When you hire a nanny, there are lots of details to work out. For example, driving expenses.
Does your nanny drive your kids to school, play dates or activities? Do they run errands for you? If your nanny uses your car while they’re caring for your kids, they should be compensated for any petrol they buy or tolls they drive through. If they regularly use their personal car to chauffeur your kids, they should be repaid for petrol, tolls and any wear and tear on their car.
So how should you handle the reimbursement? According to the Fair Work Ombudsman, nannies covered by the Miscellaneous Award (2020) who are using their own vehicle for the employer’s business are entitled to an allowance of $0.91 per kilometre.
The employee must also be reimbursed for all reasonable expenses incurred while driving on behalf of the employer. So in addition to the cents-per-kilometre you’ll be expected to reimburse your nanny for, you’ll also need to factor in tollway fees and parking costs.
Read on for more information about mileage reimbursement for your nanny.
1. Cents-per-kilometre method
The Fair Work Ombudsman’s standard mileage reimbursement rate for the Miscellaneous Award, which covers nannies, is used to calculate the cost of petrol, maintenance and depreciation of a car used for business purposes (like running errands for families or transporting kids).
Using this 2020 (most recent) rate of $0.91 cents per kilometre is helpful because it covers all of the expenses that your nanny could incur from using their car.
But for this to work, your nanny needs to keep track of the kilometres they drive in order for you to use this rate. You can also have them create an online spreadsheet that you both access, using a program like Google Drive. Track the days your nanny works and the kilometres they drove each day. When pay day comes, it will be easy to figure out how much you owe them. This method will also help keep track of their hours in case you need to pay overtime.
2. Flat-rate compensation
If keeping track of all the kilometres driven is too much of a hassle, you could also include a flat-rate line item for petrol and mileage on your nanny’s pay slip. If your nanny drives a consistent number of kilometres to transport your children, this option makes things a little easier. But since you’ll just be estimating what expenses your nanny will incur when using their car, be sure to communicate with them to confirm that you aren’t underpaying them.
3. Reimbursement per job
For part-time nannies, reimbursement per job can be more fitting. If your nanny periodically drives your kids or doesn’t follow a set weekly schedule of covering the kids’ transportation, it makes sense to compensate them each time they use their car. It’s a perfect way to give your nanny their reimbursement in a timely manner so they’re immediately repaid for the transportation expenses. Make sure to use the $0.91 cents-per-kilometre rate to adequately cover the nanny’s mileage.
4. Increased pay
Some families simply choose to give their nannies a pay rise to cover the extra driving expenses. It’s an easy solution, but the problem with this method is that both you and your nanny then have to pay taxes on the extra wages. Do the maths, but it may end up costing you more.
Discuss these options with your nanny and agree on a system that works for everyone. Make sure you include the details in your nanny contract. Don’t have one yet? Use this Sample Nanny Contract to get you started.
