With the influx of people moving to Saskatchewan for employment opportunities, the shortage of regulated child care spaces is a problem. Many members of the workforce require childcare and some are seeking alternative child care options including babysitters, day home operators or nannies.
The nanny share is growing in popularity. This form of childcare puts a spin on the traditional nanny model and appeals to those who want to share the cost or encourage relationships with other children. In a nanny share, one person establishes the legal and accounting groundwork to hire a nanny and then shares the nanny’s services with other parents. Hiring a nanny is very different than hiring a babysitter and if you are considering this model there are many legal considerations. This article summarizes the base requirements for hiring a live-out nanny. The process of hiring a live-in nanny is different and additional concerns apply.
Although some childcare providers offer contract services and are self-employed, when you hire a nanny to come into your home to care for children an employer/employee relationship is created. You become and take on all the expectations of any other employer. You must establish a salary for your employee(s), remit Employment Insurance premiums, income tax deductions and Canada Pension Plan contributions, match those contributions and ensure compliance with labour standards. You must also prepare a T4 slip at the end of each year, keep impeccable records and provide a record of employment when the contract terminates. Ignoring these requirements will lead to financial penalties and legal action.
If you pay a salary to a nanny you must open a payroll program account with Canada Revenue Agency (“CRA”). You will be issued a business number from the federal government’s unique numbering system, which identifies your business and the various accounts it maintains. The registration requirements for this type of business are not complex and you can usually use the CRA’s Business Registration Online service.
As the employer of a nanny, you must withhold, remit and report deductions from your employee’s salary. The payroll program account must be created prior to your first remittance due date, which is the 15th day of the month following the month you begin withholding deductions from your employee’s pay. Failure to remit deductions by the due date can result in a penalty. You must also calculate the employer share of CPP and EI. It is important to have a separate bank account where the deductions are kept isolated and held in trust for the Receiver General.
The CRA has a Payroll Deduction Online Calculator (“PDOC”) that assists with the calculation of federal and provincial deductions based on exact salary figures. However, the employer must ensure the information provided is accurate and the calculations correct. You will not want to rely solely on the PDOC but should create statements of earnings in compliance with employment standards. There are many considerations around payroll deductions that are not discussed here but you should give the topic some attention.
At the end of each year, you must complete a T4 slip. You will need your nanny’s full legal name, social insurance number and live-out address. In the event of termination, you must provide your nanny with a Record of Employment within 8 days of the last working day. Service Canada provides a kit on how to create a valid Record of Employment.
Besides tax compliance, you must also meet the minimum employment standards around such things as minimum wage, employment hours, overtime pay and time off including leave, statutory holidays and vacation time. Regulations for nanny employment arrangements can be found through the Saskatchewan Ministry of Labour. Although convenience and flexibility are common benefits of having a nanny, understand that you cannot necessarily come and go simply because a nanny is present. If you are running late, overtime will commence and payment in accordance is legally required no matter what casual arrangement you think you have. As informal as you might feel your situation is, do have a proper contract spelling out the details of the job, terms of sick leave, vacation entitlement and notice requirements in the event of termination by either party.
If you can find the right nanny and the right people to share the service with, a nanny sharing situation can be successful for everyone. The experience will be all the more satisfying if you ensure compliance with CRA and labour standards requirements that govern this important employer-employee relationship.
This article originally appeared in Saskatchewan Business magazine and is reprinted with their kind permission