Recruiting a nanny is the easy part – there are many wonderful, experienced nannies looking for the right family to work with. But if you want to attract the best talent, you can’t skimp on wages. It’s as simple as that.
If you have the space, there are numerous benefits to having a nanny live with you.
However, you must still remunerate your Nanny in accordance with Australia’s Fair Work regulations, even if they live on-site, or in your home.
There have been many regulatory changes in this area over the past few years. The days when you could pay a nanny cash, or pay a low base rate in exchange for rent and board without considerations for tax and superannuation are long, long gone. And there are serious penalties if you don’t do the right thing. Not knowing the laws is never an adequate defence.
So, if you’re hiring a Nanny, then you need to familiarise yourself with everything that is required for the duration of their employment with you.
Australian employment laws
The rules and regulations can be complex, but they are designed to stop circumstances where nannies are grossly underpaid.
While most families do the right thing, sadly exploitation does occur.
In 2019, the Fair Work Commission pursued a Sydney couple for more than $150,000 in wages, after it was discovered that they had only been paying their nanny $2.33 per hour and she was expected to work more than 100 hours per week.
Many nannies come from overseas – and they make a fantastic addition to any family because they will be able to introduce a different culture and different languages, which can really benefit children by opening their eyes to experiences and knowledge outside of what they are used to.
But many of these young people are travellers, not Australian residents, and they don’t know what their workplace rights are. It’s up to us, as their hosts, to make sure they’re protected and adequately remunerated under Australian employment laws.
Paying the correct hourly rate
The Fair Work Ombudsman has made it very clear that award rates apply to live-in nannies. What does this mean? Well, it means that you cannot deduct room ‘board’ or rent from wages, or use it to counteract wages and therefore pay a lower rate.
Base award rates for a nanny (whether they live with you, or somewhere else) are around $33 per hour, plus superannuation as per the regulations. Nannies were included under the Miscellaneous Award pay rate in 2010.
Nannies need to be paid at least the base minimum Level 2 award rate – obviously, junior nannies will be entitled to less pay than nannies who have qualifications and years of experience.
As a side note, you can pay Level 1 award rates, but only for a maximum period of three months – sometimes this can be useful if you want to ‘trial a nanny’ to see if they’re the right for your family. But after the trial period is over, you need to increase the base rate.
Penalty rates and overtime considerations
You will also need to consider paying nanny penalty rates and overtime if the hours worked are more than the hours stated in the award – which are 38 hours per week, or outside of the hours of 7 am and 7 pm.
Now, if you’re employing a nanny who will live in, the general idea of having them live with you might be so that they will be ‘on call’ and you’ll have the benefit of them being onsite so it’s easier for them to work early in the morning or late into the evening.
This can be of considerable benefit for parents who have a long commute, are shift workers, or perhaps need to travel as part of their work commitments. There are provisions for this type of arrangement so that the employer (you) can avoid paying penalty rates and overtime.
The ‘flexibility clause’
In this case, you can include a ‘flexibility’ clause in your employment contract. The ‘flexibility clause’ does allow you to offer time off, it may also enable you to include room board or use of amenities and utilities, but it needs to pass the BOOT test, meaning that the nanny must be Better Off Overall with the additional benefits instead of a penalty and overtime rates. And this needs to stand up legally in a court of law, so it is wise to get professional advice when you’re setting up your contract.
Having said all of that, if you’re employing a nanny as an independent contractor, then some of these don’t apply – in such cases the nanny would be responsible for their own taxation and superannuation.
As you can see, it can get complicated. This is why families often choose to outsource this aspect of employment to a professional Nanny Payroll service. The experts know what they’re doing, which means that you can relax, and not have to deal with the intricacies of organising superannuation, PAYG, payslips, sick leave, sorting our expenses, etc etc etc….
The fact is that you’re probably employing a nanny to make life a little easier. So it makes sense to make the payroll side of things easier too. If we can help, give us a call.
