Nanny Contract UK: Employer Guide & Key Terms

What this document is

A nanny contract is a written employment agreement between a parent or guardian (the employer) and a nanny (the employee) who provides childcare in the family's home. Because the nanny works under your direction, in your home, for set hours and set pay, the arrangement almost always creates an employer-employee relationship under UK law rather than a self-employed one.

That has real consequences: you become responsible for operating PAYE, deducting income tax and National Insurance, paying employer National Insurance, providing a workplace pension where eligibility is met, and giving statutory holiday, sick pay and family leave rights. By law, you must give your nanny a written statement of the main terms of employment on or before their first day of work.

A well drafted nanny contract does that job and goes further, covering the practical realities of caring for children in a family home. It records duties, schedule, confidentiality, use of the family car, driving the children, sickness cover, notice periods and how disputes are handled, so both sides know where they stand from day one.

How to use this document

1. Work out whether you are the employer. In almost every household nanny arrangement, the family is the employer and the nanny is an employee. Self-employed status is rare and needs to be genuinely justified by HMRC's tests. Getting this wrong exposes you to back tax, penalties and unpaid employment rights, so check the position before you offer the role.
2. Register with HMRC and set up payroll. Once you agree to hire, register as an employer with HMRC and arrange PAYE, either yourself or through a specialist nanny payroll provider. You will need to deduct income tax and National Insurance from your nanny's gross pay, pay employer National Insurance, and issue payslips. Agreeing salary in gross terms, not net, avoids nasty surprises later.
3. Draft the written terms of employment. Put the full agreement in writing before the first day. Cover the parties, job title, start date, place of work, hours, salary, overtime rate, holiday entitlement, sick pay, pension, notice periods, confidentiality and grounds for dismissal. Be specific about duties: cooking for the children, school runs, laundry, tidying play areas, and anything else you expect.
4. Address the household-specific issues. Nanny contracts live or die on the practical detail. Spell out use of the family car and who pays for fuel, whether the nanny drives the children, rules on phones and social media, smoking and alcohol, having friends or family in the house, food provided during working hours, and any overnight or travel expectations. Clarity here prevents most of the arguments that arise later.
5. Sign, store and review. Both parties should sign and date the contract, and each keep a copy. Keep a secure record alongside right to work checks, DBS documentation and any qualifications you have seen. Review the contract at least once a year or when circumstances change, such as a new baby, a house move, or a shift in working hours, and issue a written variation when needed.