Nanny Holiday Entitlement and Pension Duties for Employers

Nanny Holiday Entitlement

A nanny is usually an employee, which means they will normally be entitled to paid holiday. Almost all workers are legally entitled to 5.6 weeks’ paid holiday a year. For someone working five days a week, this is usually 28 days.

This does not always mean every nanny’s holiday will look the same. A full-time nanny, part-time nanny, live-in nanny or live-out nanny may all have different working patterns. Holiday entitlement should reflect the hours or days agreed in the contract.

When agreeing holiday, families should think about:

• How many days or hours the nanny works each week
• Whether bank holidays are included in the holiday entitlement
• How holiday should be requested
• How much notice the nanny should give before taking leave
• Whether the family can ask the nanny to take holiday at certain times
• What happens if the nanny starts or leaves part-way through the year
• How holiday will be recorded

If a nanny works irregular hours, holiday entitlement and holiday pay may need to be calculated differently. The gov site has an entitlement calculator you can use to make sure you are estimating correctly.

Once agreed, the holiday entitlement needs to be written into the nanny contract.

Considering bank holidays

Bank holidays can cause confusion, especially if a nanny works part time.

Some families include bank holidays within the nanny’s total holiday entitlement. Others offer bank holidays in addition to annual leave.

For a part-time nanny, holiday entitlement will usually be calculated in proportion to their working pattern. This helps avoid unfairness where a nanny does or does not usually work on Mondays, when many UK bank holidays fall.

If the arrangement is not clear, disagreements can arise later. It is better to decide at the beginning whether bank holidays are worked, paid, taken as leave or treated in another agreed way.

Nanny Notice Period

A nanny notice period should also be included in the contract.

The notice period explains how much warning either side must give if the role is ending. This protects both the family and the nanny. It also gives everyone time to plan childcare, handovers and final pay.

Families should think about:

• Whether there is a probation period
• Whether notice is shorter during probation
• What notice applies after probation
• Whether the notice period is the same for both parties
• What happens to unused holiday when the nanny leaves
• How final salary and expenses will be handled

Notice periods should be practical. A very short notice period may leave the family without childcare. A very long notice period may not suit every arrangement. The right approach will depend on the role, but it should always be written down in the contract so all parties understand what is required when leaving the role.

What Is a Nanny Pension?

A nanny pension is a workplace pension arrangement for a nanny who qualifies under automatic enrolment rules.

Some families are surprised to learn that they may have pension duties when employing a nanny. The Pensions Regulator states that if you employ just one person, including a nanny, you are an employer and have automatic enrolment duties under workplace pensions law.

A nanny’s eligibility for automatic enrolment will depend on whether they are aged between 22 and the State Pension age, ordinarily work in the UK, and earn above the automatic enrolment earnings trigger in the relevant pay reference period. The employer must assess this through payroll and keep checking where required.

Because these rules depend on current thresholds and individual circumstances, we advise families to use a nanny payroll provider such as Nanny Tax to stay compliant with this complex area of law.

Who Pays Pension Contributions?

If a nanny qualifies for a workplace pension and remains in the scheme, pension contributions may be paid by both the employer and the employee.

The employer will be required to pay their contributions. The nanny may also contribute from their salary. These contributions are usually handled through payroll and paid to the pension scheme provider.

The amount that must be paid can depend on qualifying earnings and the pension scheme being used. Families should not guess pension contributions manually unless they are confident in the rules. A nanny payroll service can help assess eligibility, calculate deductions and make sure contributions are paid correctly.

A nanny may also have the right to opt in, opt out or cease membership depending on their circumstances. Employers still need to follow the correct process and keep records.

Payroll, Tax and National Insurance

Nanny payroll is closely linked to holiday, tax, National Insurance and pension duties.

When a family employs a nanny, they may need to register as an employer, run payroll, provide payslips, deduct Income Tax and National Insurance, and make employer National Insurance contributions. Pension assessment and pension contributions may also need to be handled through payroll.

Payroll can help families manage:

• Gross salary
• Net pay
• Income Tax
• National Insurance contributions
• Payslips
• Holiday records
• Pension assessment
• Employer contributions
• Employee pension deductions
• Year-end reporting
• Employment records

This is especially important because many families discuss nanny salary in everyday terms, while payroll and pension duties need proper figures and records.

If you are employing a nanny, our guide to nanny tax and payroll may help you understand the main steps involved.

What Should Be Written Into the Nanny Contract?

A substantial nanny contract will need to include:

• Job title
• Start date
• Place of work
• Working hours
• Salary
• Whether salary is gross or net
• Overtime arrangements
• Holiday entitlement
• Bank holiday arrangements
• Sick pay
• Notice period
• Probation period
• Duties
• Confidentiality
• Use of the family car, if relevant
• Travel, if relevant
• Expenses
• Babysitting or weekend work, if agreed
• Live-in accommodation, where relevant
• Pension arrangements, where applicable

A contract helps both sides understand what has been agreed. It also reduces the risk of confusion later, especially around holiday, notice and duties.

You can read more in our guide to nanny contracts.

Common Mistakes to Avoid

Many nanny employment problems start with unclear arrangements. Getting things right at the start reduces issues later down the line. Common mistakes that happen early on include:

• Agreeing net pay without understanding the full employer cost
• Not writing down holiday entitlement
• Forgetting to agree how bank holidays are treated
• Assuming a part-time nanny does not have holiday rights
• Leaving the nanny notice period vague
• Not issuing payslips
• Not recording holiday properly
• Forgetting to assess pension eligibility
• Not sending required pension letters
• Missing pension contribution duties
• Treating payroll as optional

These issues can usually be avoided by setting up the role carefully from the start.

How Nannies Matter Can Help

Nannies Matter helps families across Surrey, Berkshire, Buckinghamshire, Oxfordshire and the wider Home Counties find trusted childcare and household staff.

When you are hiring a nanny, we can help you think through the role before the search begins. This includes the hours, duties, salary expectations, live-in or live-out arrangements, and the kind of experience your family needs.

Once you have found your nanny, we will continue to support you through the employer journey. We will consult with you on any issues that occur and can advise you on any subsequent concerns. Where specialist payroll, tax, pension or legal advice is needed, families should use an appropriate professional service. 

Get in Touch

If you are hiring a nanny and want to talk through the role, salary, holiday entitlement and practical employment steps, we would be glad to help.

Call Nannies Matter on 07736 337065 or fill in our contact form. We can discuss your family’s needs and help you begin the search for a suitable nanny.