How much should you pay a nanny? Hourly rates are rising, so be prepared to pay anywhere between $25 per hour and $45 per hour.
Many families have been surprised at the increasing cost of babysitting services and nannies. Across Australia, hourly pay rates are rising — and with good reason.
Due to the pandemic, the Australian childcare industry has suffered a crisis. There are staff shortages across the board. This is not necessarily industry-specific; many businesses have gone through the same thing.
Supply vs demand is impacting nanny pay
Available nannies, too, have been in short supply. However, that’s beginning to change as many childcare workers transfer to nanny work, preferring to work with one family rather than in a group setting with many young children.
Indeed, the disruption of Covid-19 is taking some time to adjust to. As a result, the fundamental economic rules apply. When demand exceeds supply, price tends to dictate the market.
Many families are confused about what appears to be a significant gap in pay rates from the lower end of the pay scale ($25) to the higher end ($45), though it is becoming increasingly common that nannies are now paid from $35 p/h. There are many factors to consider when you’re negotiating with a nanny – of course, qualifications and experience count for a lot, as does a good track record that demonstrates responsibility, honesty, and commitment.
Employee or contractor?
But pay rates also vary depending on whether you consider your nanny an employee or a casual ‘contractor.’ They can also depend on the non-salary benefits you can offer your nanny.
It is prevalent for families to pay their workers an hourly rate without bothering with superannuation, PAYG tax, and other tax matters. Often, this happens because the worker advises the family that they have an ABN and are working as an independent contractor. This is usually not an approach you should permit.
The ATO sets out several rules that can be used to determine whether a worker is an Employee or a Contractor. It is clear that based on ATO rules, they will generally consider your Domestic Worker an employee; after all, you don’t want your worker to be setting their work hours!
When looking to employ a full-time or part-time nanny, you must factor in (PAYG) amounts, superannuation (now 11 percent), holidays, sick pay, and public holidays. It would help if you also considered worker’s compensation insurance. You must also ensure that your nanny is paid on time and given a payslip with all the legally required details.
Every family is different, so it just pays to research and talk to a few other nannies as part of your recruitment process.
Ultimately, you’ll most likely choose the nanny who fits into your lifestyle, meets your needs, and can build rapport and trust with your children – and you. What you pay a nanny is important, but cost is usually not the sole reason you’ll select a nanny.
Professional payroll services – excellent for you and good for the nanny
Engaging a payroll service can be very beneficial after you’ve got a shortlist or chosen a candidate and are ready to negotiate.
At CarePayCo, we can help you work through all costs and develop a figure to remunerate your nanny fairly while ensuring you meet your obligations as an employer or client.
Using a supplied template, we can guide you to draft up the contract for your new employee, or if you’re engaging a contractor, work through the details of the contracting arrangement with you so you fully understand it.
We can also take care of all the administration around paying your nanny regularly and ensuring that the paperwork is accurate and up to date – for your records and theirs.
Are nanny wages tax deductible?
Currently, in Australia, nannies are not a tax-deductible expense, even though there are rumblings from time to time that the ATO will change the rules. Child care is high on the Federal Government agenda right now, though, and it will be interesting to see what changes may be implemented for parents in the future. We’ll keep clients updated with any changes as they come into effect.
Some families may be eligible for The Child Care Subsidy in New South Wales, which replaced the Child Care Benefit (CCB) and Child Care Rebate (CCR) in 2018. Your nanny must be an “approved or registered childcare provider,” and subsidies are means-tested. We can point you in the right direction to find more information and resources.
But if you’re considering employing a nanny in the New Year, and we can help in any way, please feel free to get in touch.
