Childminder retainer fees during coronavirus closures

et78

Hi All, am trying to understand what is reasonably acceptable to pay our childminder during the closures. I've seen some settings charging half/full fees etc. Now that the Govt has announced that self-employed people can get a grant of up to 80% of their profits (not until June), can get a rent holiday, apply for universal credit and get a tax bill deferral, I don't understand exactly how childminders can charge a 'retainer' fee for a space that is not available to anyone else. The benefit of a 'retainer fee' is to secure a space so that the childminder doesn't give the space to someone else whilst you're waiting for your child to start and also to protect the childminder's income in case you change your mind. How does a retainer fee apply in this situation when clearly I can't get another childminder and my childminder can't give the space to anyone else?  I understand this is a tough time for both childminders and parents but I don't see how a monthly retainer fee is justifiable given the government support and that this situation could go on for an indefinite amount of time. Interested to hear people's views. 

unforeseen

Retainer fees are not Covid invention. They have been around at various different rates before this.

What is available to the nursery is not your concern and in any case they don't really cover all the expenses involved in running a nursery. I'm not sure where the rental holiday comes from. That is a decision of the building owner.

Your choice is to pay the retainer they stipulate and have a place available for your child or not pay and end up looking for a new nursery at the end. 

gary83

the option of a rental holiday is pretty irrelevant, the rent will still need paying it’d just be deferred. So if no money came in now the nursery would have to go out of business or put up the rates when they go back to work to cover the loss. I guess it comes down to what’s in the contract & how much you want to keep using that facility after all this.

Waxy666

@et78 I note you are referring to childminder (NOT nursery) so assume it's a self employed person in a domestic setting?  So I'm guessing you meant a mortgage holiday (not rent holiday).
I'm in a similar position, childminder is asking for £2 ph (vs £6.50 full rate) to cover "fixed costs" they are still paying during closure and calling it a retainer.  I don't see anyway that the 'fixed cost' such as ofsted registration (£35 per year) justify the fee they are asking for.  If there were costs that are still being incurred I'd be happy to contribute as these aren't covered by the self employed help scheme - but as far as I can see the cost is tiny during the closure compared to the 'retainer' being asked.

I think it boils down to the fact that childminders have realised places are in demand (and will still be after the crisis) and they can use this to threaten parents to continue paying them despite the fact they are closed.

[Deleted User]

I've taken a pay cut and cant afford to hold my space so I think I'll be losing my childminder xx

et78

@Waxy666 thanks for your reply and yes I'm not referring to nurseries, it's a childminder in a domestic setting who is renting. Childminder hasn't mentioned fixed costs to run the business to cover and agree this would be acceptable. Does the rent count as business cost? Genuine question! Or should it be a % of the rent based on business hours? Govt scheme is there to protect childminder's income so am stumped as why were being asked to pay retainer fees on top of them getting 80% of earnings. Is it morally ok to get more income or at the very least 100% of your income and not work at all plus if you really need to work during closure you can if you're self-employed and willing to do another job (within govt rules of who can work at mo). There seems to be perception that if you're employed you're massively protected and whilst my job is safe, if I don't work I don't get paid end of. How are childminders expecting to be paid in full (combination of govt and fees from parents) for the next 3 months at least? Whilst parents are reducing hours to accommodate for childcare and work commitments. Unbelievably confusing and there's no definitive, proper legal advice anywhere! 

Mrsn

Waxy666 - threaten parents??? Really...

Childminders will have to wait until June until the grant is available to them. Assuming that their property is mortgaged (people in rented accommodation can childmind too) then yes they may qualify for a mortgage holiday.... of course some banks are attaching hideous terms and conditions to these so some people are finding that this isn’t feasible for them.

In between now and June they will still have to pay all of their other bills, you know to eat, heat their homes, still have to insure vehicles etc even if they aren’t using them with no income coming in. Yes they can apply for universal credit unless they are on the old tax credit system (which financially they are better off remaining under in most cases) but the monthly payment they will be eligible for still won’t be enough to live on as they won’t get help towards their housing costs unless they happen to renting.

The retainer in the contract you signed might not have been specifically designed for these purposes but they are a standard in these sorts of contracts. No childminder wants to lose their parents but they are doing what they can in very very difficult times. The only difference is some childminders are trying their best to keep their parents happy by charging a nominal amount rather than the full amount they are allowed too through the contracts signed, people are understandably worried about drops in their incomes but seem to forget that these services they were using are going through exactly the same thing....

By the way I’m not a childminder but my sister is and as a single parent she is terrified of what the next few months hold for her because she has chosen to offer a very low retainer fee. Other childminders in her area are still charging the full rate per day.

Waxy666

Mrsn said:

Waxy666 - threaten parents??? Really...

You can dress it up all you like as a 'retainer' or anything else - what childminders are saying in simple terms is "If you don't pay me £X per hour then I'm cancelling your contracted hours and you can go find a new childminder in future."  This is a threat, plain and simple.  It has no basis, it's not a request to cover costs still being incurred to ensure the setting remains viable - it's just asking for money because they feel they have parents over a barrel and can do it.
Note - I differentiate childminder from nursery here.  Nurseries have substantial fixed costs including things like rented commercial premises, staff costs etc and retainers or part payment to offset these costs which are still being incurred even though they are closed is reasonable to ask for in my view.

