Your Legal Obligations

When engaging Nanny for In Home Services there are some obligations that need to be met to protect you, the family and our Nanny.

Are you engaging a Nanny as an Employee or Independent Contractor ?

Nannies are engaged as either an ‘independent contractor‘ who run their own service and negotiate their own fees or as an ’employee’ of the family. It depends on which arrangement works best for you.

When engaging a Nanny into your family, its your obligation to comply with the Australian Taxation Office (ATO) and Fair Work and SafeWork. This is a standard and straight forward process, and in practice is not as difficult as it may seem to cover your obligations as an employer.

You can use the ATO Employee/Contractor Decision Tool to work out if the arrangement with your Nanny is an employee or independent contractor for tax and super purposes. Fair Work have compared the difference between contractors and employees.

Independant Contractor

A Nanny can commit to specific days of work with a Client on a short-term or ongoing basis in the capacity of an Independent Contractor.

Independent Contractors have an Australian Business Number and are responsible for their own tax payments and statutory obligations, under the same rules as Employees. The Client is not liable for the payment of leave.

At the conclusion of each booking or each period of service to a maximum of seven (7) days, the Nanny will provide the Client with a Tax Invoice, which will include an amount to cover the Nannys charges and reimbursement for associated costs. The amount set out in the Tax Invoice is payable immediately and directly to the Nanny.

Superannuation

Contractors paid mainly for their labour are employees for superannuation guarantee purposes. This is the case even if the contractor quotes an Australian Business Number. To determine if your Contractor is eligible use the ATO Superannuation Decision Tool, currently the Superannuation Guarantee is 9.5% of their ordinary time earnings.

Insurances

Independent Contractors come under labour hire service arrangement and are deemed to be workers for Workers Compensation purposes.

Domestic Workers Insurance is indispensable and required by law if you engage people to be employed in your home. At an estimated cost of $40 per year from most insurance companies, it covers you in the unfortunate case of the employee injuring themselves while in your home. Contact Safe Work NSW on 13 10 50.

Car Allowance

If a car is provided for the use of the Nanny, it is the engager’s responsibility to provide full insurance coverage. If the Nanny is to use her own vehicle as a condition of engagement, an allowance of approximately $0.78 per kilometre for petrol and running costs applies . Please note that the type of vehicle the Nanny drives determines the exact kilometre rate from the Australian Taxation Office.

The Client and the Nanny are responsible for ensuring that they have appropriate child safety restraints.

Employed Nanny

As an Employer, you have a responsibility to assist your Payees with meeting their end-of-year tax liabilities. The ATO encourages you to be ready and have a Checklist Available for the first time Employers. You may need to withhold PAYG Withholding Tax from payments to your Nanny, for services provided and you may need to pay Superannuation Contributions.

Nannies can be covered by the Miscellaneous Award 2010 MA000104 when they are in an employment relationship. Nannies working in a private home and performing tasks such as: caring for children, preparing meals for children, planning educational and play based activities and doing light house work.

Employment Agreement

An agreement is highly recommended which highlights both your obligations as an Employer and the Employees expectations and responsibilities of the position. Sample Agreements / Contracts are available to Registered families of South Coast Nannies.

Nannies can be covered by the Miscellaneous Award 2010 MA000104 when they are in an employment relationship. Refer to Fair Work website to ensure your obligations are being met.

  • Weekly or hourly pay rate
  • Tax, Superannuation and work cover insurance
  • Day and hours of work as well as start and finish times
  • Car allowance if applicable car usage, insurance, petrol etc
  • Social Media Policy
  • Performance Review dates
  • Specific duties and any additional duties
  • Overtime rates for working outside set times
  • Annual recreation leave, sick leave, special leave, pay on public holidays
  • Conditions of salary review
  • Conditions of termination

Superannuation

Nannies must work for more than 30 hours per week to qualify for Superannuation Contributions, currently the Superannuation Guarantee is 9.5% of their ordinary time earning. To determine if your Employee is eligible, use the ATO Superannuation Decision Tool where you will be asked questions about the nature of the work arrangement.

Refer to the Australian Taxation Offices (ATO) Super for Employees page that have the tools available to assist you in this process such as their page, working out if you have to pay Superannuation.

Pay as you go (PAYG) Withholding

Registration for PAYG Withholding can be completed online through the Australian Business Register (ABR) or download their Application to Register for a PAYG Withholding Account.

Provide the nanny a Tax Declaration form, payroll advice records and collect pay as you go (PAYG) withholding amounts from payments you make. Employers calculate how much tax to withhold each pay period using the ATO Tax Tables or estimate how much tax to withhold each pay period the ATO using the PAYG calculator.

At the end of each financial year, PAYG withholding annual report is lodged to the ATO. This includes all payments and the amounts withheld for your employee. Refer to ATO website to ensure your obligations are being met or call 13 28 65.

Holiday Leave and Sick Leave

There are minimum leave entitlements for full-time and part-time employees. All full-time employees are entitled to a minimum of 20 days annual leave or pro-rata for the hours/days worked. Part time employees receive the same entitlement on a pro-rata basis. Sick and carer’s leave comes under the same leave entitlement of 10 days sick leave in the first year or pro-rata for the hours/days worked. Refer to FairWorkss the Pay and Conditions Tool Calculator (P.A.C.T.) to find out how much annual or sick / carer’s leave has accumulated.

Car Allowance

If a car is provided for the use of the Nanny, it is the engager’s responsibility to provide full insurance coverage. If the Nanny is to use her own vehicle as a condition of engagement, an allowance of approximately $0.78 per kilometre for petrol and running costs applies . Please note that the type of vehicle the Nanny drives determines the exact kilometre rate from the Australian Taxation Office.

The Client and the Nanny are responsible for ensuring that they have appropriate child safety restraints.

Insurances

Domestic Workers Insurance is indispensable and required by law if you engage people to be employed in your home. At an estimated cost of $40 per year from most insurance companies, it covers you in the unfortunate case of the employee injuring themselves while in your home. Contact Safe Work NSW on 13 10 50.

Public Liability Insurance to cover accidents in your home. You should check your Home and Contents insurance policy to ensure your Nanny is covered. Alternatively, you may arrange public liability insurance with an insurer such as NannySure.

Motor Vehicle Insurance if your Nanny is going to be using your car.