What are the cost implications - national insurance, tax, sick etc.
They would be coming in the same day each week, the same hours. You would be dictating that, plus also what they did during that time, so they are going to you be your employee.
They are likely to have another job, so you will need to operate PAYE even though the pay level may be below the threshold for operating PAYE. You CAN NOT use the simplified scheme, it must be full PAYE as they have another job.
Agree a Gross salary. Your employees tax code for your job may well be BR (though tax office may tell you to use something else). If BR then that means all income is taxable. PAYE Calculator by MrAnchovy will give you an indication of the Employers NI costs for current tax year. I expect it will be Zero, as Employers NI does not start to be paid until a threshold is met.
You can do PAYE yourself or have a payroll company assist with it. There are many around, some offer lower costs for short term things (example, PAYEforNannies provides lower cost for a 3 month temporary period) if you don't think you will be having a nanny for a year.
Sick Pay - I don't think they would earn enough to qualify for Statutory Sick Pay (earnings requirement £97 per week, tax year 2010/11). See BusinessLink: Earnings Related Qualification SSP
Statutory Maternity Pay also has minimum earning criteria.
So unless you are paying £97 per week or more, then things like SSP and SMP are not going to apply in my view (do seek professional advice if you require it, I'm just a nanny
).
Non earnings related rights will apply, so things like having a Written Statement (contract), Notice Period for ending the agreement, Holiday Entitlement (work this out in Hours based on typical working hours). BusinessLink: Interactive Tool for Holiday Calculation