Hidden costs of the employer model families often miss (insurance, sick pay, recruitment)

When you're arranging live‑in care for someone you love, there's a natural instinct to want complete control. You want to choose exactly the right person, build a relationship with them, and know that everything is being done just the way you'd want it. That's completely understandable. It's exactly the kind of personal touch that matters.

And when you look at the upfront costs, the direct employer model can seem like the more affordable option. You pay the carer's wage, and that's that, right?

Well, not quite. There's a whole layer of costs that sit beneath the surface, and they have a habit of adding up in ways that families often don't spot until they're already in the middle of it.

Employer's liability insurance: not optional

This is the one that catches most people out. The moment you employ someone, even if it's just one person working in your own home, you are legally required to have employer's liability insurance. It's not a nice‑to‑have. It's the law, under the Employers' Liability (Compulsory Insurance) Act 1969.

Your policy must cover at least £5 million, though most standard policies provide £10 million. And if you don't have it? You could face fines of £2,500 a day for each employee not properly covered.

The cost itself isn't huge in isolation. Policies can start from around £69 a year for some businesses, but for a sole employer the actual figure depends on your circumstances. The point is that it's an ongoing cost that many families simply don't budget for when they decide to employ directly.

National Insurance: the one that really adds up

This is where things get significantly more expensive. As an employer, you are responsible for paying secondary Class 1 National Insurance contributions on top of your employee's wages.

From April 2025, the employer National Insurance rate increased from 13.8% to 15%. And the threshold at which you start paying dropped from £9,100 to £5,000 per year. That means you're paying 15% on earnings above £5,000, rather than above £9,100.

To put that into real terms, if you're paying a live‑in carer £25,000 a year, you're looking at around £3,000 a year in employer National Insurance contributions alone. That's money that comes out of your budget on top of the wage you've agreed.

Pension contributions: another legal requirement

Under automatic enrolment, if your employee is aged between 22 and State Pension age and earns more than £10,000 a year, you are legally required to enrol them in a workplace pension scheme.

The minimum employer contribution is 3% of qualifying earnings. Qualifying earnings for the 2025/26 tax year are between £6,240 and £50,270. So on that same £25,000 salary, you're looking at around £560 a year in pension contributions, and that's just the legal minimum.

Statutory sick pay: the unpredictable one

This is the cost that's hardest to plan for because you simply don't know when it might hit.

From April 2025, statutory sick pay increased to £118.75 per week. And here's the change that really matters: from 2025, statutory sick pay became payable from the first day of illness, rather than after a three‑day waiting period. That's estimated to cost employers across the UK an extra £450 million annually.

If your carer is off sick for a few weeks, you're still paying them. And you're also potentially paying for cover. It's a double hit that can throw a carefully planned budget completely off course.

Recruitment: the cost of finding the right person

This is another area where the costs are easy to overlook. Advertising, DBS checks, right‑to‑work checks, reference checks, and the time spent interviewing all add up.

Research shows that recruiting a single care worker costs organisations a median of £7,870, including recruitment expenses, training costs, and agency cover costs. For a family employing directly, the costs may be lower, but they're still significant. And if the person doesn't work out and you have to start again? You're paying all over again.

Holiday pay and other leave

Your employee is entitled to annual leave under the Working Time Regulations. They're also entitled to maternity, paternity, and parental leave, with statutory rates for 2025/26 at £187.18 per week.

These aren't optional extras. They're statutory entitlements that you, as the employer, are responsible for managing and funding.

The payroll admin burden

Even if you manage all the other costs, you still need to run PAYE, deduct tax and National Insurance, keep accurate records, and report to HMRC. If your employee earns £96 a week or more, you must register for PAYE.

Many families end up paying a payroll provider to handle this, which is another ongoing cost. Others try to do it themselves, which takes time and carries the risk of costly mistakes.

So what's the alternative?

This isn't to say that employing a carer directly is never the right choice. For some families, it works beautifully. But it's important to go into it with your eyes open.

When you use an agency like Edyn, all of these costs are already built into the package. The employer's liability insurance, the National Insurance, the pension contributions, the sick pay, the holiday pay, the recruitment, the payroll admin. It's all taken care of.

You're not just paying for a carer. You're paying for peace of mind, for professional support, and for the reassurance that you're not going to be caught out by a cost you didn't see coming.

To summarise

The direct employer model can look cheaper on paper. But when you add up employer's National Insurance at 15%, pension contributions at 3%, statutory sick pay, holiday pay, insurance, recruitment costs, and the time and stress of managing payroll, the gap narrows considerably.

And that's before you even think about what happens if your carer is off sick and you need emergency cover, or if they leave and you have to start the whole recruitment process again.

At Edyn, we believe that great care should be straightforward. It should give you confidence, not leave you worrying about whether you've remembered to sort out your employer's liability insurance or calculated the right National Insurance contribution.

Because at the end of the day, the most important thing is that the person you love is getting the support they need. Everything else should be a walk in the park.

Book a free care advice call, or give us a ring on 020 3970 9900.

This guide offers general information only and is not financial or legal advice. Everyone's circumstances are different, and care funding and later-life financial planning are complex, so please seek advice from a qualified, regulated financial adviser and, where relevant, a solicitor, for your own situation.