How to run payroll for temporary staff

Temporary staff or contract workers are employees who are hired for a specific period, often to meet short-term needs within an organisation.

These workers are not considered permanent employees and are typically employed through staffing agencies, temporary staffing firms, or directly by the business itself.

Why does a business need temporary staff

Temporary staff might be hired to cover permanent employees who are on leave, to meet seasonal fluctuations in workload, or to provide additional support for short-term projects or events. They can work full-time or part-time and are usually paid on an hourly or project-based basis.

Temporary staff benefit organisations in various ways, including increased flexibility, cost-effectiveness, access to specialized skills, higher productivity, and reduced risk. There are also some limitations to having temporary staff, such as limited loyalty and commitment, training and onboarding challenges, and communication difficulties.

How popular are temporary workers?

According to the Office for National Statistics (ONS), in the UK, the number of temporary workers stood at around 1.6 million from April to June 2021, which is approximately 5% of the total workforce.

This figure includes both agency workers and those on fixed-term contracts. The COVID-19 pandemic has impacted the number of temporary workers, with many losing their jobs or having their contracts terminated early due to the economic downturn.

How to pay temporary staff

Running payroll for temporary staff is like running payroll for regular employees, but there may be some additional considerations to keep in mind. Here are some key differences to consider when paying temporary staff:

Pay structure for temporary staff

Temporary staff are typically paid on an hourly basis, while permanent staff are paid a regular salary. The hourly rate for temporary staff may be higher to compensate for the lack of benefits and job security.

Benefits for temporary staff

Permanent staff are typically entitled to benefits such as health insurance, retirement plans, and paid time off, while temporary staff are not. Some staffing agencies may offer temporary staff benefits such as holiday pay or sick pay.

How to tax temporary staff

Temporary staff may be subject to different tax arrangements than permanent staff. For example, temporary staff may be classified as self-employed or may be subject to different tax deductions.

Employment status of temporary staff

Because temporary staff are not considered permanent employees they do not have the same job security as permanent staff. They may be terminated without notice or have their contract terminated early if the employer no longer requires their services.

Payroll administration of temporary staff

Employers may have different payroll procedures for temporary staff than for permanent staff. For example, temporary staff may be paid through a staffing agency or through a separate payroll system.

Overall, paying temporary staff differs from paying permanent staff in terms of pay structure, benefits, taxation, employment status, and payroll administration.

It is important for employers to understand these differences and ensure they are complying with employment laws and regulations when hiring and paying temporary staff.

For more information on the best ways to pay your temporary workers please get in touch with our team. Top of Form


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