Yearly Bonuses, Raises, and Holiday Pay for Your Nanny or other Household Employee
Are Nannies or Other Household Employees Offered a Yearly Bonus or Raise?
Agencies as well as other industry experts like My Household Managed suggest offering a yearly raise and bonus in order to retain high quality employees. Career nannies, house managers, and other household employees are typically accustomed to being offered raises and bonuses as appreciation for their hard work. The household employee you hire may be hoping or expecting to receive a raise or a bonus even if it is not explicitly outlined in your work agreement. However, because a bonus is not required, and is meant to be merit-based, a nanny or other household employee should not expect to be guaranteed a bonus.
Yearly raises are meant to adjust for inflation and increased job responsibilities ( due to additional children, pets, or added duties ) and to reward high performing employees for their hard work. Bonuses may be performance-based or considered holiday pay.
Some household employers choose to offer a bonus and/or a raise in their job advertisement or in their work agreement in order to make their role more attractive to potential employees. We recommend advertising yearly raises and bonuses in your job description to help give peace of mind to any potential candidates that may be considering employment in your household. Both a bonus and a raise can be set at a minimum threshold outlined in a work agreement. (Ex: Discretionary bonus at year-end of at least 2% of employee’s gross annual salary). This gives peace of mind to the candidate, especially if they are used to being offered these job perks in the past.
When Should a Nanny, House Manager, Housekeeper, or Other Domestic Staff Expect to Receive a Bonus or a Raise?
Raises are offered at the yearly anniversary of the employee’s first date of hire. Bonuses are typically offered at the year’s end in the form of an additional payment in the form of cash or added to the employee’s payroll. Keep in mind that a bonus or raise is not always guaranteed, and the amount can vary depending on an individuals performance and/or the expectations set in a work agreement.
Raises are to account for inflation, cost of living increases, additional job responsibilities, and to show an employee appreciation for the work that they do.
Naturally, throughout an individual’s course of employment, a nanny or household employee will likely take on additional tasks and responsibilities. These should not only be added to the employee’s work agreement if they are tasks you would like them to continue to perform, but your nanny or other household staff should be compensated for these additional tasks, as well. When calculating their raise you should consider any consistent “non-contracted” extras that the employee has taken on as well as any additional children or pets that have been added to the family.
Bonuses for household employees are considered “holiday” pay that is given as a “thank you” during the holiday season, OR a discretionary, “merit based” pay, meaning that the bonus earned depends on an employee’s performance throughout the year. If you are a family offering discretionary bonuses, be sure that you are implementing performance reviews at least once per quarter, to ensure that your employee understands areas they need to improve in to earn a better bonus.
What Is a Fair Raise to Offer a Nanny or Other Household Employee?
After one year of employment we recommend a performance-based raise. At a minimum, this raise should be at least 3% to adjust for inflation and cost of living increases. (This equates to a raise of .75 cents per hour for a nanny earning $25 per hour). If you are happy with your employee and hope to retain them for the long-term, we recommend a raise of at least $1-$2 per year, or 3%-10% of their annual salary, as that is the typical industry standard. While there is no official policy when it comes to offering raises, a $2 raise each year would be appreciated by most employees.
What Is a Fair Bonus to Offer My Nanny or Domestic Staff?
Yearly bonuses are another benefit to reward your employee and keep them satisfied for the long-term. It is typical to pay 1-2 weeks salary as bonus or holiday pay. However, if money is tight or a bonus is not an option this year, consider other options to make sure your nanny or household employee feels valued and appreciated for the work that they do. If your nanny has been employed for less than a year you can consider one day’s pay for every month they have worked for you.
Can I Offer My Employee a Gift Instead of a Bonus?
Some families like to offer holiday gifts to their employees. A care package with some of your employees favorite items, a handmade card or project from the kids, a voucher for a spa day, or additional paid time off are all great gift ideas.
Recently, we surveyed our candidates and found that when given the choice between receiving four different options for gifts, a cash bonus seems to be the preferred way of receiving a “thank you” from their employer.
Am I Required to Offer a Bonus or Raise to My Employee?
Employers are not required by law to offer bonuses or raises to their employees, making it up to the discretion of the individual family and the expectations outlined in their work agreement. It is, however, highly recommended in order to reward your employee for their hard work and to encourage them to continue their employment with your family.
What if My Employee’s Performance Has Been Just “Satisfactory”, or if We Are Not in a Position to Offer an Increase in Pay?
We always recommended quarterly performance reviews to ensure that your employee is meeting your expectations and to give them any feedback on things they could improve in order to secure a bonus or raise.
If you have offered an employee a bonus in the past and are unable to do so this year, be sure to notify your employee that their lack of bonus pay is not due to their performance. “If you skip an expected holiday bonus without an explanation, your nanny may feel undervalued, lose satisfaction with their job, and could start looking for other employment opportunities.” - GTM Payroll
If you are not satisfied with your employee’s performance we do not recommend offering them a bonus as this could give a false impression of your satisfaction with the work the employee has been doing.
“If a raise is not a possibility at a certain point in time, communicate with your nanny about what he or she is doing well and when a raise can be expected. In the event that you don’t feel your nanny’s performance merits a raise, have a discussion about what the nanny can do better to earn a raise in the future” - Westside Nannies
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If you are a family looking for a nanny, house manager, housekeeper or other domestic employee, submit an application with My Household Managed.
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