I think if we require her to come, that's work, and doesn't count as holiday.
Our view is that two(ish) weeks have to be taken at the same time as ours, but we feel obliged to give a good long notice so that she can plan.
When we've taken a nanny with us, she's been happy to count this as holiday, and in return for us footing all the bills, she helps out a little with the kids.
Although there is a legal aspect to this, I think the main issue to to negotiate reasonably, not push them into giving up their hols.
They may actually want to come, since often you are able to afford a better holiday than she can, and of course the marginal cost of one extra person is very low on some types of holiday.
We also have what we label "random days". On top of the 4 weeks and bank hols, we do long weekends etc, and those aren't counted as holiday but she's free to go off, sleep etc. Conversely, these days are "free", so we choose them to suit us, but again to be reasonable we tell her when we know.