The tinsel is up, the high street is buzzing and for your business, this means one thing: the annual Christmas rush is upon us! Check out our guide to hiring temporary staff this Christmas.
As a business owner, your first instinct is operational, “I need more people on the shop floor,” or “We need more hands in the warehouse to pack orders.” Your instinct is to solve the immediate problem.
Our first instinct is different. We see a spreadsheet!
Hiring temporary Christmas staff isn’t just an HR decision; it’s a critical financial one. Get it right, and you protect your profits, keep your permanent team happy and maximise the year’s biggest sales opportunity. Get it wrong, and you could be facing a nasty financial hangover in January, riddled with HMRC compliance headaches and unexpected costs.
So, before you post that “Help Wanted” sign, let’s look at seasonal hiring from the numbers-first perspective.
Cost or Investment?
When we talk to business owners about staffing, especially at this time of year, one thing comes up again and again — “staff are such a big cost.”
And you’re right — wages are one of the biggest expenses in any business. But the real question isn’t just how much you’re spending, it’s whether you’re spending it in the right places.
Too many businesses see seasonal or extra staff as an unavoidable expense, something they have to “get through” to survive the busy period. But staffing should be viewed as an investment — and like any investment, it needs to deliver a return.
Finding the sweet spot
From an accountant’s point of view, this is all about balance.
Have too few people, and the numbers will show it: missed sales, unhappy customers, staff burnout. Productivity dips, errors increase, and those hidden costs pile up fast.
Have too many, and your profit margin disappears before you’ve even realised it. You’re paying for people to stand around, and your wage bill starts eating into the money you’ve worked hard to earn.
That’s where good rota planning comes in. Look at your sales patterns and previous busy periods to plan staffing levels properly. Build in flexibility — shorter shifts, weekend cover, or cross-trained staff who can move between roles. That way, you’re only paying for the hours you actually need.
What does an employee really cost?
When you look at staffing through an accountant’s lens, the hourly rate is only part of the story. There’s a lot more to factor in:
💰 Employer’s National Insurance – 15% on anything above the threshold (around £96 a week for 2025/26).
🏖️ Holiday Pay – 12.07% on top of wages from day one.
💼 Pension Contributions – 3% if your temp meets the auto-enrolment rules.
📋 Recruitment & Training – The time your team spends finding and training someone new.
🧾 Payroll & Admin – Processing wages, HMRC submissions, and compliance.
👕 Uniforms or Equipment – Small things that quickly add up.
By the time you include everything, the real cost of someone on the National Living Wage is usually around 30% higher than their base pay.
Plan for Profit, not just payroll
When you’re planning staffing levels, think about the return your business gets from those extra hours.
Ask yourself:
➡️ How much extra work, sales, or output will this person make possible?
➡️ How quickly will that extra income cover their cost?
➡️ What’s the risk to the business if we don’t bring someone in?
If the extra staff help you deliver more work, keep customers happy, and protect your core team from burnout — that’s not just a cost. That’s a smart investment.
Stay agile
The most successful businesses are the ones that can adapt quickly. If you can flex your rotas based on workload and keep your staffing costs in line with your income, you’ll stay in control of your profit all year round.
So next time you’re looking at your staff list and thinking, “Can I afford to hire someone?” — flip the question:
👉 Can you afford not to?
HMRC – Don’t get a fine for Christmas
This is the most critical part. A simple mistake here can lead to fines from HMRC that wipe out your festive profits. Temporary staff are not ‘cash-in-hand’ favours. They are employees and you have obligations.
- Right-to-Work Checks: You must check and take a copy of every single employee’s legal right to work in the UK before their first shift. The penalties for non-compliance are severe.
- Contract: They are entitled to a ‘Written Statement of Particulars’ (a contract) from day one. A simple fixed-term contract stating their start/end date, pay rate, and hours is essential.
- PAYE & Real Time Information (RTI): Every temp must be on your payroll. You must report their pay and deductions (Income Tax and NI) to HMRC on or before each payday using a Full Payment Submission (FPS). ‘Cash-in-hand’ is illegal and leaves you wide open to investigation.
- Holiday Pay (The 12.07% Rule): You have two main options. You can either:
- Accrue it: Track their holiday allowance and pay it as a lump sum at the end of their contract.
- Roll it up: (Recommended for temps) You can add the 12.07% to their regular pay. However, this must be shown as a separate item on their payslip. You can’t just absorb it into a higher hourly rate.
- Pension Auto-Enrolment: Don’t get caught out. That worker you hired for six weeks? If they’re 23 and work enough hours to earn over £833 in a month, you must enrol them. Your payroll software should flag this, but the legal responsibility is yours.
Parties & Gifts
While we’re on the subject of Christmas costs, remember two key HMRC rules:
- The Staff Party: You can spend up to £150 per head (including VAT) on an annual event (like a Christmas party) completely tax-free for your employees. This applies to temps as well if you invite them. But be warned: if you spend £151, the entire amount becomes a taxable benefit, not just the £1 excess.
- Gifts: You can give employees a “trivial benefit” tax-free. The key rules are: it must cost £50 or less (incl. VAT), it cannot be cash (vouchers for goods are fine, cash vouchers are not), and it cannot be a reward for performance. A festive hamper or a bottle of wine is a perfect example.
Hiring Christmas staff is one of the sharpest tools you have to maximise revenue during your busiest quarter. But it must be treated with financial discipline.
Before you do anything else, talk to your accountant. We can help you build that ‘fully loaded’ cost forecast, ensure your payroll is set up for RTI and pension compliance and decide if a direct hire or an agency is the most cost-effective route.
Contact us today, we can help you plan for the festive season and answer any queries you have.