How to prepare payroll for seasonal or temporary staff

Seasonal and temporary workers are vital to many UK organisations, especially in retail, hospitality, tourism, education, agriculture and logistics. Yet they are also the group most likely to cause payroll confusion. I have seen many employers struggle with onboarding, tax codes, variable hours, right to work checks and holiday pay calculations, simply because they try to treat seasonal workers the same as permanent staff. In my opinion good payroll preparation starts long before the first shift begins.

This guide explains everything you need to know about preparing payroll for seasonal or temporary staff in the UK. I cover the legal steps, right to work checks, PAYE rules, holiday pay, National Insurance, pensions, record keeping and common problems employers face. The aim is to give you a practical and complete understanding so your payroll runs smoothly even during busy periods.

Why seasonal and temporary staff require special payroll preparation

Seasonal staff create unique challenges because:

• Their hours often change weekly

• They may work multiple jobs

• They frequently join and leave within the same tax year

• They may be students or under 21

• They may work irregular overtime

• Employers rarely have time for detailed payroll checks in peak season

In my opinion the best way to avoid payroll mistakes is to set up strong processes before hiring begins. Once the season starts, you are often too busy to fix issues on the fly.

Step 1: Collect the correct starter information

You cannot run payroll correctly without accurate information at the start. For temporary and seasonal staff this is crucial, because even minor errors can cause overpayments, underpayments or incorrect tax deductions.

You must collect:

1. Right to work evidence

Every employee must have their right to work checked. This applies even if they only work for a week.

2. Starter checklist

Seasonal workers often do not provide a P45. In that case they must complete the HMRC starter checklist.

This identifies:

• Whether the employee has another job

• Whether they receive a pension

• Whether they had taxable benefits

• Their student loan status

• Their plan type

3. Personal details

Including:

• Full name

• Address

• National Insurance number

• Date of birth

• Emergency contact details

4. Bank details

Accurate banking details are essential because seasonal staff may leave before payment errors can be corrected.

In my opinion

Never onboard someone verbally or through informal messages. Payroll accuracy starts with good documentation.

Step 2: Determine the correct tax code

Seasonal workers often trigger incorrect tax codes because:

• They have not provided a P45

• They have multiple jobs

• They are students working part time

• They start and leave within the same tax year

If they provide a P45

Use the tax code shown on it.

If they do not provide a P45

Use the tax code produced by the starter checklist.

Emergency tax

If information is missing, payroll may apply an emergency tax code temporarily. Once HMRC updates the record, payroll adjusts automatically.

Students

Students do not have special tax codes. If they earn above the threshold they pay tax normally.

In my opinion checking student loan status is especially important. Many payroll systems deduct student loan automatically unless told otherwise.

Step 3: Decide how you will pay them

Temporary and seasonal staff are usually paid:

• Hourly

• Weekly

• Monthly

• Per assignment or per shift

Your payroll system needs accurate records for:

• Hours worked

• Overtime

• Bonuses

• Shift allowances

• Tips or tronc (if applicable)

Zero hours and seasonal contracts

Seasonal staff often work under zero hours contracts where hours vary each week. This means payroll must be prepared to process variable pay, variable NI and recalculated holiday pay.

In my opinion

Clear communication at the start about pay frequency prevents confusion and reduces admin later.

Step 4: Check National Insurance rules

National Insurance for seasonal workers follows the same rules as permanent staff, but errors are common.

What to check:

1. NI category

Examples:

• Category A: standard workers

• Category M: under 21

• Category H: apprentices under 25

• Category C: workers over state pension age

Seasonal staff are often young workers so employer NI may not apply.

2. Weekly or monthly pay periods

NI applies per pay period, not cumulatively. This means someone can pay NI one week then nothing the next.

3. Holiday pay and NI

Holiday pay is NI applicable.

In my opinion

Getting NI categories right for young workers can save employers significant money.

Step 5: Understand holiday pay for seasonal workers

Holiday pay for temporary and seasonal staff is an area many employers misunderstand. All workers are legally entitled to holiday pay, no matter how short their employment.

Holiday pay is calculated at:

• 12.07 percent of hours worked
  or

• Based on the worker’s actual average weekly pay over the last 52 weeks

Workers on irregular hours

You must use the 52 week averaging method.

Rolled up holiday pay

Rolled up holiday pay can only be used if:

• It is shown clearly on the payslip

• It is paid at the correct legal rate

• It is compliant with new government rules

In my opinion rolled up holiday pay can simplify payroll but must be calculated correctly to avoid underpayment claims.

Step 6: Set up pensions correctly

Seasonal staff fall under the same auto enrolment pension rules as permanent staff.

