How Much Should Your Nanny’s Holiday Bonus Be?

How Much Should Your Nanny’s Holiday Bonus Be?

By A New England Nanny 7 0
nanny's holiday bonus

A holiday bonus is always a good way to show your family’s appreciation for your nanny, and it will certainly be more meaningful this year. But how much should you give? Our payroll partner GTM Payroll Services offers this advice on how to decide on your nanny’s holiday bonus.

‘Tis the season of giving. Time to consider a holiday bonus for your nanny. How much should you give? Do you even have to give one? What about other types of gifts? You may have questions about your nanny’s holiday bonus. Here are some answers.

Do I need to provide my nanny with a holiday bonus?

Holiday bonuses are customary in the household employment industry. Many nannies, 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.

In some cases, you may not be able to afford a holiday bonus. Again, explain to your nanny that the decision was a financial one and not performance-related so there is no confusion. Still try to provide some kind of gift as a show of appreciation for their hard work over the past year. You could also consider giving them some extra paid-time-off to make up for a lack of a bonus.

How much should I give as a holiday bonus?

For a full-time nanny, it 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.

If your nanny is new to your family (employed for less than a year), you could consider one day’s pay for every month they have worked for you as their holiday bonus.

For longtime nannies, try to be consistent with their bonus from year-to-year. They may grow used to getting a certain amount and budget for it. If you decide to give more, great! But if it will less than usual, it may cause confusion and dissatisfaction. Explain to them why the bonus was less this time around.

Should I plan for a holiday bonus?

Considering that a holiday bonus for a nanny is standard, you can factor this into your budget for in-home childcare. You could add it to your nanny contract or work agreement. It can state that you may offer your nanny a holiday bonus at your discretion.

What about gifts other than a bonus?

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.

Can I give an annual review bonus instead?

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.

Are there tax implications for providing a bonus?

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 nanny. They should also have income taxes withheld. Some families add a little extra to the bonus to cover taxes. Clients of GTM Payroll Services can include a holiday bonus when updating their nanny’s pay.

Contact A New England Nanny at (518) 348-0400 for more information on holiday bonuses and other gifts for your nanny!

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