Labor costs of casual workers are often higher than you think. Many hospitality entrepreneurs only calculate the hourly wage, but forget employer contributions, holiday pay and other mandatory costs. This causes them to underestimate their personnel costs and lose profit without noticing.
What exactly are labor costs?
Labor costs are all the costs you incur for an employee. This goes beyond just the gross hourly wage on the payslip. You also have employer contributions, insurance and other mandatory costs.
💡 Example:
Casual worker works 8 hours on Saturday, gross hourly wage €12.50:
- Gross wage: 8 × €12.50 = €100
- Employer contributions (23%): €23
- Holiday pay (8%): €8
- Insurance and levies: €5
Total costs for you: €136 (€17 per hour)
The complete cost breakdown
For a correct calculation, you need to include all cost components:
- Gross hourly wage: The amount on the payslip
- Employer contributions: Employee insurance premiums (unemployment, disability, sectoral)
- Holiday pay: Minimum 8% of gross annual salary
- Pension premium: Depending on collective agreement, often 3-8%
- Sick leave: Your responsibility for the first 2 years
- Administrative costs: Payroll processing, contracts
⚠️ Note:
Employer contributions change every year. In 2024 they're around 23% of gross wages. Always check the current percentages with your accountant.
Calculation step by step
The formula for total labor costs per hour:
Total labor costs per hour = Gross hourly wage × (1 + employer contributions% + holiday pay% + other%)
💡 Example calculation:
Casual worker, gross hourly wage €13.50:
- Employer contributions: 23%
- Holiday pay: 8%
- Other costs: 3%
Total percentage: 23% + 8% + 3% = 34%
Actual costs: €13.50 × 1.34 = €18.09 per hour
Difference between Hospitality Collective Agreement and custom arrangement
Most hospitality businesses fall under the Hospitality Collective Agreement. This has specific rules for casual workers:
- Minimum call-in time: 4 hours per shift
- Irregular hours allowance: Extra for evenings, weekends
- Travel allowance: Mandatory from a certain distance
- Pension premium: Also applies to casual workers
⚠️ Note:
Even if you only have someone work 2 hours, you must pay for 4 hours according to the Hospitality Collective Agreement. This significantly increases your actual costs per productive hour.
Impact on your cost price and profit
Many restaurants calculate personnel costs that are too low in their pricing. This makes them seem profitable, but money disappears every month.
💡 Impact example:
Restaurant calculates with €13.50 hourly wage, actual €18.09:
- Difference per hour: €4.59
- With 30 hours of casual workers per week: €138
- Per year: €7,176 less profit
That's almost €600 per month you didn't see coming
How do you keep track of this?
For correct cost price calculation, you need to know what staff actually costs. Many entrepreneurs use a fixed markup of 35-40% on top of the gross hourly wage as a rule of thumb.
In a system like KitchenNmbrs you can record the actual labor costs per hour, so your cost prices are calculated automatically and correctly. This prevents you from unknowingly making losses on dishes that require a lot of labor.
How do you calculate the labor costs of a casual worker?
Determine the gross hourly wage
Check the Hospitality Collective Agreement for the minimum hourly wage in your job category. Casual workers are entitled to the same wage as permanent staff in the same role.
Calculate all employer contributions
Add up: employer contributions (23%), holiday pay (8%), pension premium (variable), and other costs such as sick leave and administration (3-5%). Total usually 35-40%.
Calculate the total costs per hour
Multiply the gross hourly wage by (1 + total percentage of employer contributions). For example: €13.50 × 1.35 = €18.23 per hour total costs.
✨ Pro tip
Always calculate with €18-20 per hour in total costs for casual workers, even if the gross hourly wage is €13-14. This prevents your cost prices from being too low.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Do I have to pay holiday pay to casual workers?
Yes, casual workers are entitled to a minimum of 8% holiday pay on their gross annual salary. This is usually paid monthly or paid out annually in May.
What if a casual worker gets sick?
As an employer, you pay 70% of the wage during sick leave for the first 2 years. Budget an extra 2-3% for this in your total labor costs.
Are employer contributions the same for all casual workers?
The percentages are the same, but the absolute amounts differ per hourly wage. Employer contributions are a percentage of gross wages, so higher wages mean higher contributions.
Do I have to build up a pension for casual workers?
Yes, under the Hospitality Collective Agreement, from age 21 and a minimum of 8 hours per month. The pension premium is usually 3-8% of gross wages, depending on age.
Can I hire casual workers more cheaply than permanent staff?
No, the hourly wage must be the same. Casual workers often cost more due to the 4-hour minimum rule and allowances for irregular hours.
⚠️ EU Regulation 1169/2011 — Allergen Information — https://eur-lex.europa.eu/eli/reg/2011/1169/oj
The allergen information on this page is based on EU Regulation 1169/2011. Recipes and ingredients may vary by supplier. Always verify current allergen information with your supplier and communicate this correctly to your guests. KitchenNmbrs is not liable for allergic reactions.
In the UK, the FSA enforces allergen regulations under the Food Information Regulations 2014.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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