Nanny Final Pay in New Zealand: A Practical Guide

When a nanny moves on, plenty of families assume the final pay is just the last week's wages and a quick goodbye. Most of the time it isn't. Final pay is one of the parts of employing a nanny that catches people out, and getting it wrong tends to surface at the worst possible moment, usually right when everyone wants the relationship to end on good terms.

Here's what should be going into that last payment, and where the common slip-ups happen.

Start with the wages owed

This is the easy part.

Your nanny gets paid for every hour worked up to their last day, including any agreed extra hours and anything still owing from an earlier pay period that didn't quite get squared away. Before you run the final pay, take five minutes to make sure the timesheets are actually up to date. A surprising number of disputes come down to nothing more than a fortnight that never got logged properly.

Annual leave is where it gets fiddly

Unused annual holidays have to be paid out when employment ends, and this is the single biggest source of final pay errors we see.

The catch is that there are two different things going on, and they're paid differently. Any annual leave your nanny has already become entitled to (the four weeks that lands on each work anniversary) is paid at the greater of their ordinary weekly pay or their average weekly earnings over the previous 12 months. Whichever figure is higher is the one you use.

Then there's the stretch of time worked since their last anniversary, where the leave hasn't formally landed yet. That part is paid as 8 percent of gross earnings for the period, minus any holiday pay already taken in advance. And if your nanny worked for you for less than a year all up, the whole holiday component is simply 8 percent of everything they earned, less anything already paid out.

For a nanny on steady hours this is reasonably tidy. For one whose hours moved around, with school terms, a growing baby or the odd week off over summer, the averaging can swing the number quite a bit, which is exactly why it's worth slowing down on.

Don't forget public holidays

Public holidays trip families up in two ways.

The first is straightforward. If a public holiday falls during the employment, before the final day, and it would otherwise have been a day your nanny worked, it gets paid like any other public holiday.

The second one is the sneaky bit. If your nanny still has annual leave owing when they finish, and a public holiday falls within the period that leave would have covered had they taken it straight after their last day, that public holiday has to be paid as well. This is the rule that bites hardest around Christmas and New Year, when several public holidays are bunched together. Someone finishing in mid December can be owed more than the calendar suggests once those days are layered in.

Alternative holidays, or days in lieu

If your nanny worked a public holiday at some point and earned a day in lieu that never got taken, that has to be paid out too. It's settled at their relevant daily pay, or average daily pay where their days varied, for the day employment ends.

Days in lieu are the easiest thing on this list to lose track of, because they're earned once and then sit quietly in the background for months. If the records have been patchy, this is the line to double check.

Notice periods and deductions

Your employment agreement sets out how much notice each side has to give, and for nannies that's commonly one, two or four weeks. How notice plays out at the end depends on the wording and the circumstances.

If you ask your nanny to stop straight away rather than work out their notice, you'll usually owe payment in lieu for that period. Going the other way, if a nanny leaves without giving the notice they agreed to, it's tempting to claw something back from the final pay. Be careful here. You can't simply dock final pay because notice wasn't worked, or because a house key or a pram didn't come back. Deductions need the employee's written agreement, and without that you'd be stepping outside the Wages Protection Act. If you're genuinely out of pocket, get advice before touching the final figure.

A few things people regularly get wrong