Most parents, at one time or another, have handed over a few notes of cash to pay the babysitter after a night out. But the occasional babysitter is very different from a Nanny who will spend much more time with your children on a regular basis. There are several reasons why it’s important to set up a legal payment arrangement.
Here’s something you might not know. When you decide to engage a Nanny or Carer, you become an employer. So let’s just think about that for a minute. Every employer in Australia is bound by certain pieces of workplace legislation which determine Health and Safety, holiday entitlements, breaks in the working day, insurances if accidents occur, tax and superannuation … the list goes on. And many companies have Human Resource and Payroll teams to make sure that those regulations and laws are adhered to, to protect both the employer and the employee.
The good news for you is that there are specialist Nanny Payroll services that can take of these details on behalf of you and your family, so there’s really no reason (or excuse!) not to set up a legal arrangement with your Nanny or Carer.
A specialist service will help you set up an employment contract. This way you can address issues such as sick day entitlements, vacation time, and other details like bonuses or use of the family car. A specialist service will also make sure the Nanny’s or Carer’s details are filed with the ATO.
One of the reasons that employing nannies is becoming increasingly popular is because it’s a highly flexible child care arrangement. So for this reason, professional advice is recommended, so you can set up tailored contracts and determine your obligations based on your specific arrangement.
Tax and Superannuation obligations
Obviously, for the employer — you — the main reason you want to make sure that you pay your Nanny or Carer correctly is so you and your Nanny/Carer don’t get in trouble with the Australian Tax Office.
Tax can be complicated, but by engaging a specialist Nanny or Carer Payroll Service, then you can be assured that tax is being calculated correctly, paid accurately, and within the ATO deadlines.
Superannuation is a consideration too and in Australia, superannuation laws change pretty regularly. For example, there’s a new round of amendments to previous wage thresholds coming into effect later this year which will affect part-time workers. A professional service will be aware of these, and implement them as necessary.
Record of employment
Quite simply, when you pay your Nanny or Carer in cash you deny him or her a regular pay summary and a record of their employment and earnings. These are both important, not just for their career, but for other areas of life too. For example, if your nanny/carer wants to take out a personal loan or apply for a mortgage down the track, he or she can’t do so without a proper track record of earnings and savings. Banks are pretty fastidious about this kind of historical personal paperwork.
A record of what you pay the Nanny can be helpful for household budgeting. In some cases, families are able to access the Child Care Rebate too, so a record of child care costs is necessary.
Insurance
This is a biggie for obvious reasons. When you have the right paperwork in place, then making an insurance claim is simpler and the whole process runs more smoothly, which just saves everybody time, stress, and hassle. In the case of a workplace accident, if you have set up your employment arrangement with your Nanny/Carer correctly, then you have peace of mind that anyone who is hurt or anything that’s damaged will be covered appropriately by insurance.
So, from a legal point of view, it’s obvious that there are valid reasons for keeping the arrangement above board, rather than “under the table.”
Attract the best!
From a Nanny’s or Carer’s point of view, when you take the time to make the employment arrangement legitimate, it shows respect and integrity. When a Nanny/Carer is making a decision about who they’re going to work for, then having all the right contracts and paperwork in place is a valued drawcard.
