Agency or private hire: what changes when you employ someone directly

What the two arrangements actually are

With an agency, you are the client of a company. The company recruits, screens, employs and pays the caregiver. It handles payroll, taxes and insurance, and it carries liability and workers' compensation cover. If your regular caregiver is ill, the agency is responsible for sending someone else. You pay the agency an hourly rate; the caregiver receives a portion of it.

With a private hire, you or your parent contract directly with an individual. You agree the rate, the hours and the duties. There is no company between you. Depending on how the arrangement is structured, your parent may become a household employer, which brings obligations around payroll, tax withholding and insurance that vary by state.

That last sentence is the whole decision in miniature. The hourly rate is lower privately because the agency's overhead has been removed — but the work that overhead paid for still has to be done, and now it is being done by you.

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The trade-offs, side by side

Cost. Agency rates are higher per hour. Private rates are lower per hour, but the true comparison includes payroll costs, insurance and your own time on administration.

Cover. An agency owes you a replacement when someone calls in sick. A private caregiver's sick day is your problem, at 7am, and this is the single most under-estimated difference.

Screening. An agency runs background checks, verifies references and confirms any required certifications. Privately, you do all of that yourself, and you should.

Insurance. Agencies carry liability and workers' compensation. Privately, ask an insurance broker what your parent's homeowner policy does and does not cover when someone is working in the house. Do not assume.

Continuity. Agencies rotate staff, sometimes a lot. A private hire is usually one person, which is better for a parent who finds new faces difficult and worse when that person leaves.

Control. Privately you choose the person, set the tasks and manage directly. With an agency you get the person they send, and any task outside their care plan may be refused.

Supervision. An agency supervises and handles performance problems. Privately, the difficult conversation is yours.

The paperwork question you must not answer yourself

If you hire directly, your parent may become a household employer. That can bring payroll registration, tax withholding and reporting, and in many states a workers' compensation requirement. The specifics depend on the state, the hours worked, the amount paid and how the arrangement is structured.

We are not going to summarise those rules, because a summary is exactly what gets people into trouble. Do this instead:

- Speak to an accountant before the first shift, not after. Tell them the state, the expected hours and the pay rate, and ask what registrations and filings apply and when.
- Ask about a payroll service for household employers. Several exist and they handle the filings for a monthly fee, which is usually less than the cost of getting it wrong.
- Ask an insurance broker what cover is needed and whether the existing home policy is affected.
- If the arrangement is substantial, or if there is any live-in element, ask an employment attorney. Live-in and overnight arrangements have their own rules.

Treating a caregiver as a contractor because it seems simpler is where families get into difficulty. Whether that classification is correct in your situation is a legal question with a real answer, and an accountant or attorney gives it to you in one appointment.

Questions to ask an agency

Call three agencies. Same questions, same order, notes in the same shape.

- Are your caregivers employees of the agency, or contractors placed by you?
- What background checks do you run, how recently, and how often are they repeated?
- Do you carry liability and workers' compensation cover? Can you send me the certificate?
- Is there a minimum number of hours per visit or per week?
- What is the hourly rate on weekdays, weekends, overnights and public holidays?
- What happens when the assigned caregiver is sick? How quickly do you send someone, and who?
- How many different caregivers will my parent typically see in a month?
- Can we meet the caregiver before the first shift, and can we ask for a change?
- Who writes the care plan, who updates it, and can the family see it?
- What tasks are your caregivers not permitted to do?
- How are visits recorded, and can the family see the notes?
- What notice is required to cancel or reduce hours, and are there fees?
- Who do I call at 10pm if something is wrong?

Ask for the contract in advance and read the cancellation clause before you sign anything.

Questions to ask a private caregiver

Interview in your parent's home, with your parent present if that is workable.

- Tell me about your experience with someone in a similar situation.
- What hours can you commit to, and how far ahead do you need a schedule?
- What is your rate, and does it change for weekends, overnights or holidays?
- How much notice would you give if you needed a day off, and what should we do then?
- Do you drive? Whose car, and whose insurance covers it?
- What tasks are you comfortable with, and which would you rather not do?
- Can you give me two references from families you have worked for, with phone numbers?
- Would you agree to a background check arranged and paid for by us?
- How do you prefer to be paid, and are you set up to be paid as an employee?
- Would you be willing to write a short daily note about how the day went?

Call both references and ask the same two questions of each: what did they do well, and why did the arrangement end.

Then put the agreement in writing: hours, duties, rate, pay dates, notice on both sides, holidays, what happens on a sick day, and who is called in an emergency. A written agreement is normal and it protects the caregiver as much as it protects your parent. Ask an attorney to look at it if the arrangement is substantial.

Set up the handover before day one

Whichever route you choose, the first week is decided by what is written down before it starts.

A new caregiver needs, on paper and in the house: the daily routine and what "normal" looks like, the medication list as the pharmacy has it, who to call and in what order, the doctor and pharmacy details, key and alarm codes, where things are kept, the tasks for each shift, and a place to write a short note at the end of each visit.

If several people are involved — an agency caregiver, a neighbour, two siblings — the arrangement fails at the seams rather than in the middle. Somebody assumes someone else did it.

Our Sibling Care Team Rota is the printable version of that: a task list split by person, a weekly rota, a shift handover sheet, a shared cost ledger so money stops being a source of friction, and a meeting agenda for the conversation nobody wants to run. It works the same way whether the people on it are family, a paid caregiver, or both.

It does not decide who should do what. It makes sure the answer is written down where everyone can see it.

How to price the two options honestly

Build one sheet with both columns and fill it in with real numbers before you decide.

For the agency column: hourly rate by day type, minimum hours per visit, expected weekly hours, any registration or assessment fee, and the monthly total.

For the private column: hourly rate by day type, expected weekly hours, plus the employer costs your accountant quotes you, plus any payroll service fee, plus insurance, plus what you would pay for cover on a sick day. Add an honest estimate of your own time on scheduling, payroll and supervision — two hours a month is optimistic.

The gap usually narrows more than people expect. Sometimes it stays wide, and the private route is genuinely cheaper. Either way you are now comparing two totals rather than two hourly rates.

One more line for both columns: what happens if this breaks down. Agency — how quickly can they replace the person, and what notice do you owe. Private — how long would it take you to find and vet someone else, and who covers the gap.

Verify agency rates directly with the agency. Published ranges age badly and vary enormously by region.

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