Employing a Nanny in New Zealand
Mark Hudson • Jul 07, 2021
Understanding the complexities of employing a Nanny in New Zealand
Finding the perfect nanny is an exciting moment for any family, but understanding the responsibilities and obligations that come with hiring one are extremely important.
Nannies can’t be paid with cash in hand, nor are they independent contractors, but instead need to be treated as an employee.
For households unfamiliar with employing staff, this can be a confusing and stressful process, and potentially very expensive if the correct procedures are not followed.
To make things clearer, we have outlined the steps you should follow if you want to know how to hire a nanny.
1.Sign an employment contract
Things to consider when drawing up this contract are:
- What is the rate of pay (note that there have been recent changes to the minimum wage from NZ$18.90 to NZ$20.00 per hour)
- What are the agreed hours
- Is my nanny casual, part-time, fixed term, or full time
- Other benefits included in the employment package
- Sick pay hours
- Notice period
2. Collect the necessary information
There are a number of documents that you need to obtain from each employee before they start.
Before your nanny begins, make sure you have the following information:
- Proof of their right to work in NZ
- Completed tax code declaration (IR330)
- Completed Kiwisaver forms (KS2 or KS10)
- Bank account details
- Any other relevant information
If you are unsure which documents need to be completed email us
or contact your accountant.
3. Register as an employer
As soon as both parties have signed the employment agreement, you will need to register as an employer with the IRD and for this you will need an IRD number. Here is the link
for information on how to get one.
Once you have obtained that, there are two ways to register:
- Online through your MyIR
- Download and complete the Employer Registration Form (IR334)
Dealing with the IRD can be complicated. Another option is to use a payroll provider like Pay The Nanny, which handles all aspect of the IRD and even becomes the tax employer of your nanny, meaning you’re never required to even register as an employer, or deal with the IRD at all.
4. Set up a payroll system
Although your payroll can be managed manually, we recommend that you use a payroll software. These help reduce manual errors and make filing and paying your monthly taxes much simpler.
There are a number of excellent cloud-based software to choose from:
Most payroll providers are fairly similar, but we find that Payhero has the best pricing structure and usability.
5. Paying your nanny taxes
Late or incorrect payment of your nanny will swiftly land you in hot water with the IRD and lead to costly penalties.
The nanny taxes you will be responsible for paying are:
- Income Tax (PAYE)
- Kiwisaver contributions if they are registered with Kiwisaver
- Child support payments if they owe child support
- Student loan payments if they have a student loan
These need to be filed each time your process a payroll and are paid on the 20th of each month for the previous month. We recommend that you use a PAYE intermediary or a payroll provider like ourselves to avoid missing deadlines or incorrect payments.
6. Manage leave entitlements
As employees, nannies are entitled to holiday pay, public holidays, sick leave, bereavement leave and parental leave.
It is essential that you make the correct leave entitlement calculations.
The holiday pays act can be extremely complicated, there have been recent changes to sick and bereavement leave, and further changes are expected in the coming year.
For this reason, we recommend using an external provider to help manage your leave requirements.
About Pay The Nanny
Here at Pay The Nanny, our mission is to make it as easy as possible for households to effectively manage their payroll responsibilities for their nannies.
Pay The Nanny provides friendly, accurate and flexible nanny payroll services to nanny employers. We take care of everything to do with PAYE, ACC, holiday pay, sick pay, maternity leave and Kiwisaver.
For more information, check out our website at www.paythenanny.nz
and give us a like on our Facebook page.
Making Payroll Simple for Nannies since 2019!
Nanny Pay Rates for 2024 in New Zealand