Is My Nanny an Employee or Contractor in Australia?

Last updated: September 23rd, 2026.

If you’ve hired a nanny, one of the most important questions to clarify is:

Is my nanny considered an employee or a contractor?

Many families assume that paying someone with an ABN automatically makes them a contractor. In most nanny arrangements, that is not the case.

Understanding the difference is essential for staying compliant with Australian tax and employment law.

How Does the ATO Classify a Nanny?

In Australia, most nannies are legally classified as employees.

The Australian Taxation Office looks at the nature of the working relationship, not just how payments are made.

To determine if your nanny is an employee, ask yourself if your nanny:

• Works regular or set hours
• Performs work in your home
• Follows your direction and household routines
• Uses your equipment and resources
• Relies on your family as a primary source of income

If the answer is yes to the above, then your nanny would generally be considered employees by the ATO.

This means you are responsible for tax withholding, superannuation, and payroll reporting.

Does an ABN Make My Nanny a Contractor?

No.

Having an ABN does not automatically make someone a contractor.

The ATO examines the substance of the working arrangement. If the nanny is integrated into your household and working under your direction, they are usually considered an employee, even if they invoice you.

Misclassifying a nanny as a contractor can result in back payments, super liabilities and penalties.

Why Classification Matters

If your nanny is an employee, you must:

• Withhold PAYG tax
• Pay superannuation
• Issue payslips
• Report through Single Touch Payroll
• Meet minimum Award conditions
• Take out a Work Cover policy

You should also ensure the agreed rate aligns with current nanny pay rates in Australia.

Failing to meet these obligations can expose families to penalties and back payments.

Are There Situations Where a Nanny Could Be a Contractor?

True contractor arrangements are rare in private households.

There are contractor nannies out there who work across multiple households and request to invoice you under their existing ABN.  However, even if the nanny determines they require payment through an ABN, the payer can still be deemed liable as an employer in the event of Fair Work dispute or WorkCover claim. 

A contractor typically:

• Controls how and when work is completed
• Provides services to multiple clients independently
• Supplies their own tools
• Bears commercial risk
• Takes out their own insurance

Most in-home nanny roles do not meet this definition.

The main scenarios in which a nanny can be deemed a contractor are when they work ad hoc across different households with extra babysitting shifts, or when they provide short-term support for consulting (sleep, behaviour, temp replacements, etc.).  These nannies typically work under a brand, have a website or social media presence, and run like a business. 

What About Casual Employment?

Some families confuse casual employment with contracting.

Casual nannies are still employees. They receive a higher hourly rate instead of leave entitlements, but tax and super obligations still apply.

If you’re unsure how employment type affects pay, review current nanny pay rates Australia and ensure your arrangement aligns with the Miscellaneous Award. 

The Risk of Getting It Wrong

Incorrectly treating a nanny as a contractor can lead to:

• Super guarantee charge liabilities
• Back payment of leave entitlements
• Tax penalties
• Interest and administrative fees
• Financial liability in the event of a WorkCover claim if the worker gets injured.

The cost of rectifying a misclassification can be high.

How to Ensure You’re Compliant

Before finalising your arrangement:

1. Confirm the employment classification.
2. Document the agreement clearly using a written contract.
3. Set up payroll correctly.
4. Call your state-based Workers Compensation regulator and take out a policy for any employee or contractor.

If you would prefer support managing tax, super and reporting from the beginning, learn more about our nanny payroll service and how we support families across Australia.

The Bottom Line

In most cases, a nanny working in your home will be legally classified as an employee, not a contractor.

Even if they have an ABN.

Understanding this distinction protects both your family and your nanny and ensures the arrangement is structured correctly from day one.

Clear classification. Clear agreement. Correct payroll.

That’s how you pay your nanny the right way.