So the thing I'm finding difficult is, if the children sleep through and the nanny lives in the home, is it technically classed as 'work' during the sleeping hours?
^
Yes, of course it is classed as 'work'
The live in nanny is responsible, and chances are (if you hire a good one, who takes pride in their work), they will not sleep well (not sleep 'deeply/properly') as they will be semi alert / very aware that they are on overnight duty - be that putting a dummy back in their charges mouth, or similar...
Even IF the children 'sleep through' - you are still asking the nanny to be available and on duty - it is 'work' as you pay for the nannies time / nannies responsibility/experience / availability.
In the UK, it is standard, (for most) live in nannies to do two evening babysits - by evening babysits - - this generally means babysitting duty until mid night or similar - this is very different to 'overnight' care / monitor duty - whichever you wish to call it.
Experienced Live in Nannies often charge a standard overnight fee of £50 per overnight...