Even though nannies are domestic employees and payments of their wages and super are not deductible, it is important to pay them correctly according to Fair Work guidelines, as highlighted by a recent court case.

Case Background

A Sydney based couple were found to have underpaid their nanny, taking advantage of the fact she was a vulnerable first time Australian worker who did not know her rights.

The nanny, who was a Filipino citizen, worked up to 82 hours a week over the course of a year for the family to assist with the care of the couple’s two young children. The nanny had been working unreasonable and excessive hours of more than 38 hours a week which breached National Employment Standards by Fair Work.

Instead of receiving $105,809 under the Miscellaneous Award 2010 for the hours she worked over the course of the year, the couple paid her the equivalent of $12,574 Australian dollars. The underpayment resulted from not paying penalty rates for overtime hours, early starts and late finishes, or public holidays. This was in addition to the Sydney couple underpaying the nanny’s base hourly rate. The couple also breached guidelines in relation to annual leave, record keeping and payslips.

The couple was ordered to pay $93,235 by the Federal Court. Additionally, they had to pay fines totalling $37,500.

What does this mean for me?

Although this was an extreme case, it serves as a reminder to medicos employing a nanny of the importance of getting these payments correct, just as you would for an employee in a business.

When employing a nanny there are many relevant employment considerations such as minimum employment standards under the Fair Work Act, award rates, overtime rates, PAYG withholding and superannuation.  This list is by no means exhaustive so it is important to consult an expert when working out payroll requirements for any employee.

Learn more

If you need any assistance in relation to the correct employment obligations around paying your nanny, please contact Kristy Baxter from our medical services division on (07) 3023 1300 or taxmed@pilotpartners.com.au.