The bearded wanderer could be breaking laws protecting people from overwork, unfair dismissal and race discrimination laws, said Ben Doherty, an employment law specialist with Pinsent Masons, the law firm behind OUT-LAW.COM.
Employers are governed by the European Working Time Directive, which restricts the number of hours anyone can work. That law could land Claus in hot water, said Doherty.
"In my mind the elves work full time all year round, and probably work more than 48 hours per week for the majority of the year," he said.
Doherty also said that elves could be being exploited if they are treated as contractors rather than employees by Claus, whose age is unknown.
"Broadly speaking, employees have the right to greater protection, for example, they have the right not to be unfairly dismissed and are also entitled to a redundancy payment if dismissed for that reason," said Doherty. "This could be relevant if a particular year saw a downturn in toy demand due to a higher than normal level of bad children."
"If Santa had to reduce his workforce as a result of the downturn and the elves were employees, they would be entitled to a redundancy payment. If they were not employees they would get nothing," he said.
Claus must also be wary of how he treats requests for flexible working. "What about the elf who wants to work flexibly so that they can look after their kids but Santa won't agree because he needs everybody working hard at this time of year?" said Doherty. "He can turn down the request, but if he does not deal with it in accordance with the statutory procedure he can face claims for breach of the regulations."
"In the wider scheme of things the remedy for that breach is fairly inconsequential however normally the employee will also bring a claim for sex discrimination which will not be inconsequential," said Doherty.
Perhaps most serious of all is the possibility that Claus's elf-focused employment practices may leave him open to accusations of race discrimination.
"It may be possible that if he only recruits elves to manufacturer his toys he will risk claims from other race types," said Doherty. "What if a suitably qualified Scottish toy maker wants to work for Santa but is refused a job because he is not an elf?"
"I don’t think Santa would succeed with an argument that it was a genuine occupational requirement that his toy makers be elves, therefore he may be in some trouble," he said.
The revelations come in a nightmare week for Father Christmas. He has already been criticised for putting children's data at risk with opaque data protection policies, ignoring e-commerce trading laws and adopting a cavalier approach to health and safety legislation.
There was no comment from The Grotto at the time of going to press.