Here's what I wish someone had told me when I started my first restaurant: casual worker costs will shock you. Most hospitality owners calculate just the hourly wage and forget employer contributions, holiday pay, and other mandatory expenses. That's how you end up bleeding money without realizing it.
What exactly are labor costs?
Labor costs include every expense tied to an employee. You can't just look at that gross hourly wage on the payslip. There's employer contributions, insurance, and other costs you're legally required to cover.
💡 Example:
Casual worker puts in 8 hours Saturday, gross hourly wage €12.50:
- Gross wage: 8 × €12.50 = €100
- Employer contributions (23%): €23
- Holiday pay (8%): €8
- Insurance and levies: €5
Your actual cost: €136 (€17 per hour)
The complete cost breakdown
You need every cost component for an accurate calculation:
- Gross hourly wage: The payslip amount
- Employer contributions: Employee insurance premiums (unemployment, disability, sectoral)
- Holiday pay: Minimum 8% of gross annual salary
- Pension premium: Varies by collective agreement, typically 3-8%
- Sick leave: You're responsible for the first 2 years
- Administrative costs: Payroll processing, contracts
⚠️ Note:
Employer contributions shift annually. They're around 23% of gross wages in 2024. Always verify 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%
Real costs: €13.50 × 1.34 = €18.09 per hour
Difference between Hospitality Collective Agreement and custom arrangement
Most hospitality businesses operate under the Hospitality Collective Agreement. It has specific rules for casual workers:
- Minimum call-in time: 4 hours per shift
- Irregular hours allowance: Extra for evenings, weekends
- Travel allowance: Required beyond a certain distance
- Pension premium: Applies to casual workers too
⚠️ Note:
Even for a 2-hour shift, you must pay for 4 hours under the Hospitality Collective Agreement. This dramatically increases your actual costs per productive hour.
Impact on your cost price and profit
Many restaurants underestimate personnel costs in their pricing. They look profitable on paper, but money vanishes every month. One of the most common blind spots in kitchen management is assuming the wage on paper equals your actual expense - it doesn't, and that gap can destroy your margins.
💡 Impact example:
Restaurant calculates with €13.50 hourly wage, reality is €18.09:
- Difference per hour: €4.59
- With 30 hours of casual workers per week: €138
- Annually: €7,176 less profit
That's almost €600 monthly you didn't account for
How do you keep track of this?
For accurate cost price calculation, you need to know what staff actually costs. Many entrepreneurs use a fixed markup of 35-40% on top of gross hourly wage as a rule of thumb.
Systems like KitchenNmbrs let you record actual labor costs per hour, so your cost prices calculate automatically and correctly. This prevents unknowingly losing money on dishes that demand significant 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
Budget €18-20 per hour in total costs for casual workers during your first 6 months, even if gross hourly wage is €13-14. Track your actual expenses monthly to refine this number and prevent underpricing your menu.
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 get a minimum of 8% holiday pay on their gross annual salary. This is typically 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 identical, but absolute amounts vary per hourly wage. Employer contributions are a percentage of gross wages, so higher wages mean higher contributions.
Can I hire casual workers more cheaply than permanent staff?
No, the hourly wage must be identical. Casual workers often cost more due to the 4-hour minimum rule and allowances for irregular hours.
📚 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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