If you run a small business, chances are you’ve had to hire extra help during busy periods like Christmas, spring or summer sales, or specific seasons tied to your industry. The payroll challenges presented by temporary workers, also called seasonal employees, are unique.
In this blog article, weโll break down the usual seasonal hiring woes and how you can handle payroll for seasonal employees like a pro. Weโve invited Victoria Corbo, one of the best bookkeeping specialists in the country, to help point out some tips and tricks to get your extra hiring process running smoothly this busy season.
What are seasonal employees?
Seasonal employees, typically casual employees, are staff members who are hired temporarily during peak periods of business. Depending on the industry, they may work for a few weeks or months. For example:
- Retail businesses may hire extra workers during mid-year sales and Christmas.
- Hospitality businesses may require more staff during the summer holiday season.
- Farms and agricultural businesses might hire workers during harvest seasons.
While seasonal employees are only with you for a short period, they are still entitled to the same payroll obligations as regular employees, including wages, tax deductions, and superannuation. Ensuring you meet these obligations correctly and on time is critical to avoiding penalties and keeping your workers happy.
Key payroll challenges for seasonal employees
Payroll for seasonal employees can be difficult for small business owners already juggling day-to-day operations. Here are a few common challenges:
1. Advanced payroll system needs
Seasonal employees often work irregular hours, fluctuating with demand, making payroll predictions challenging and complicated. Managing payroll for temporary staff involves more than simple calculationsโit takes an efficient payroll system to handle everything. As your workforce management needs expand or contracts to meet seasonal needs, your payroll system should scale effortlessly without causing additional headaches.
2. Talent acquisition demands
Talent acquisition is more than just filling vacanciesโit involves sourcing and hiring employees who align with your companyโs long-term goals. In todayโs competitive market, businesses must attract top talent by focusing on skills, experience, and cultural fit while building a strong employer brand.
3. Superannuation obligations
Managing superannuation for seasonal workers poses unique challenges due to irregular hours and high turnover. Maintaining accurate records and ensuring compliance can be particularly difficult during peak periods.
On 1 July 2024, the Superannuation Guarantee (SG) rate increased to 11.5%, with a further rise of 0.5% on 1 July 2025, reaching 12%. Although these increases may seem minor, they can substantially affect employees’ super balances due to compound interest.
The $450 monthly earnings threshold for super contributions was removed on 1 July 2022, requiring employers to make super payments for all eligible employees, regardless of earnings. For employees under 18, super is only necessary if they work more than 30 hours a week unless specified otherwise in a workplace agreement.
4. Holiday penalty rate computation
Employees must receive extra pay when working on public holidays. Typically, employees will earn penalty rates as compensation for working when most people are off.
To calculate these rates, start with the employee’s regular hourly wage and apply the appropriate penalty rate multiplier, depending on the holiday and the employee’s award or agreement. For instance, if an employee’s usual rate is $30 per hour and the penalty rate is 2x, they would earn $60 per hour for hours worked on that public holiday.
Accurate computation of these rates ensures fair compensation and compliance with legal requirements. To effectively manage holiday penalty rates, it’s crucial to review your finances and budget for these additional costs in advance.
5. Employing Working Holiday Makers
Employing working holidaymakers can offer great flexibility for businesses, especially during peak seasons. However, there are specific tax obligations and regulations you need to follow. These employees are taxed differently, and you’ll need to register with the Australian Taxation Office (ATO) to withhold the correct tax rate.
Maintaining compliance with the right tax rate and understanding the unique payroll requirements for working holidaymakers will help avoid potential penalties and ensure smooth payroll and staff management.
6. Correct taxation
Seasonal employees are typically hired as casual workers, making tax calculations more challenging due to fluctuating hours. Employers must ensure the correct amount of tax is withheld based on hours worked and whether the employee has claimed the tax-free threshold.
Employees can only claim the tax-free threshold with their main job, and it’s their responsibility to declare this using the Tax File Number (TFN) Declaration form. Employers must adhere to the TFN declaration submitted by the employee, even if they have multiple jobs or make an error on the form. If an employee identifies a mistake, they must submit a Withholding Declaration form for correctionโemployers cannot make changes without this.
Regarding superannuation, employees must complete a Super Choice form, which employers are legally required to follow. As long as employers comply with these forms, they are protected from penalties, even if the employee’s declarations are incorrect. Adhering to these legal obligations and utilising payroll software like Payroller can streamline the process and ensure compliance with tax and super requirements.
7. Record keeping
Maintaining accurate and up-to-date records for seasonal employees is essential for a compliant and efficient payroll system. This involves tracking hours worked, rates of pay, tax deductions, and superannuation contributions. Due to the rapid turnover of seasonal staff, the volume of new records can accumulate quickly, making payroll management overwhelming without an organised approach.
Accurate record-keeping is crucial for compliance and protecting your business. In case of an audit by the ATO or disputes over pay or entitlements, well-maintained records provide proof of payments made and hours worked. While the ATO requires payroll records to be kept for at least seven years, itโs advisable to retain them indefinitely, as disputes can arise long after this period.
