Paying Casual Labour: What Employers Need to Know

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If you employ or work with casual labour, then your organisation needs to:

• understand which entitlements to offer
• what rights are relevant and applicable
• whether this changes how you run payroll.

Where businesses offer casual work on a more flexible, or irregular basis, employers are often confused about the rules for paying workers that are not the same as their more permanent staff members.

Casual Labour, Explained

“Casual” labour as a worker who is briefly employed by an organisation but is not part of their wider permanent workforce. Where demand for work might vary throughout the year – what’s called ‘seasonality’ in employment – casual labour can support a business in temporary peak times, such as during summer demand or winter sales.

Ultimately, casual labour has become an umbrella phrase for those working flexibly without fixed hours every week. From day-to-day, there is no guarantee that there will be any paid work. This work is typically not offered with a guarantee of minimum hours.

Worker classification has confused many employers in the past. But when you understand the labour laws that affect your workforce, you can learn how to pay it correctly.

According to the UK government, worker classification (sometimes called ‘employment status’) is the first step toward growing your workforce. Classification is important because it determines which employment rights, and therefore entitlements, apply to your workers.

‘Casual’ or ‘irregular’ work is likely to apply if:

• a worker performs work only occasionally for a business
• a worker’s contract specifies that employment is ‘casual’
• terms and conditions were approved before employment was offered – whether a job was offered orally or in writing
• there is a manager who supervises the work
• taxes and National Insurance (NI) are deducted from their wages

Contracts and types of work that are considered ‘casual’, include:

• freelancers or self-employed workers
• contracted work, including subcontractor agreements
• zero-hour contracts (for example, where there’s no agreed minimum on working hours)
• guaranteed minimum hour contracts
• single job assignments
• short term contracts
• work that’s ‘as required’

Understanding Casual Worker Rights

Employment status will help employers determine which entitlements apply to their workforce. These will depend on whether you classify staff as employed, self-employed, or workers. It’s common to employ a mixture of permanent employees, self-employed workers, and independent contractors, especially in industries where demand is inconsistent throughout the year (such as in retail or agriculture).

Unlike their full-time counterparts, casual workers will typically have reduced rights, but they will still be entitled to the basics, such as the National Minimum Wage and Statutory Annual Leave.

When Does a Casual Worker Become an Employee?

A casual worker is not an employee, especially if they are engaged to carry out labour temporarily, such as during staff shortages or seasonal demand. Minimum working hours may not be given and, therefore, work is not guaranteed on a regular, ongoing basis. Working this way reflects a more casual relationship between an employer and their worker, where labour is engaged irregularly.

When you establish work through an agreement, however, and specify days and hours, this will likely change the status of a staff member.

Rules for Paying Casual, Self Employed Labour

If you employ or plan to hire casual workers, then you should know these top rules.

Casual Workers Should Be on Your Payroll

There are a couple of misconceptions about paying casual workers that could result in non-compliance. Many employers may even believe that they can issue cash payments or that short assignments, especially those that expire after less than a month, are exempt from payroll. No matter the length of an assignment, casual workers will need be enrolled on your payroll. This process should include relevant deductions, such as National Insurance contributions and income tax.

Ultimately, casual labour will need to be processed through payroll, no matter how short term it is.

Casual Workers Have Basic Rights  

The following worker entitlements should be honoured by employers:

• National Minimum Wage

Casual workers are entitled to this, so you must ensure that you pay them a rate that reflects the current National Minimum Wage. The total amount will be determined by a workers age and whether they are considered an ‘apprentice’ or not.

• Weekly Working Maximums

The limit on working hours a week is set at 48 hours in the UK. It’s important to know that casual workers have the right to refuse to work over this limit.

• Statutory Sick Pay (SSP)

This entitlement unlocks where an employee pays National Insurance contributions from their wages.

So, Do Casual Workers Always Go on the Payroll?

As we’ve covered, when work is contracted, engaged irregularly, or casually, even if only for a few days in a month, then workers will need to be enrolled and processed by a company’s payroll, according to HMRC.

If you hire a temporary or seasonal workforce during business peaks and offer labour for only a few days in a pay run, you will still need to include any causal workers on your payroll. For example, a retail company might hire temporary staff to cope with winter demand during Christmas peaks. In this instance, those new hires will need to be processed by their payroll.

Finding the Right Level of Support with Staffology

When running payroll, it’s often a top priority to find software as reliable as it is intuitive. Whether your business employs a casual workforce or has permanent employees, you can rely on Staffology’s software to run payroll compliantly and confidently.

To find out more information about how Staffology could support your business needs for calculating payroll in the UK, get in touch and speak to one of our team. 

Duane Jackson, May 4th, 2022

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