Paying your employee and paying payroll deductions

You are an employer, in other words, you have to pay a salary to your nanny but also collect and pay payroll taxes and remittances to the government. Only after having added all these elements can you determine the overall expense of your nanny. 

The salary of your nanny

The tranquility and relief that comes with a nanny doesn't come for free, obviously. Here is what you need to know about the legal payroll requirements for paying your nanny.

The minimum wage is set on the provincial level. The minimum wage is not what you should expect to necessarily pay your nanny, it's just means that it is the legal minimum that you can pay in your province. Consult this page for the current minimum wage rates in Canada.

The hourly rate you will pay your nanny is gross, therefore it is the hourly rate before taxes and deductions.

It is also normal to reevaluate your nanny's salary 

What else goes on the payslip?

Vacation pay: Employers in Canada must give their employees at least 2 weeks of paid vacation after the first year of employment (3 weeks in Saskatchewan). The employer can either pay the employee 4% vacation pay on every paycheque or can withhold the vacation pay until the nanny decides to take her vacation at which point he will provide it in one lump sum.

Statutory holidays: Employers are required to pay employees for statutory holidays regardless if they work them (exact laws vary by province). If your nanny has to work on a statutory holiday you must pay her 1.5x her wage. In the case where a statutory holiday falls on normal day off (such as a weekend) they should receive the following work day off (ex. the Monday after the weekend).

And we also add (if applicable):

• Overtime hours
  In most provinces workers are entitled to 1.5x their regular hourly wage after 8 hrs/day or 40 hrs/week. Exceptions include Alberta and New Brunswick which count overtime as hours exceeding 44 hrs/week and Nova Scotia at hours above 48 hrs/week. More useful info on can be found here.
• Allowances
  If your nanny is required to drive your child(ren) around in her own vehicle you will need to provide her with a gas allowance which you can add to her paycheque.

And we subtract (if applicable):

• Sick days: Unless otherwise negotiated in the contract with your nanny you are not obligated by law to pay your nanny for sick days. If has to take a day or two off due to illness it is up to you whether you compensate her or not.
• Unpaid leave: Outside of the legal minimum of paid vacation, employees may occasionally request for additional time off, which is unpaid. You will simply subtract the hours/days/weeks that she does not work.

Payroll deductions

Going from net to gross salary is already impressive, but add more employer contributions and it can be really scary!

Here are some explanations:

As an employer you will be required to remit payroll deductions to te CRA on a monthly basis. There are two types you must pay:

• Employee contributions, payable by the employee, deducted from the employee's salary BUT paid by the employer,
• Employer contributions paid by the employer.

You can use the CRA's Payroll Deductions Online Calculator to get an idea of your nanny's contributions as well as the employer contributions you will have to pay. 

We'll discuss how to pay your payroll remittances further in the administrative section of this guide.