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In relation to hill sheep, the perception is that they live to a high welfare standard with minimal labour input per ewe, and that there is little reason for concern.  This perception has however not been confirmed by science to date, chiefly due to a lack of research interest into the hill sheep sector.  Meanwhile, extensive sheep farming faces increasing economic pressures, with low returns and falling government subsidy that may compromise animal welfare.  Labour has been shown to be a key input factor for both productivity and welfare in extensive production systems. Despite this, little research has been done to try and optimise the labour input for productivity and welfare. This study is a first attempt to link labour input, productivity and welfare in extensive sheep systems through empirical observation and computer modelling.  The fieldwork was undertaken from 2007 to 2009 on three research farms and three commercial farms.  Labour use was analysed within a number of defined tasks.  Linear programming (LP) modelling was then used to explore eight different scenarios with regard to sheep welfare, labour and productivity, and the potential impacts of specific management changes. Data analysis and model results showed hill sheep live to a high welfare standard according to the low incidence of welfare problems with low risks to productivity, confirming public expectations.  Farmers, are however, aware their attention to an individual sheep’s welfare brings poor returns in terms of flock productivity.  With this in mind, there is some scope for welfare-beneficial or –neutral reductions in labour, particularly if within-farm movement, e.g. between grazing areas, can be reduced.  However, larger reductions of labour, even within legal guidelines, could seriously endanger the welfare of individual sheep, though without great risks to productivity at flock or farm level.  Thus considerable savings in labour might, in some circumstances, reduce costs and hence improve profitability.