The main benefit of the nanny share arrangement is to reduce the cost of child care. To get this arrangement to work effectively there is a great deal of research, agreement and discussion that will have to done between the share parents. There is plenty of information out there on the pros and cons on nanny share systems but not very much information on how to arrange payment.
Payment and employment contract issues need to be discussed before entering a nanny share arrangement.
If you are hiring a nanny in your home to look after your children you become a non-business individual household employer. You will be issued a PAYG Withholding number (unless you are operating as a sole trader) which is linked to your TFN – that is, the PAYG number can only be linked to one person.
Unlike a registered company, the two or more parents in a nanny share situation can’t be issued one PAYG withholding number to operate under.
You will have to discuss who is going to register and if both are going to register – how it will work:
- One parent could register and have everything in their name and costs could be divided equally between both parties.
- Both parties could register and manage their employment obligations separately by splitting the working week or paying for alternate weeks.
Whilst the first option is the easiest, it’s important to remember if it is all in your name, if a mistake is made that is considered a breach by the Fair Work Ombudsman, Work Cover or the ATO, the fine and/or enquiry will only be addressed to the registered individual.
A good idea is to have a contract not only with the nanny but also with the other parents outlining:
- How to divide the cost of the shared nanny with the other family outlining proportions of cost/time the nanny spends with each family or number of children per family.
- How payments will be made.
- How paid annual leave is going to be arranged that suits the nanny and both parties.
- How are you going to arrange backup childcare services when the nanny is sick?
- What happens to the cost if one of you goes away on holidays and child care is not required for the
- How long do you expect the arrangement to last for and how much notice is required by the parents to drop out of the nanny share
- Where will the care take place and what insurances are required.
To discuss any of the above further please contact Domestic Payroll.