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How and when to pay the nanny her vacation pay?
Your nanny starts earning her vacation pay as soon as she starts working for you even though she's not entitled to take vacation time until after her first year of work. Employers have two options for paying an employee his or her vacation pay.
You can either decide to pay the nanny her 4% (6% in Saskatchewan) vacation pay on every paycheque or to pay her the amount she has accumulated up to when she takes her vacation. In any case the calculation is the same, the difference being that one method allows you to pay it out gradually throughout the year and the other requires that you pay it out in one lump sum.The 4% on every paycheque method
If you choose this method you will pay your nanny 4% of her earnings as vacation pay on every paycheque (biweekly or monthly). The amount is calculated using her base earnings either hourly or salaried but does not include overtime or holiday pay.
You will then not need to pay your nanny when she takes her vacation since you have already paid for her vacation time throughout the year
Paying your nanny when she takes her vacation
You may also be able to pay your nanny her regular wages at the time when she decides to take her vacation. In this case, the regular wages must equal at least 4% of her annual earnings. The nanny can request to be paid her vacation payment before or in the pay period following when she takes her vacation.
Reminder of paying vacation owed
If you accumulate your nanny's vacation pay instead of paying it with her regular earnings you will have to pay out the amount accrued when the nanny leaves your services.
For example, if your nanny leaves in the middle of the year and has not yet taken her vacation you will need to pay her 4% of her earnings to date with her last paycheque.
Example
Your nanny works 50 weeks per year with a weekly salary of $450. This is how the calculations could look:
Pay on every cheque | Annual payment | |
Annual salary | 50 x 450 = $22, 500 | 50 x 450 = $22, 500 |
Amount paid | $900 x .04 = $36 | $22, 500 X .04 = $900 |
In this case you will either pay your nanny $36 biweekly on her paycheque which will total $900 throughout the year or you will pay your nanny $900 when she decides to take her vacation time.
