[Nannies] The Self Employed Nanny versus the Employed Nanny

Here begins my line of posts detailing on and about Nannies. As many SMC's who I run into on the forums seem to use them, I thought I'd start looking into the feasability of hiring a nanny in Vancouver, BC.

The first thing that I learned here is that there are a LOT of "We'll find you a nanny!" companies here in Vancouver. :D Seriously. Quite a few.

Take a step forward.

Then I figured out that not all of them are licensed, and not all of them do much at all except coordinate the background check and put out the Craigslist ad for you.Then they charge a few thousand.

One step back.

Googling various child care provider sites for policies and nitty gritty, I found out there are two ways a nanny can present herself for employment, and how the government of Canada can see the employment contract between you. Either:

1) Your child care provider is self-employed; You are a client. She tells you what her requirements are and you either meet them/sign for her services, or you don't hire her.

2) You are an employer, and set out the requirements/wages you wish to pay. People apply who wish to accept those conditions.

 What's the difference, and how do you figure out which type of relationship you want to look for?




That gets complicated. The first thing the Canada Revenue Agency looks at is intent. Are you both on the same page that you are becoming an employer-employee, or are you buying a set of services (child care hours) from her? TALK ABOUT THIS. If it is "unclear" chances are things could look bad for you down the line in the name of tax evasion charges.

If your Child Care Provider is Self Employed, the following must be present:

1. The CCP must have the ability to make decisions on how he does his work. I.e. there will be very little or no parent input expected. An example is a group daycare. The parents drop off the child, but do not get to dictate when naptime is.
2. The CCP is able to hire assistants/subcontract if necessary, as long as the job gets done (Within reason, and to the specifications agreed upon). I.e. does your nanny arrange her own sick coverage?
3. The CCP sets her own wage. "It's $50/day.". Note that self-employed nannies do not need to adhere to the minimum wage law; that is reserved for employer/employee relations.
4. The CCP has a visible business presence; i.e. advertises in places to show they are a business all on their own.

Perks and Downsides for Self-Employed Child Care Providers:

1. You do not qualify for the mandatory minimum wage law. Your salary is whatever you set for your services; if no one is willing to pay that wage, you absorb the risk.
2. You do not qualify for mandatory paid holidays, paid vacation, Canada Pension Plan Payments from your clients, or Employment Insurance/WCB insurance.
3. You must arrange to pay your own taxes. 
4. If you a monthly rate, and the child does not meet requirements to be in care (too sick, parents on vacation), they paid for a day of service; they still must pay you.

If your Child Care Provider is a Employee, the following must occur:

1. You, as employer, get to dictate how, where, and when the CCP does their job.
2. You, as employer, must pay minimum $10.25/hour to all employees, with overtime at 1.5x hourly rate after eight hours. 
3. You, as employer, must subtract sufficient taxes, Canada Pension Plan, and Employment Insurance from an employee's salary before paying them. This makes some CCP's cranky, as they would prefer to be paid under the table. Note that if you do pay under the table, you don't get the tax write offs, and if caught, will owe ALL the contributions, yourself, not just half.
4. You, as employer, must arrange for Worker's Compensation Board Insurance, just in case they are hurt on the job.
5. You, as employer, must contribute your own portion towards the CCP's Canadian Pension and Employment Insurance. 
6. You get to choose who provides the service (i.e. the nanny you hired personally, and not one of his friends).
7. You also have the obligation to provide two weeks of vacation (paid) each year, OR in leiu, a 4% hourly wage increase instead of vacation taken. Note that this in lieu MUST be put into writing in the contract.

Perks and Downsides of Being an Employee Child Care Provider:

1. The power dynamic is different. Your employer gets to choose how and where you care for their child. You also can't substitute someone else if you are sick... you just don't get paid.
2. No Sick days, unless your employer offers them.
3. You may not get to choose when you take your vacation; your employer has the right to choose that for you.

Note that some people try and take the best of column A and the best of column B and "Insist on their rights" to both, without any of the downsides of either. That's not okay, nor realistic. That's why it's important to clarify the type of arrangement you are seeking, and that everyone is really clear on it and what they have the right to expect... and what they don't.


Okay, that's enough about that tonight.