My nanny has resigned with a negative annual leave balance?
When you hire a full or part time permanent nanny or au pair, they should be accruing annual leave, accruing at a base rate of pay on the ordinary hours. For a full time employee its a 4 weeks annual leave entitlement for each 12 months of service, for a part time nanny, annual leave is calculated on a pro rata basis.
When your nanny goes on holidays, they are paid their normal wages based on the amount of accrued annual leave however you can choose to pay holiday pay even if there is not enough accrued annual leave. The outstanding leave balance will go into negative and when the nanny returns to work the accruing leave will be allocated against the negative balance.
No matter how strong the relationship with your nanny and au pair, if you allow them to take paid leave when there is not enough accumulated leave, you do so at your own financial risk if they leave suddenly.
When an the working relationship is terminated, your nanny or au pair should be paid any accumulated annual leave, calculated at their base rate of pay.
Negative annual leave balance on termination of employment can be adjusted through an application of a credit taken from termination pay from the notice period.
In most situations the notice period should be adequate to cover any negative annual leave balance however it can happen and it did happen last week, where the employee departs with no notice leaving the employer out of pocket.
The employee can be requested to pay back any outstanding amounts , most employees want to end working relationships on a good note for future references sake, however if relations breakdown, or your nanny lives overseas there is little you can do to reclaim any outstanding money. You should not deduct the amount from any super owing no matter how tempting.
This situation happens enough to employers, that many companies will either have a, ‘no negative or minimal annual leave balance blanket rule’. However for parents with nannies it’s often not that easy, as you need your nannies to either to take holiday at the same time as you or when you can arrange other care. Dipping into negative leave may be good option to keep good working relations with your nanny especially if they are required to take holidays at a time that may not suit them.
I would just recommend keeping where possible the negative balance to less than 2 weeks ordinary pay, including in your employment contract clear dates when you require leave to be taken and how much notice to give and that any outstanding leave will be deducted from their notice period.
Contact Domestic Payroll if you require any further information.