Auto enrolment applies if:

• The worker is aged between 22 and state pension age

• They earn above the auto enrolment threshold in that pay period

Common issues:

• Seasonal staff often dip in and out of the qualifying threshold

• Employers sometimes forget to postpone or enrol

• Workers who leave quickly sometimes trigger incorrect deductions

You can postpone auto enrolment for up to three months. This is very helpful for seasonal workers who are only employed for short periods.

In my opinion

Postponement is the simplest way to avoid accidental short term enrolment for workers you know will leave soon.

Step 7: Maintain accurate timekeeping records

Accurate hours are essential for seasonal payroll. Mistakes happen often because:

• Hours are submitted late

• Managers approve shifts inconsistently

• Overtime is not recorded properly

• Staff work variable patterns

Good systems include:

• Digital clock in systems

• Timesheet apps

• Written timesheets signed weekly

In my opinion timekeeping is the biggest cause of payroll disputes with temporary staff. Clear and consistent processes are essential.

Step 8: Process leavers correctly

Seasonal staff usually leave within weeks or months. Payroll must:

• Process the correct leaving date

• Issue a P45

• Pay any outstanding holiday pay

• Remove them from pension schemes

• Close their record in payroll software

Why this matters

Incomplete leaver processing causes:

• Duplicate tax codes

• Incorrect year to date figures

• Overpayments

• Payroll system errors the following season

In my opinion closing records properly is as important as onboarding.

Step 9: Keep proper payroll records

Employers must keep payroll records for at least three years, including:

• Hours worked

• Pay

• Tax and NI deductions

• Pension contributions

• Holiday pay calculations

• Right to work checks

• Contracts and starter forms

Good records protect you from disputes and HMRC audits.

Common payroll mistakes with seasonal workers

Based on my experience these are the errors I see most often:

1. Wrong tax codes

Especially when no P45 is given.

2. Missing student loan checks

Payroll assumes repayment should be deducted even when the worker is not required to pay.

3. Incorrect NI category

Under 21s often get coded incorrectly.

4. Holiday pay miscalculations

Either no holiday pay or incorrect rolled up calculations.

5. Auto enrolment failures

No postponement used or no enrolment when required.

6. Late timesheets

Leading to incorrect wages and disputes.

7. Not issuing P45s

Causes problems for the worker’s next payroll.

8. Paying cash in hand

Illegal and creates compliance risk.

9. Incorrect overtime or shift rates

Often due to poor timekeeping systems.

10. Not updating status mid season

Workers may change roles or rates without payroll being told.

In my opinion most issues come from poor communication between managers and payroll.

Real world examples

Example 1: A holiday park employing 200 seasonal staff

Poor timekeeping records led to incorrect overtime payments. Switching to a digital clocking system reduced payroll errors by 80 percent.

Example 2: A supermarket hiring Christmas staff

Many workers had student loans but had not supplied the correct plan type. Payroll deducted the wrong amount. Reviewing starter forms fixed the issue.

Example 3: A farm employing harvest workers

Most workers were under 21 and exempt from employer NI, saving significant costs once payroll corrected the categories.

Example 4: A hospitality company

Seasonal staff left without receiving their holiday pay. This created legal risk and backdated pay claims. A holiday pay tracker solved the issue.

Best practices for preparing seasonal payroll

Based on everything I have seen over the years, these are the practices I believe make the biggest difference:

Prepare before the season begins

Do not try to set up payroll during the busiest period.

Use digital onboarding

Collect starter forms, right to work checks and bank details electronically.

Create clear policies

Communicate pay schedules, overtime rules and holiday pay early.

Train managers

They control timesheets which directly affects payroll accuracy.

Use postponement for pensions

Avoid enrolling workers who will be gone within weeks.

Review payroll weekly during peak season

Catch mistakes early to prevent compounding errors.

Keep lines of communication open

Managers, HR and payroll should share information constantly.

In my opinion the biggest payroll risks disappear when everyone knows their role and follows a consistent system.

Final thoughts

Preparing payroll for seasonal or temporary staff requires more planning and more attention to detail than most employers expect. With variable hours, fluctuating earnings, quick turnover and busy seasonal periods, it is easy for mistakes to creep in if the process is not structured properly.

In my opinion the key is preparation. Collect the right information, understand the correct tax and NI rules, calculate holiday pay accurately, use pension postponement wisely and maintain meticulous records. When you put robust systems in place before the season begins, payroll becomes predictable and far less stressful even at the busiest times.

Seasonal workers deserve accurate and timely pay just as much as permanent staff. Preparing payroll properly protects your business, reduces disputes and ensures compliance with UK employment law.