Casual workers often cause a lot of confusion for employers but this doesn’t have to be the case. In reality they should be treat the same as a normal employee. Throughout this blog I explain how you need to treat a casual worker.
HMRC once said that if a worker was employed for a week or less they wouldn’t need to be added to the payroll. This is no longer the case, all casual workers need to be payrolled immediately. The only exception is if you are a short term harvest worker, If they work for two weeks or less then you can pay them without adding them to the payroll.
Get on the ball
Generally casual workers move from job to job so it’s guaranteed that they will not have a P45 from previous employment. In this instance you must provide the worker with a starter checklist to complete. If you are not familiar with this then this is a form that was previously known as the P46. It is a document that covers general details such as name, address, date of birth etc. and other important aspects such as your present circumstances. So whether you have had another job since April, if it is your first job or whether you have more than one employment or pensionable income. This is the section that employers use to determine your tax code when you don’t provide a P45
Please take the time and get the casual worker to complete the form immediately to avoid them being put on emergency tax (this is a common mistake employer’s make) the employee then ends up being on the incorrect tax code for longer than required.
Pay the employee in real time
Another common mistake employers make when employing casual workers is paying them cash in hand. You may think that this is an easier option but this may cost you more than you may think.
The reason being is this, if you are paying the employee cash, when you put them on the payroll you will have to gross this up so they receive their cash amount NET.
Mr Smith takes on a student during the holidays for temporary work.
Over the course of the month he is paid cash £200. The student left before completing the starter checklist. This now means that Mr Smith must accommodate for the tax on the employees pay using the BR tax code (20%). To arrive at the £200 net figure it would cost Mr Smith £250. So you can see that this has cost the company more.
Holiday pay for casual workers
Casual workers are entitled to holiday pay it is just calculated slightly differently. They are entitled to paid leave and must also be paid any leave that is owed to them when they cease employment.
For full time employees their entitlement is accrued monthly at the rate of one twelfth of their annual entitlement. For casual workers, holiday entitlement accrues in the same way but due to the variation of hours it is easier to calculate based on hours.
The worker is entitled to a pro-rata amount of 5.6 weeks holiday per year. To work out the hourly holiday entitlement you use this calculation:
- So there are 52 weeks in the year
- Take off 5.6 weeks holiday from this
- This equals 46.4 weeks
- Now to get the percentage to work out your hourly holiday entitlement you divide 5.6 weeks by the 46.4 weeks.
- This gives you 12.07% so holiday pay is calculated at this percentage per hour
This sounds baffling but now you know the percentage to use the actual holiday pay calculation is simple.
A casual worker works 250 hours over the summer holidays, the calculation for their holiday pay accrual would be:
- 250hours x 12.07% = 30.18 hours accrued
I hope this has explained some of the uncertainties that come along with taking on a casual worker…
If you would like to find out more about Blow Abbott, why not explore some of our other services: