word ‘underground’ has fairly strong connotations of illegality, but that’s precisely why I use it. For what we are talking about here is the provision of child care that is outside the law – which is, of course, what illegal means. And while some may suggest that the law is overly prescriptive and, dare I say it, characteristic of a ‘nanny state’, there are good reasons for the laws in this area. Not least of these is the safety of children who are being cared for.

There are essentially two main groups of nanny working illegally in Australia.

The first are those working for cash-in-hand. These nannies operate completely outside the system, essentially on the ‘black market’. The illegality of this situation should be obvious. It starts with the fact that the nanny is earning money that is not being declared to the tax department (ATO). Then there is the lack of workers compensation cover, professional liability and superannuation guarantee payments.

Nannies working under these circumstances operate with no protection. They are open to abuse, can be summarily dismissed at any time and are constantly risking prosecution by the ATO. Parents and, more importantly, children in these situations are also essentially unprotected. Parents certainly leave themselves risking a potentially awkward situation should they discover any form of misconduct on the part of their nanny. It’s difficult to turn to the law for help when you have so obviously been ignoring it. They are also breaking the law themselves by hiring an employee on a cash-in-hand basis.

The second group of illegally operating nannies are those who work as contractors using their own Australian Business Number (ABN). The ATO has very clear rules and tests about this. Operating as a contractor is only allowed when a person is operating a legitimate business, which includes not having all your income from one client, and not being solely reliable on an individual to get the work done. Most of the cash-in-hand risks apply to this category of nanny and their employer.

Of course, people who employ nannies under either of these circumstances need to accept that they cannot qualify for any government rebates, that they cannot be sure that their nanny is up-to-date with current legal requirements of the profession, and that their nanny will not be getting any professional development.

Yes, it is true that cash-in-hand nannies and nannies working as contractors are often cheaper – sometimes substantially – than nannies provided through an agency like ours. And yes, it does affect legitimate business operators like ourselves when the playing field is anything but level. However, this is not my primary concern in all of this. My biggest concern is that there are too many parents and their children – and nannies for that matter – who are leaving themselves wide open to prosecution or worse as a result of working outside the system.

Let me finish by emphasising that this is not a problem unique to Australia – not by any means. Estimates are that as much as 85% of in-home care in the USA is provided by carers working outside the law. (It’s hard to get a definitive figure locally, but something the order of 65% is probably about right.) There is also growing concern globally about the prevalence of modern slavery, with more and more stories coming to light of housekeepers, child carers and other home-based service providers working under horrendous conditions.

I realise that I am probably preaching to the converted to some extent by writing about this topic in our newsletter. Most of you who read this are clearly happy working or hiring inside the legitimate in-home care industry. Nonetheless, it is important that anyone who has any involvement in the child care industry is aware of what is going on and what the risks are to those who choose to operate ‘underground’.

Date: 5-August-2021 @ 8:02 am
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