Pay rise for our nanny

[HappyAsIAm]

Our (live out) nanny joined us a year ago, when our previous nanny (who had been with us for 18 months) went on maternity leave. She works 3 days a week, which is what I work. We have one 3 yo DS.

A bit of background - previous nanny (who has now formally said she is not coming back to work, so our current nanny is now on a permanent contract) earned £9/hour. She was earning £8.50/hour when she joined us, but we increased her rate to £9/hour after 6 months.

When our current nanny joined us, she had just left a job where she was earning £12/hour. We couldn't match that, so we suggested £10.50/hour, as that was half way between what we paid our old nanny and what she had earned in her last job.

She has been excellent, and made a huge difference to our lives in the time she has been with us. She hasn't had one day off sick, has always been willing to do overtime (and swapped her working days on two separate weeks to fit in with mine), gone out of her way to have our car fixed, taken DS to the dr when he had an ear infection, and generally been really good with our DS. By the same token, we have given her extra paid holiday, nice birthday and Christmas presents etc.

Now that she has been with us for a year, and will be staying with us, we want to give her a salary rise. But how much? I have had a 3.5% pay rise, as I have moved up a grade at work this year. After tax and tax rises, I will take home £700 extra this year compared to last. Should I pass on my pay rise to our nanny, and give her 3.5% = £10.85/hour too? If I did, that would cost us £600 extra per year (£550 for her, £50 extra employer NI) so she would get basically all but £100 of my increase.

Does this sound right? We really value our nanny, and want her to be happy.

Well the tax changes will leave her about £5 a week better off net, or 2%, anyway so this is going to help from her point of view.

But £10.85 is not quite 3.5% which seems a bit stingy - can you not make it £10.90 or even a nice round £11? This would leave her quite well paid (where are you?) but she sounds like an excellent nanny.

The bad news is that employers NI is now 13.8% so that extra £15 a week would cost you almost £890.

Is she Ofsted registered?

mranchovy, A 3.5% rise on £10.50/hour = £10.87.

We live in North Kent.

if you are paying her net, you should already be enjoying the benefit of her higher personal allowance. You could pass that on to her. Frankly it sounds like a pretty generous wage as it is.

Our nanny in a SE London nanny share takes home £315 net per week for 30 hours (3 days). We did give her an effective 5% pay rise after about 16 months (from £300/week) but I haven't passed on her higher tax allowance.

I also gave a cash bonus of something like £200 after she'd been with us a year.

chandellina, We pay her gross. The hourly rates I mentioned are gross rates.

I don't want to be "stingy" mranchovy, but I really don't know what to do.

3.5% is not stingy -- especially not in this market.

sorry for misunderstanding!

Okay, let me rephrase that.

£10.85 is not quite 3.5%, so if you explain to her that you are giving her 3.5% which is the same as you got then if she works it out for herself and finds out that it is actually a bit less than 3.5% it may seem a bit stingy.

Yes in current market conditions, 3.5% as a 'normal' annual pay rise would be generous. But this is not a normal annual pay rise, it is her first pay rise, she accepted a job at a lower rate than she was on previously (possibly partly due to market conditions) and she has apparently 'proved' herself in this job and exceeded expectations.

Having said all that, £10.85 is a pretty good rate for North Kent even if jobs were plentiful IMHO.

Sounds generous to me.

Thanks for your replies. But:

Oh gawd. I went home from work last night and said to our nanny that we would be increasing her salary by 3.5% as of today, in line with my raise. Nanny didn't react much - seemed neither unhappy or happy by this news, but came into work this moring and seemed her usual self.

DH and I are not able to give cash bonuses - we are both lawyers and need to do things above board. Do you think I should also give a lump sum bonus (which would have to be taxed)? We do really value our nanny, and we could afford to give a one-off bonus, I suppose. DH is a bit reticent as we are already passing £600 of my £700 pay increase onto our nanny, but we do feel that she is really great at what she does.

I personally feel that it's great that you have passed on the same percentage rise as you got yourself. I wouldn't have expected it as a nanny, I would be happy with anything to try to keep wage up with the cost of living.

Not sure how you wanted your nanny to react. I would have probably reacted very similar, neither happy nor unhappy... life goes on. It's not life changing news, it's not a case of you telling your nanny they won't have a job in 4 weeks time, or something bad like that.

No I don't feel a lump sum bonus is something to offer at this point. I'm sure your nanny realises that you value them and that if you could afford to give more you would... but reality is that you can't give them more. If you really feel that you want to put more money their way (though I'm not sure where you are getting that money from) then you could perhaps increase the weekly kitty over part of the summer holidays perhaps, so nanny and your son can have a more costly day out somewhere.

Cheers nannynick, you've really made me feel better. I just want to do the right thing by our nanny, but I couldn't work out what the right thing would be.

Any lump sum would be coming out of our savings.

I will increase the weekly kitty, as you say. Though our nanny is very good about doing inexpensive things with DS and she very rarely spends all of the kitty anyway!