Sara Trumble, 26, claimed Mills reduced her to tears with the demands she placed on her and forced her to work long hours without any extra pay.
The nanny, paid 260 a week by Mills to look after her daughter Beatrice, now six, told an employment tribunal she felt she was a hard-working and loyal employee but her former boss took advantage of her.
Ms Trumble, who began working for Mills in April 2004 when she was still married to Sir Paul McCartney, said she handed in her notice in September 2008 after she was relegated to domestic duties when she returned from maternity leave
During her evidence, to the three-day hearing at Ashford in Kent, which began in March, Ms Mills said she treated Ms Trumble "like a daughter" and showered her with gifts during her employment, including a two-seater sports car.
Ms Mills wept as she described how she met Ms Trumble when she gave her beauty treatments at a health club near Sir Paul's estate in Rye, East Sussex, and took her on as a nanny to help her better herself.
A spokeswoman for Mills said:
"Heather is delighted with the decision of the employment tribunal that has dismissed all of Sara Trumble's claims. Heather was a very fair and generous employer and is pleased that this has been confirmed."