You are 100% right. There are so many people that have maids/nannys in place without the proper contracts.
It protects everyone. Plus, everything is clear as to what needs to be done.

A friend of ours had a maid/nanny and they did everything for her...yearly trips back home, weekends off, bought her clothes and gave her so many things.
She was with them for 5 years.

They started to find out that the 'money' being put in the piggy banks for the kids was being taken. Then they found out there was jewelry (not expensive stuff - like Claire's stuff) going missing.

Put up a nannycam and they found her entertaining her friends and dancing while the baby was crying in the bed.

It all comes down to the person. We are all taking such a risk ---- and actually, even through an agency overseas (reputable is a very lax word), you dont interview them, you dont do anything, you just pick them up at the airport and plant them in your house with your kids. If you are a business person, you spend more time interviewing prospective employees than being done for our own families.

Scary actually.