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Annual Bonus for your Nanny or Senior Caregiver?

Posted by HomeWork Solutions on 11/14/17 4:33 PM
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The end of the year is quickly approaching. Traditionally at this time of year you consider recognition for the  people in your life who provide you services and traditionally receive a holiday bonus. You

are thinking about that, aren't you? In addition to the cleaning company team and your hairdresser, there's probably nobody more deserving than family employees such as your nanny or senior care worker. After all, they're the unsung heros of your household.

If you hadn't considered giving your nanny or senior care worker a bonus, we'll explain why you should and show you how. If a holiday bonus has been part of your end-of-year routine, we'll share some norms with you to help you evaluate the amount to give. 

Note: For the sake of clarity, we talk about the nanny for the duration of this article. You will use the same guidelines for senior care workers.

To Give or Not to Give

Your nanny cares for your children day after day, providing you both flexibility and dependability in your child care, and in short simplifies your life. Your nanny is an important member of your household. So, unless you're facing a financial hardship, you should consider giving your nanny a holiday bonus — it's the right thing to do. A recent study showed only 3% of families didn't reward their regular nanny at all at the end of the year.

Three Reasons to Give Your Nanny an Annual Bonus


  1. Expressing Appreciation. Nannies care for your children day in and day out, ususally alone. This is an important and sometimes thankless job. They care for your children, and, let's face it, taking care of even the best, most well behaved children can be trying at times. Nannies also often perform a range of tasks not listed in their job descriptions and families often ask them to adjust to last-minute schedule changes. An annual bonus is a good way to tell your nanny thank you for a job well done.

  2. A bonus is customary. Many nannies count on their bonus to supplement their incomes around the holidays. While a nanny shouldn't necessarily expect a bonus, you should factor in an annual bonus as part of a nanny's compensation.

  3. You Want to Keep Your Nanny. We'll be frank here: Nannies that don’t receive some annual recognition may take the lack of a bonus as reason to start looking for another position.  If you're happy with your nanny, a bonus is one way to ensure they’ll stay.

When Not to Give an Annual Bonus

If you're planning on letting your nanny go because of poor performance or for personal reasons, it's acceptable to skip a bonus. In this case, it would send the wrong signal and raise your nanny’s expectations.

What to Give

Now that you've decided to give you nanny an annual bonus, the question remains: what to give? Hands down the best answer to this question is CASH. While it may seem impersonal, a poll of nannies showed cash was their number one choice for an end-of-year gift. Their second choice was a gift card from a place where it could be used for multiple types of items, such as Amazon.com or American Express.

How Much to Give

If you're planning on giving your nanny an annual bonus but are unsure how much to give, the most common answer is to give at least one week's salary. A number of variables may determine the appropriate amount of money to give, however.

  • The Nanny's Base Wages: How does your nanny's compensation fit into the averages paid in your community? Needless to say, a nanny earning in the lower end of the local pay scale shoud receive a higher bonus, and one at the highest end might receive less than a full week.  The standard range is one to two weeks' earnings.

  • Geography: Both nanny compensation and the amount of the annual bonus can vary depending on where you live: more in large cities and less in rural areas. When in doubt, you can ask colleagues and other parents you know what they are giving their nannies.

  • Scope of the Job: The rule here is the more demanding the job, the larger the bonus should be. Things like flexibility, going above and beyond and dependability should be rewarded.

  • Number of Years on the Job: Nannies who have been with a family for many years typically receive a larger annual bonus than those who have not.

  • Your Financial Situation: If you're watching your budget to make sure you can afford to pay your nanny a decent wage, they may be understanding if you can't give a large sum as a bonus. On the other hand, if you’re planning that week long ski vacation, your nanny will notice, and won't be happy with a small amount. If at all possible, be consistent. A sudden drop in the end-of-year bonus may send a signal that you're unhappy with your nanny's work, which could damage your relationship. Try to factor the bonus into your annual budget to avoid being caught short at the end of the year.

What to Do if You've Had a Bad Year

If your family's economic circumstances prevent you from being able to pay the standard bonus, the important thing is to acknowledge this to your nanny. Your nanny is generally very sensitive and aware of family situations, and she will most likely understand. Instead of giving the payment all at once, you might try breaking it down into smaller amounts over a period of time.

If you can't afford a bonus due to financial hardship, here are some suggestions for gifts you can give in lieu of cash:

  • Spa services
  • Concert tickets or tickets to a show
  • Frequent flier miles
  • A timeshare week
  • A gas card
  • Help buying a computer
  • Extra paid time off

Most good nannies develop a strong bond with your child. You may wish to consider a personal gift, such as photo book, a scrapbook, or a keepsake such as a locket with your child's photo that reflects their relationship. Involve your children - this not only models gratitude to them, it also makes the gift more meaningful to the nanny.


Your nanny's holiday bonus is considered to be taxable income, and you must report and pay taxes on it. Many families don't realize that even the dollar value of a gift card must be reported as income. Since you're an employer, your bonus doesn't qualify as a gift. A full discussion on the tax issues surrounding nannies and bonuses is outside the scope of this article, so make sure you talk to a nanny tax expert to review the tax ramifications.

The Nanny Annual Bonus: A Win-Win Situation

An appropriate cash bonus will let your nanny know they are appreciated. It's a win-win situation. You'll be letting them know how thankful you are for the fine job done, while at the same time, you'll be giving them an incentive to continue providing loyal and dependable care for your family.

Topics: nanny bonus

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