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ESA & Nanny Laws for Overtime

My wife and I had our first child a year ago. A bouncing baby boy named is Elliott. My wife and I have been trying for months to get Elliott into a daycare in time for my wife’s return to work in a few weeks, but no spots are available (we live in Toronto). We opted to hire a nanny.

I didn’t know anything about nannies when my wife first raised the possibility of hiring a nanny for Elliott. Being a lawyer, I delved into the legalities. I discovered that there was much to learn. Here are, in my opinion, the most important things you need to know:

1. Nannies are very expensive.

They are. Period.

2. Nannies are your employee

As an employer you have to abide by the duties and responsibilities imposed upon you by the Employment Standards Act (ESA). It doesn’t matter if your nanny is full-time, part time, live-in or live-out: your nanny = your employee.

3. You have to pay at least minimum wage and you have to pay for any overtime

The ESA requires that an employer pay its employee a minimum wage. There is a general minimum wage that covers most employees in Ontario. This general minimum wage is currently $11.40 per hour. Good luck finding a decent nanny for that wage. The going rate for a nanny, in Toronto anyway, is about $15.00 net (i.e., after all payroll deductions have been made). Different wage rules apply for live-in nannies. I recommend you take a look at the Ministry of Labour website for more details.

If your nanny works more than 44 hours a week any excess time is considered overtime. You will have to pay at least one and one-half times your nanny’s regular hourly wage for any excess time above the 44 hour threshold. Did I mention nannies are very expensive?

4. You have to make payroll deductions and pay insurance premiums

You have to withhold and remit taxes from your nannies pay; that is unless you want to the CRA to come knocking. You also have to withhold and remit CPP and EI premiums and match those contributions. If your nanny works more than 24 hours a week you have to register with the Workplace Safety and Insurance Board and pay its insurance premiums. Hope you enjoy doing math. If not, google “nanny payroll services Ontario” to find a company to which you can outsource this work. Full disclaimer: I know nothing about the quality of these services. Use at you own risk.

5. You have to give your nanny paid holidays

The ESA also says that your nanny is entitled to a minimum of 2 weeks paid holidays per year, and is entitled to leave without pay in certain circumstances, such as pregnancy, family medical and personal emergencies.

6. Terminating your nanny is not as simple as you may think

If you dismiss your nanny without cause you have to give her reasonable working notice or pay in lieu of notice (commonly called severance pay). What counts as sufficient working notice or pay in lieu is governed by the ESA and the common law. A good primer on termination and notice can be found at the Ministry of Labour website. You can contract out of the common law notice requirement, which is more onerous than then under the ESA, but I strongly urge you to consult with your lawyer before attempting such a feat.

Conclusion

If you want to hire a nanny, take the time to get a very clear understanding of the employment laws by which you, as an employee, will be governed. Start by visiting the web sites I’ve set out above. If you find yourself getting confused or in need help, give me a call. I am happy to chat for a few minutes. No charge. Even I found some of the rules confusing, and I am a lawyer!​

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This article is provided for general information purposes and should not be considered a legal opinion. Clients are advised to obtain legal advice on their specific situations.

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