So You're Hiring a Nanny — Here's What Becoming an Employer Actually Means

By Smart Au Pairs & Nannies — matching families and childcarers since 2005

The moment your nanny's first day is agreed, something quietly significant happens: you become an employer. Not "sort of" an employer, not an informal arrangement between friendly parties — a real employer, with the same legal responsibilities as any small business taking on staff.

After more than twenty years of placements, we can tell you that the families who embrace this from day one have the happiest, longest-lasting nanny relationships. The ones who treat it as a formality to tidy up later are the ones who call us in a muddle six months in. Here's what we wish every family knew before their nanny's first Monday morning.

First, a quick distinction: nanny or au pair?

Because we place both, we see families confuse the two all the time. An au pair lives as part of your family in a cultural exchange arrangement — helping with the children and light housework, typically on a part time/split shift basis, in return for board, lodging and modest weekly salary  — while a nanny is a professional childcarer, live-in or live-out, on a full salary.

But here's what many families don't realise: employment law applies to your au pair too. The idea that an au pair is "just a guest who helps out" and sits outside the rules is one of the most persistent myths in our industry. Au pairs are entitled to a written agreement, paid holiday, proper working hours and a fair, safe working environment, just like a nanny. The real difference between the two isn't the legal framework — it's the scope of the role, the hours, and the pay point, which is simply lower for an au pair to reflect the live-in, cultural-exchange nature of the arrangement and in most cases the fact that au pairs have significantly less experience compared to professional nannies. 

So whichever route you choose, everything below applies. If you're not sure which arrangement suits your family, that's exactly the conversation we love having — get in touch before you advertise, not after.

Payroll isn't optional — whether you're hiring a nanny or an au pair

For the standard arrangement, that means you register as an employer and operate PAYE — deducting income tax and National Insurance from her gross salary, paying employer's National Insurance on top, providing payslips, and reporting to HMRC each pay period. And yes, this applies to au pairs too: if your au pair's pay is above the relevant HMRC thresholds, payroll must be run just the same. The lower pay point of an au pair arrangement doesn't take you outside the system — it just changes the sums.

It sounds daunting. In practice, a nanny payroll service handles the whole thing for a modest annual fee, including pension auto-enrolment if your nanny meets the thresholds. It is money extremely well spent, and it means your nanny builds a proper employment record — which matters for her mortgage applications, maternity rights and state pension. Paying properly is one of the clearest ways to show a professional you value her.

One thing to agree upfront: always negotiate and contract the salary in gross figures, not net. A net-pay agreement means you absorb every future change to her tax code — including debts to HMRC you knew nothing about.

Insurance: check before their first shift

If you employ someone in your home, you are legally required to hold employer's liability insurance. Some home insurance policies include it for domestic staff; many don't. Ring your insurer, ask the question directly, and get the answer in writing. It's a ten-minute job that protects you if your nanny is ever injured at work — and skipping it can attract eye-watering daily fines.

The contract is where good relationships are built

We'll be honest: most nanny-family fallouts we've mediated over two decades could have been prevented by one well-written page in a contract. The disagreement is almost never about something dramatic — it's about a grey area nobody wrote down.

The areas worth putting in black and white:

• Hours and overtime — what's contracted, what happens when you're home late, and the rate for babysitting evenings
• Pay and review dates — gross salary, payment date, and when you'll review it 
• Holiday — the statutory minimum is 5.6 weeks (28 days for full-time, and yes, this applies to nannies), plus how it's split between her choice and yours, and whether bank holidays count within it
• Sickness — what she's entitled to and what happens when the children are ill. Note that statutory sick pay rules are changing under the Employment Rights Act, so check the current position when you draft contracts (SSP is now applicable from day 1).
• Duties — nursery duties, children's meals and children's laundry are standard; the family ironing and dog-walking are not, unless agreed and paid accordingly
• Notice periods — for both sides, so an ending is handled with dignity

And then — this is the bit families forget — take the contract out again when things change. A baby arrives, school starts, hours shift. If the role has grown, the conversation (and often the salary) should grow with it. "Role creep" without acknowledgement is the fastest way to lose a brilliant nanny. Some au pairs stay with the families beyond their contracted time, and we absolutely recommend reviewing contracts at 12 month mark if not done previously. 

Guaranteed hours: pay for the time you've booked

If you contract 35 hours a week, you pay 35 hours a week — even the week Granny visits and you barely need her. Your nanny has reserved that time for your family and turned down other work to do it.  Think of it like a nursery place: you pay for the term, not the days attended.

Banking/balancing out hours can work in short term/within one payroll month but we do not advise banking hours over longer periods of time. 

The everyday details that keep things smooth

Agree early how activity money works — a kitty, a prepaid card, or receipts and reimbursement. If she'll drive, settle whose car, who insures it for business use, and who pays for fuel. None of this is glamorous, but sorted-out logistics are the background hum of a happy working home.

Then keep talking. A ten-minute Friday catch-up over a cuppa — what went well, what's coming up, anything niggling — does more for a placement than any clause we've ever drafted.

The short version

Whether you're welcoming a nanny or an au pair, this is a genuine professional relationship, and it rewards being treated like one. Get the payroll, insurance and contract right at the start, keep communication little-and-often, and revisit the paperwork when family life moves on — because it always does.

Feeling unsure where to start? Our UK Nanny Hiring Pack includes a ready-to-use employment contract, family handbook and pay & compliance guide built on twenty years of placements — or speak to our team at smartaupairs.com and we'll walk you through it.