I know I’ve said this before (many times!) but it bears repeating again, and again. The only circumstances in which you can legally employ a nanny in Australia is as a legitimate employee.
It is illegal under Australian law to employ a nanny (or anyone else, for that matter) on a cash-in-hand basis. It is also illegal for a nanny to offer herself as a contractor (with her own ABN) unless she is running a legitimate business, which at the very least means drawing income from a number of different clients.
Not only does illegally employing a nanny deprive her of her rights, but it drastically increases the chances that your nanny will leave for a better job sooner rather than later. It is really not worth the hassle.
So what does hiring a ‘legitimate employee’ mean? It means a number of things, including a fair amount of bureaucracy, which probably explains why so many people, unfortunately, attempt to cut corners and pay their nanny ‘under the table’ (putting aside those who pay cash in a dodgy attempt to reduce their costs).
The first thing an employer needs to do is register their status as such with the Australian Tax Office. You need to register for a PAYG withholding account, which will allow you to deduct tax from your employee’s pay for passing on to the ATO. You also need to set yourself up to make superannuation payments on behalf of your employee(s). Then, on your new nanny’s first day, they will need to complete the ‘Tax file number declaration’ form.
From then on, you will need to keep detailed records of all payments made to your nanny (along with tax withheld and superannuation contributions made), providing your nanny with an annual summary (‘group certificate’) at the end of each financial year.
If this all sounds like too much, there are alternatives – legal alternatives that don’t involve brown envelopes and used banknotes.
One alternative is to employ your nanny through a reputable agency such as Placement Solutions. This is by far the most hassle-free option as the agency will handle all aspects of recruiting a suitable nanny along with all the ongoing paperwork. All you need to do is provide weekly timesheets and leave the rest to us.
However, not everyone wants to take this path, and it may not be an option for you anyway (Placement Solutions, for instance, only operates in the state of Victoria.).
In that case another option is to use a ‘payroll service’, effectively handing over the bureaucracy to someone else to handle. Payroll services for nannies have been quite common in countries like the US for a while, but they have not been available in Australia – until now.
As part of our effort to make our experience and service available across Australia, we have recently set up Just Family Payroll. We’ve built this web-based service to allow any family or single, anywhere in Australia, to have their nanny or household manager paid entirely legally while retaining a direct employer-employee relationship with the nanny or household manager.
Put simply, Just Family Payroll handles the bureaucracy of wages, tax and superannuation while you get on with running your family. It’s all about removing stress and leaving you with peace of mind.