Allusion is used throughout "The Lammas Hireling." Most of the allusions in the poem refer to folklore and mythology from Ireland and Britain. Part of the poem's power comes from the mystery of these allusions, and in particular the distance between what they mean to the speaker and what they mean to the reader. That is, to the speaker allusions to mythology help him justify killing the hireling—but most modern readers won't be familiar with his references. This creates tension throughout the poem, in keeping with the dark subject matter.
In line 11, the speaker alludes to an Irish riddle about hares: "a cow with leather horns." This plays on another myth, which says that witches sometimes turn into hares. Lines 12 and 13 continue this allusion, offering up a puzzling proverb:
To go into the hare gets you muckle sorrow,
the wisdom runs, muckle care.
"Muckle" here means much. The sentence is warning against witchcraft, but also has a faint suggestion of repressed sexuality (going "into"). The third stanza continues this allusion, with the hireling allegedly turning into a hare before the speaker's eyes. Relatedly, "elf-shot" in line 21 alludes to the Anglo-Saxon belief that shooting pains are caused by invisible arrows fired by invisible elves.
The other main allusion is in the last two lines:
... Bless me Father for I have sinned.
It has been an hour since my last confession.
The two sentences highlighted above situate the speaker in the Catholic tradition, and suggest that he feels intensely guilty about what he has done (hence the obsessive confessions). The allusion also turns the reader into a kind of priest figure, hearing the speaker's confession (and casting judgment upon it). The guilt may not be about the killing itself, but the speaker's possible homosexual feelings towards the hireling.