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From 6 January 2024, the main rate of class 1 National Insurance contributions (NIC) deducted from employees’ wages is reduced from 12% to 10%. From 6 April 2024, the main rate of self-employed class 4 NIC will reduce from 9% to 8% and class 2 NIC will no longer be due. Those with profits below £6,725 a year can continue to pay class 2 NIC to keep their entitlement to certain state benefits. Our guidance will be updated in full in spring 2024.

Updated on 6 April 2023

Care workers

Care workers can face some challenges in the tax and benefit system, often due to their travel patterns. We set out some of the issues related to zero hours contracts and varying work patterns below and explain what to do if you are affected by them.

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Zero hours contracts

Zero hours contracts occur when a person agrees to be available for work when required but has no guaranteed hours or times of work. Their use for care workers helps the home care providers manage high and low demand.

If you are on a zero hours contract, you will usually have the employment status of worker, or otherwise employee. Worker status is explained on GOV.UK. Having at least worker status means that, in theory, you should be entitled to the minimum set of statutory employment rights, such as the minimum wage, holiday pay, a workplace pension, rest breaks and protection from discrimination.

Further, being paid under the Pay As You Earn (PAYE) system (as most care workers are) provides a ‘secondary contributor’ (that is, someone who is liable to pay class 1 secondary National Insurance contributions). This means that you may be able to receive statutory sick pay (SSP) and parental pay from your employer if you satisfy all relevant qualifying conditions.

In response to concerns about the use of zero hours contracts, the government issued some guidance to employers. Although this is aimed at employers, it may be useful for workers too to help them understand their rights.

If you have any concerns about being on a zero hours contract, you could contact ACAS which is a free, confidential helpline to ask for advice on what to do next.

Holiday pay

All care workers who are classified as employees or workers are entitled to holiday pay.

The minimum holiday entitlement under law is 5.6 weeks per year – this equates to 28 days for a person working a five-day week.

One method of calculating paid leave for those working irregular hours throughout the year, such as zero hours contract workers, is to base entitlement on 12.07% of the hours worked (using the statutory minimum leave period of 5.6 weeks). However, this method has been challenged in the courts.

For more information on how holiday pay is calculated, see our main page on Holiday pay.

Example

Mary starts a new job as a care worker. She works 17 hours one week, 20 hours the next week, and then 15 hours for the next two weeks. After a month of working, she has built up entitlement to approximately 8 hours of paid leave (67 hours x 12.07%).

If she usually earned £10.50 an hour, she would be entitled to £84 (eight hours x £10.50) when she took her leave. 

If you are unsure as to whether your employer is dealing with your holiday correctly in your particular circumstances, you could seek further clarification as to your position from ACAS.

Other issues

Care workers may also be interested in our guidance on pension contributions under auto-enrolment and the effect of pension contributions on state benefits, like tax credits and universal credit.

For information on zero hours contracts and statutory sick pay, see our Statutory Sick Pay page.

For information on National Insurance contributions, see our pages on National Insurance generally, NIC for employees and National Insurance credits.

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