HMRC has issued a timely reminder to employers that payroll compliance applies just as firmly to seasonal and short-term staff as it does to permanent employees.
With Christmas trading driving a surge in temporary recruitment across retail, hospitality, leisure, logistics and warehousing, HMRC is encouraging workers to review their payslips and raise concerns where they believe they have been underpaid.
For employers, this increased visibility brings added risk. Even genuine payroll errors can trigger HMRC enquiries, financial penalties and public naming for non-compliance.
Seasonal work and minimum wage obligations
All workers, regardless of the length of their contract, must be paid at least the correct National Minimum Wage (NMW) or National Living Wage (NLW) for every hour worked.
This obligation applies equally to festive staff brought in to manage peak demand.
HMRC has highlighted that underpayment often occurs in fast-moving, short-term roles where hours vary and informal working practices develop.
The issue is not always the headline hourly rate. Problems frequently arise where working time is not fully captured or deductions are applied incorrectly.
The current NMW hourly rates are:
| 21 and over | 18 to 20 | Under 18 | Apprentice |
| £12.21 | £10 | £7.55 | £7.55 |
These rates apply regardless of whether the contract is permanent, temporary or seasonal.
Where payroll errors commonly occur
HMRC has identified unpaid working time and deductions as the two most common causes of minimum wage breaches.
Unpaid working time can include opening and closing duties, cleaning or mandatory training carried out outside paid hours.
Covering extra shifts, even at short notice, must also be paid correctly.
Deductions are another high-risk area. Costs for items such as uniforms or equipment must not reduce pay below the legal minimum. Even small deductions can lead to non-compliance if they push pay under the relevant threshold.
The cost of non-compliance
HMRC has made its enforcement position clear. Employers who breach minimum wage rules can face penalties of up to two hundred per cent of the underpayment, alongside a requirement to repay all arrears owed to workers.
In the 2024/225 tax year alone, HMRC identified £5.8 million in wage arrears affecting more than 25,000 workers and issued around 750 penalties totalling £4.2 million.
In many cases, non-compliant businesses were also publicly named, causing reputational damage.
Beyond financial penalties, payroll failures can disrupt management time and damage trust with staff at the busiest time of year.
What employers should review now
Businesses relying on seasonal staff should take time to review their payroll processes, including:
Seasonal recruitment often happens at pace, but payroll compliance cannot be treated as an afterthought.
Systems that work well for permanent staff may not automatically capture the complexities of variable hours and short-term contracts.
Getting payroll right
Professional payroll support can help businesses put robust controls in place, reduce the risk of HMRC intervention and provide reassurance that workers are being paid correctly.
With HMRC taking a more proactive approach, investing in compliant payroll processes is far more effective than dealing with penalties after the event.
If your business uses seasonal or temporary staff, now is the right time to review your payroll arrangements and ensure they are fit for purpose.
