Advice about annual raise + looking after 2nd child

[smeraldina]

Might anyone be able to offer some guidance here. We've had our nanny for nearly 18 months and her contract stated a pay review after six months and then annually.
She's great and we increased her pay by 4% at the six month stage.
The next review is due at the end of the month. I'm not sure what sort of increase to go for. We're a bit stretched, due to a pay drop for DH, but also want to show our appreciation.
Plus, her duties will increase moderately in September as I will be having another baby (although I will be on mat leave for a year so in some ways - in the beginning - she may have slightly less/the same amount to do as I will be around more).
Do we increase now, and then again at the birth? And if so, how much each time would be reasonable?
Or just once, now? And if so, how to phrase that. Would it work to call it a pay increase 'in appreciation of her work in the last year and in anticipation of the new duties involved in looking after two children?'
If it helps, she's currently part time, on about £11.80 gross per hour.

Have you/your DP had a payrise during this time? If you haven't could you defer a payrise to a later date? It doesn't seem sensible to increase your outgoings otherwise.

Nannies are not paid per child. Why increase pay for extra child... can't imagine nanny would want you to reduce pay when a child goes to pre-school or school.

A pay review does not mean a pay rise. You are having an annual review, so consider what their salary is and if that is appropriate given the current market, their duties and your families financial situation and probable situation over the upcoming year.

I care for 3 children and get less than £11.80 gross an hour - are you in London or another large city? If you are not big city based then £11.80 is a good salary already in my view.

How about appreciating them differently such as by say letting them leave early on some days, or not even work at all some days when you are on maternity leave. It will obviously depend how your maternity leave goes, but in early stages you may be feeling that you can cope and don't need nanny around as much.

I would consider the pay rise she got at 6 months to be her annual rise. Have this review and tell her rate of pay will be evaluated in six months and every year thereafter.

£11.80 gross per hour is a pretty good rate. If you give her a 4% raise every six months, you will be paying her £16.15 per hour in 4 years. Say a work week of 50 hours, and you are looking at an annual salary of just under £42k. And, obviously, if you are in the 50% tax bracket you will have to make about £84k (a bit more actually because there are other costs as well) to pay that salary.

Many many thanks for these very useful comments.
To answer reddaisy - I've recently got a small rise, DH has taken a 10% cut so it's not ideal to give a rise. And Strix - thanks for the reality check. If we keep going at 4% every year, my nanny will soon earn significantly more than I do per hour. (She works part time, me full, which is why we can afford this) I have nothing against this as I think nannying is among the most challenging jobs going - but in terms of parity our salaries should probably be matched.

I think nannynick's idea of time off during maternity leave is a great one - and one that I might enjoy given the change in circs. I think we'll go for a letter of appreciation - a small raise (?1%) if we feel we can manage it - and discuss the future possibility of time off when I'm on maternity leave.