Nanny rate gets discussed quite openly in today’s internet age (in fact, Nanny of Oz just posted a nanny wage calculator to help Australian nannies and families determine the industry standard for their circumstances!), but there is still a real lack of understanding about what the big picture of the rate actually means. It actually varies a lot depending on the type of employment/the way a nanny in Australia is paid, and this isn’t often specified. We are advocates for transparency and open discussion around industry standards and pay ranges, but it’s important to be clearer in the way we speak about hourly rates.
Nanny Rate as a Contractor/Cash in Hand
When a family pays a nanny rate that is all inclusive, and it is the nanny’s responsibility to manage that money – setting aside money for taxes and paying it to the ATO, putting money into their Superannuation fund, and making sure that they have money set aside for any time off that will be unpaid (such as vacation days, sick days, and public holidays). At minimum nannies working under this type of arrangement should factor in at least 10% extra on top of an hourly wage to cover Superannuation.
Under this arrangement there is no expectation of any paid leave and it is the simplest payment option for families… but not necessarily the most sensible.
Nanny Rate for Casual Employment
When an agency or family employs a nanny, but does not provide them with paid time off. In this arrangement Super should be paid on top of the nanny rate, meaning that the employer deposits 10% on top of the nanny’s wage into their Superannuation fund. Under the Miscellaneous Award there is an allowance providing 25% higher minimum wages to Casual Employees than Permanent Employees, to compensate for them not receiving paid leave.
This setup is relatively simple in terms of expectations and provides a lot of flexibility for families and nannies who are flexible in their hours or who want to be able to change the schedule regularly.
Nanny Rate for Permanent Part-Time or Full-Time Employment
When the family employs a Nanny with regular hours (‘guaranteed hours’), provides them with paid time off (such as vacation days, paid public holidays, and sick days), and contributes 10% to their Superannuation on top of their nanny rate.
This is seen by banks and other organisations as the gold standard form of employment and is a wonderful thing for families to offer their nanny to ensure they are working under conditions that promote longevity. That’s why we run a company to facilitate it! (Don’t let the word ‘permanent’ scare you – the employment agreement can still be terminated if circumstances change for either party.)
What does this all mean for the nanny rate?
If an Australian nanny rate is quoted as “$30 an hour”… what does that mean in each of the above scenarios? Let’s break down some numbers:
A nanny who is being paid $30 cash in hand or as a contractor will need to remove almost 10% from that if they are going to contribute standard Superannuation on top of their ‘wage’ to themselves. This brings their wage down to right around $27.27 an hour. That nanny does not get paid when they do not work – if they are sick, if the family decide they don’t need them, if they want to take a vacation, or if a public holiday falls on their standard working day.
A nanny who is employed on $30 as a casual employee should receive 10% on top of that wage into their Superannuation. This means their hourly total is $33 per hour. This nanny also does not get paid if they do not work, but they do have the benefit of being an employee, which can mean they are in an easier position when it comes to things such as applying for loans and doing their taxes.
A nanny making $30 as a Permanent Full-Time Employee will receive 10% on top of that wage into their Superannuation. This brings their hourly total to $33 per hour. They will also receive paid time off. Assuming that they work 40 hours over 5 days, they will receive 20 paid vacation days and 11 paid public holidays (according to Victoria’s 2022 public holidays). They are also entitled to 10 paid sick days in the year.
This is where the biggest difference in overall value comes in! A Permanent Full-Time Nanny could be paid for 41 days (8.2 weeks) in a year where they do not have to work. At 8 hours a day, that’s 328 unworked hours being paid each year (328 x $33 = $10,824). The maths is about to get tedious and confusing here (we’ve done it so that you don’t have to), but stay with us for a moment…
An Australian nanny who is a Full-Time Employee with “a nanny rate of $30” could receive $68,640 in a year of working 44 weeks, while a Casual Employee would get $58,080 for working the same amount and a Contractor could get only $47,995.20 for the same. This averages out to the Permanent Full-Time Employee making $39 per hour for hours worked, while the Casual makes $33 and the Contractor makes $27.27.
When we put it like that..!! Hopefully this has given nannies and families a deeper understanding of the various meanings hidden behind a quoted nanny rate, and the impact it has on what the nanny actually earns overall.