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Not having a signed nanny contract doesn't mean your life is going to turn into a Jerry Springer episode. However, having a signed nanny contract could mean the difference between an enjoyable working relationship with your nanny, and one filled with “he said-she said” arguments.
Unless you're a A-list celebrity, having a 40 page legal document created by the country's most expensive lawyer is probably a bit over-the-top. Really, you don't even need to visit a lawyer or pay legal fees for this type of contract. It should be signed in the presence of a witness (an impartial third party if possible) and the contract should be explained and discussed before asking anybody to sign it.
Just because you're a die-hard fan of Law & Order doesn't make you a lawyer (unless you actually ARE a lawyer), so don't even try to stuff the nanny contract full of “wheretoforths” and “heretowiths”. Plain, straight-forward, to-the-point language is really all that's required. You don't have to buy expensive paper. You don't need gold seals or stamps. Instead of thinking of them as nanny “contracts”, just think of it as a letter of understanding. Really, that's all it is. Nanny contracts are really just letters that explain the job description so that everyone is clear.