Holiday bonuses are customary in the household employment industry. Many nannies and other household employees, like other workers who rely on holiday tips, count on them as part of their income. It is also a sign of appreciation for a job well done. 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.
That said, your nanny should not expect to automatically receive a holiday bonus. They are to be are earned and based on merit and performance.
If you are unhappy with your nanny’s performance and considering letting them go, do not give them a bonus. That may send the wrong signal that everything is ok and provide a false sense of job security.
When things are not working out and that is the reason for a lack of a bonus, have that discussion with your nanny. Talk about the areas of their job where you would like to see improvement.
Regarding paid holidays, it’s good to keep in mind that nannies have families too, and surely many of them would like to be at home during certain holidays. If you will need your nanny on a holiday, they should be compensated at least 1.5 times their regular wage to show how much you appreciate them working for you during this time.
Gifts, in addition to a bonus, are always a great idea. They can be inexpensive like a gift card to a favorite restaurant, flowers, books, or a framed picture of your nanny with the kids.
Presents from your children are also appreciated – maybe even more so than something store-bought. Have your kids create a piece of artwork and a holiday card. Or help them bake cookies or other goodies.
Some extra paid-time-off to use at their discretion is also a nice gift.
How Much Should a Holiday Bonus Be?
For a full-time employee, a holiday bonus is typically one to two week’s salary. It can be more or less depending on factors like job performance, length of service, location (nannies in major cities may receive more), and your family’s financial means. Some long-term caregivers receive up to one month’s pay.
Considering that a holiday bonus is standard, you can factor this into your budget for in-home childcare. You could add it to your employment contract or work agreement. It can state that you may offer your nanny a holiday bonus at your discretion.
A holiday or annual review bonus is considered taxable income. As you are the employer, the bonus does not qualify as a gift in the eyes of the IRS. You will need to pay the usual FICA taxes (7.65 percent for Social Security and Medicare) as will your employee. They should also have income taxes withheld. Some families add a little extra to the bonus to cover taxes.
If you conduct an annual job performance review with your nanny, that is also an appropriate time to provide a bonus. Just make sure your nanny is aware that this considered their annual bonus and not to expect another one during the holiday season.
Many people choose to tip their mail carrier or their garbage collector during the holiday season. Nannies are more than a service provider – you trust them to care for those you love, and showing your appreciation during the holidays – through whichever form you choose, bonus or otherwise – helps keep that bond strong.
Contact us at (518) 348-0400 if you have any questions. Happy holidays to you and your nanny!