If childminders have a similar basis to ask for a retainer they need to list out what costs they are still incurring and justify why the retainer is the £x that is being asked for.  If there are any childminders on here that can help us parents understand this then please do let us know.  I'm not a childminder and if I've completely misunderstood then please correct me but my basic thinking through of the costs a childminder incurs:
- Food, daytime activities (paint, contribution to kid clubs etc), petrol, - none are being spent during closure,
- public liability insurance and registration fees - PACEY insurance premiums can be frozen and Ofsted fees are <£3 per month for early years care for the whole business (not per child or per family).

Other costs such as the mortgage on their family home or insurance on their car are not business costs, they costs which an employee would cover from their salary and for a self employed childminder come out of their business profit, which is exactly what the gov scheme is paying out on.  So what justifies the value of the retainer they are asking for?

@Mrsn if the issue is one of timing (i.e. no receipt until June from the gov) then the retainer should be deductible from future invoices.  It's something I've suggested to my childminder, that I'll support with cash up front in the short term, but it's effectively an interest free loan until the government money comes in / service resumes.

et78

Waxy666 said:

Mrsn said:

Waxy666 - threaten parents??? Really...

You can dress it up all you like as a 'retainer' or anything else - what childminders are saying in simple terms is "If you don't pay me £X per hour then I'm cancelling your contracted hours and you can go find a new childminder in future."  This is a threat, plain and simple.  It has no basis, it's not a request to cover costs still being incurred to ensure the setting remains viable - it's just asking for money because they feel they have parents over a barrel and can do it.
Note - I differentiate childminder from nursery here.  Nurseries have substantial fixed costs including things like rented commercial premises, staff costs etc and retainers or part payment to offset these costs which are still being incurred even though they are closed is reasonable to ask for in my view.

If childminders have a similar basis to ask for a retainer they need to list out what costs they are still incurring and justify why the retainer is the £x that is being asked for.  If there are any childminders on here that can help us parents understand this then please do let us know.  I'm not a childminder and if I've completely misunderstood then please correct me but my basic thinking through of the costs a childminder incurs:
- Food, daytime activities (paint, contribution to kid clubs etc), petrol, - none are being spent during closure,
- public liability insurance and registration fees - PACEY insurance premiums can be frozen and Ofsted fees are <£3 per month for early years care for the whole business (not per child or per family).

Other costs such as the mortgage on their family home or insurance on their car are not business costs, they costs which an employee would cover from their salary and for a self employed childminder come out of their business profit, which is exactly what the gov scheme is paying out on.  So what justifies the value of the retainer they are asking for?

@Mrsn if the issue is one of timing (i.e. no receipt until June from the gov) then the retainer should be deductible from future invoices.  It's something I've suggested to my childminder, that I'll support with cash up front in the short term, but it's effectively an interest free loan until the government money comes in / service resumes.

Thanks @Waxy666 this helps me to have a constructive conversation with my childminder rather than an emotional blackmail one (which is what it's feeling like at the moment unintentionally or not). Agree with offering to help in the interim whilst govt payout comes in June. And please any childminders who can tell us what business costs they're incurring during closure it would be massively helpful. I'm not self-employed or a childminder and therefore have no experience of this so any constructive information would be appreciated. Thanks in advance!

Undervalued

Waxy666 said:

Mrsn said:

Waxy666 - threaten parents??? Really...

You can dress it up all you like as a 'retainer' or anything else - what childminders are saying in simple terms is "If you don't pay me £X per hour then I'm cancelling your contracted hours and you can go find a new childminder in future."  This is a threat, plain and simple.  It has no basis, it's not a request to cover costs still being incurred to ensure the setting remains viable - it's just asking for money because they feel they have parents over a barrel and can do it.
Note - I differentiate childminder from nursery here.  Nurseries have substantial fixed costs including things like rented commercial premises, staff costs etc and retainers or part payment to offset these costs which are still being incurred even though they are closed is reasonable to ask for in my view.

I don't agree that "This is a threat, plain and simple" but that is largely irrelevant as, apart from a few types of unlawful discrimination, a business can decide who it will or will not allow to be clients. So if they are confident of having plenty of clients when they re-open they can make paying a retainer fee a condition of having a place. It is only a variation of paying a fee to get onto the waiting list to join an expensive club. If demand outstrips supply people will pay.

Equally, if the childminder misjudges their market and there are plenty of acceptable alternatives it will backfire on them.

Waxy666

Undervalued said:

I don't agree that "This is a threat, plain and simple" but that is largely irrelevant as, apart from a few types of unlawful discrimination, a business can decide who it will or will not allow to be clients. So if they are confident of having plenty of clients when they re-open they can make paying a retainer fee a condition of having a place. It is only a variation of paying a fee to get onto the waiting list to join an expensive club. If demand outstrips supply people will pay.
Equally, if the childminder misjudges their market and there are plenty of acceptable alternatives it will backfire on them.

Fair point - it is just market dynamics.  It just annoys me and seems contradictory that people are getting up in arms about the ethics and morals of individuals re-selling hand sanitiser at a huge profit on ebay (which is just another example of supply and demand), but seem quite willing to argue that a childminder charging retainers which aren't linked to ongoing business costs and seem to be mostly to provide themselves with a better return than the existing government support is morally and ethically absolutely fine.