The high turnover of seasonal staff complicates keeping employee details current. Frequent new hires or pay rate changes can lead to errors or missed payments if relying on manual processes. Additionally, Australian law mandates maintaining employment records for a minimum of seven years.
Meet our specialist: Victoria Corbo, your go-to bookkeeper for Payroller support
Victoria is an experienced bookkeeper who has been helping small business owners streamline their payroll processes for years. Specialising in Australian payroll, Victoria works closely with Payroller users to navigate the system, troubleshoot any issues, and ensure that businesses stay compliant with tax and superannuation obligations. With a passion for simplifying payroll for small business owners, she also shares her expertise through blog posts that focus on tips, tricks, and best practices for efficient payroll management.
Victoriaโs approachable nature and in-depth knowledge make her an invaluable resource for those looking to master Payroller and make payroll easier than ever.
Hereโs what Victoria had to say about working with Payroller users:
“Helping Payroller users is more than just troubleshootingโit’s about empowering small business owners with the tools and knowledge they need to succeed. Payroller’s simplicity and user-friendly interface make it easy for me to guide users through every step of the process. I love seeing the relief on a business owner’s face when they realise just how easy payroll can be with the right support!” โ Victoria Corbo, Bookkeeper & Payroll Specialist.
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How to set up payroll for seasonal employees
1. Determine employee classification
Before hiring seasonal staff, itโs crucial to classify them correctly. Seasonal employees are often hired as casual workers, which means their hours can fluctuate based on demand.
Understanding whether they qualify as casual, part-time, or full-time employees will affect pay rates, benefits, and taxation. Misclassification can lead to compliance issues and potential penalties, so itโs essential to consult the Fair Work Act or seek legal advice if youโre unsure.
2. Issue a Record of Employment (ROE)
Once youโve classified your seasonal employees, provide them with a Record of Employment (ROE) when their contract ends. This document outlines their employment period, hours worked, and earnings.
Itโs vital for their future job applications and any claims for unemployment benefits. Keeping accurate records ensures you comply with employment laws and helps employees transition smoothly to their next job.
3. Adjust your payroll system settings
To effectively manage seasonal employees, ensure your payroll system is flexible enough to accommodate their varying hours and pay rates. This may involve updating your existing payroll processes or integrating new software that can handle these fluctuations. A streamlined payroll system allows you to accurately track hours worked, calculate wages, and ensure timely payments, reducing the risk of errors.
Tips to handle seasonal employee payroll
1. Optimise the onboarding process
A smooth onboarding process sets the tone for your seasonal employees. Ensure they receive a thorough introduction to their roles, including training on workplace policies and procedures. Providing easy access to necessary documentation, such as tax forms and company handbooks, helps them feel welcomed and informed. This can lead to higher productivity and lower turnover rates.
2. Use flexible and scalable payroll software
Investing in payroll software that can scale with your business needs is crucial when managing seasonal employees. Look for solutions that automate payroll calculations, tax withholdings, and compliance reporting. Software like Payroller can simplify the payroll process, ensuring you meet your obligations without adding complexity. This not only saves time but also reduces the risk of human error.
3. Know the relevant labour laws
Stay informed about the labour laws that apply to seasonal employment in your area. This includes understanding minimum wage requirements, overtime rules, and any entitlements like annual leave or sick pay. Regularly reviewing these regulations ensures compliance and helps you create a fair working environment, fostering goodwill among your employees.
4. Set up a record-keeping process for seasonal employees
Finally, establish a robust record-keeping system for your seasonal staff. This should include tracking hours worked, rates of pay, tax deductions, and superannuation contributions. Accurate records are essential for compliance and can protect your business in case of audits or disputes. Consider using software that automatically maintains payroll reports, allowing you to focus on other aspects of your business.
User case: Handling payroll during a busy Christmas season
Letโs say you own a small retail store in Melbourne. Every December, your business experiences a customer surge, so you hire six extra casual workers to help manage the workload. These employees work different hours each week, making payroll a potential headache.
By using Payroller, you can enter all six employees into the system in minutes. They each submit their hours via the Payroller app, which automatically calculates their pay, tax, and superannuation. There is no need to sit down and manually input data into spreadsheets or try to calculate tax rates.
At the end of the week, you simply review the pay run and hit “approve.” Payroller takes care of the rest, including generating pay slips and filing the necessary superannuation reports.
Simplify your payroll for seasonal employees with Payroller
Payroller is a payroll software tailored for Australian small businesses, making payroll management straightforward for seasonal employees. Streamline the process when you can do the following on Payroller:
- Easily add seasonal employees
- Track irregular work hours with timesheets
- Handle superannuation compliance with ease
- Automate tax calculations
“Payroll can be a challenge for small businesses, but with the right tools, itโs easier than ever. At Payroller, weโre all about making payroll simple and stress-free.” โ Tim Lee, CEO of Payroller.
Handling payroll for seasonal staff can be stress-free. Start using Payroller today to manage your seasonal employeesโ payroll!
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