Holiday Pay for Self-Employed Builders: What You're Actually Owed

‍‌​​‌​‌​​‌​‌​‌‌‌‌‌‌​​​‌‌​​​‌​​‌‌‌‍> Disclaimer: SiteKiln gives you plain-English information, not legal or employment advice. Talk to a qualified professional before making big decisions.

The short version

If you're an employee or a worker -- not genuinely self-employed -- you're legally entitled to 5.6 weeks' paid holiday a year. That includes a lot of people in construction who've been told they're "self-employed" and have never seen a penny of holiday pay. The law doesn't care what your contract says you are. It cares what you actually are. And if you've been missing out, you may be able to claim it back.

Why this matters in construction

Construction is full of people who work 48 weeks a year, take a week off at Christmas and a week in the summer, and don't get paid for either. They're told that's the deal because they're "on CIS" or "self-employed." Many of them accept it because that's how it's always been.

But a huge number of those workers aren't genuinely self-employed. They're workers or employees in law -- they just haven't been classified properly (see 3.1). And if you're a worker or an employee, you are entitled to paid annual leave under the Working Time Regulations 1998. No exceptions. No negotiation. It's a statutory right from day one.

The Pimlico Plumbers case proved exactly how big this can get. Gary Smith worked as a plumber for Pimlico for around six years. They said he was self-employed. The Supreme Court said he was a worker. The Court of Appeal then ruled he was entitled to compensation for holiday pay across the entire period of his engagement -- a claim worth £74,000.

That's one person. Multiply that across the construction workforce and the scale of what's been withheld is enormous.

Who is entitled to holiday pay?

There are three employment statuses in law. Two of them get holiday pay:

The question isn't what your contract calls you. It's whether the reality of your working arrangement makes you a worker or employee (see the tests in 3.1).

If you personally do the work, you can't realistically substitute, you don't control how or when you work, and you work for one company most of the time -- there's a strong chance you're a worker. And workers get holiday pay.

How much holiday are you entitled to?

The statutory minimum is 5.6 weeks per year. For someone working five days a week, that's 28 days. This can include bank holidays -- your employer can count them as part of the 5.6 weeks, not on top of it.

For part-time workers, it's pro-rata. If you work three days a week, you get 5.6 x 3 = 16.8 days.

Your employer or the company engaging you can offer more than 5.6 weeks. They can never offer less.

How holiday pay is calculated

This is where it gets important. Holiday pay isn't just your basic hourly rate. For at least four of your 5.6 weeks (the EU-derived leave), holiday pay must reflect your normal pay -- which includes:

• Regular overtime -- if you regularly work more than your contracted hours, that overtime should be included in the holiday pay calculation.

• Commission or performance-related pay -- if it's a regular part of your earnings.

• Other payments linked to performing your role -- regular bonuses, allowances, etc.

The calculation uses a 52-week reference period. You add up your total earnings over the last 52 paid weeks (ignoring any weeks you weren't paid at all), then divide by 52 to get your average weekly pay. That's what each week of holiday should be paid at.

If you haven't worked 52 weeks yet, you use however many complete weeks you have.

In construction terms: if you're a worker earning £200 a day, five days a week, your gross weekly pay is £1,000. Over 5.6 weeks of holiday, that's £5,600 a year you should be receiving in holiday pay. If you're getting nothing, that's £5,600 a year being kept from you.

Rolled-up holiday pay -- what it is and when it's legal

Rolled-up holiday pay means the employer adds a percentage on top of your hourly or daily rate instead of paying you separately when you take time off. For years this was in a legal grey area. Now the position is clearer:

From 1 April 2024, rolled-up holiday pay is legal -- but only for:

• Irregular hours workers -- people whose paid hours vary from pay period to pay period.
• Part-year workers -- people who only work part of the year with gaps of at least a week.

For regular, full-time workers, rolled-up holiday pay is still not lawful.

Where rolled-up holiday pay is used legally, the rate is 12.07% of gross pay, and it must be clearly itemised on your payslip as a separate line. If it's not shown separately, or if it's being used for workers who don't qualify, it's not compliant.

The 12.07% comes from: 5.6 weeks' holiday out of a 46.4-week working year (52 minus 5.6). 5.6 / 46.4 = 12.07%.

The construction reality: Many construction companies have been paying "rolled-up" holiday for years to workers who may not qualify for the rolled-up method -- or not paying it at all and just saying the day rate "includes holiday." If there's nothing itemised on your payslip or pay statement showing the holiday element separately, you have no evidence it was ever paid. And a tribunal won't take the company's word for it.

"My day rate includes holiday pay"

You'll hear this a lot in construction. The company says your day rate already factors in holiday pay, so you're not owed anything extra.

The problems with this:

• If it's not itemised, it doesn't count. For rolled-up holiday pay to be valid (where it's allowed), the holiday element must be a separate, identifiable line on your payslip or payment record. A verbal assurance that "it's in there" is not sufficient.

• You may not even qualify for rolled-up holiday pay. If you work regular hours every week, the rolled-up method isn't available to your employer. They should be paying you when you take leave, not rolling it into your rate.

• The maths often doesn't add up. If your day rate is £200 and the company claims 12.07% is holiday, your "actual" rate would be roughly £178.50 with £21.50 as holiday. But most of the time nobody's done that calculation -- they just picked a round number and said it covers everything.

• Even if they did roll it up properly, you're still entitled to take the time off. Holiday pay isn't just about money -- the law gives you the right to take leave. An employer can't say "we've paid you the extra, so you don't get time off."

The Building and Civil Engineering Holiday Pay Scheme

Construction has its own industry-specific holiday pay mechanism managed through the CITB framework. Under this scheme, employers buy stamps or accrue credits for each worker, and the worker cashes them in when they take holiday.

This scheme applies to employees in the building and civil engineering sector. If your employer is part of this scheme, your holiday pay should be building up through stamps or credits. If you've never heard of it, never seen a stamp card, and never received any payout when you took time off -- ask. You may have entitlement sitting there unclaimed, or your employer may not have been paying in.

What the Pimlico Plumbers case means for you

Smith v Pimlico Plumbers went through every level of the court system and is now the leading case on holiday pay for misclassified construction workers. The key points:

• The Supreme Court confirmed in 2018 that Mr Smith was a worker, not self-employed, despite what Pimlico's contracts said.

• Mr Smith had taken holidays during his six years with Pimlico but was never paid for them.

• Pimlico argued that because he had taken leave (just unpaid), his holiday right was used up. The Court of Appeal disagreed.

• The Court of Appeal ruled that the right under the Working Time Directive is to paid leave. Taking unpaid leave because your employer refuses to pay you doesn't mean your right has been exercised -- it means your employer put unlawful preconditions on it.

• Mr Smith's right to payment for accrued but unpaid holiday carried forward across the whole period of his engagement and crystallised on termination.

What this means practically: if you've been classified as self-employed, are actually a worker, and have never been paid for holidays -- the money hasn't disappeared. It's been accruing. And it may be recoverable.

How far back can you claim?

Holiday pay claims can be brought in two ways:

• Under the Working Time Regulations 1998 -- you must bring a claim within three months of the most recent failure to pay holiday.

• As an unlawful deduction from wages under the Employment Rights Act 1996 -- this can cover a series of deductions, but there's a two-year backstop on how far back the claim can reach.

The Pimlico Plumbers case showed that where an employer refuses to acknowledge your worker status and never pays you for holiday, the right to payment can carry forward and be claimed on termination. But there are limits, and the law on backdating is technical. Get advice early rather than assuming you can always claim later.

The key point from case law: a gap of more than three months between underpayments can break the "series of deductions" chain, which may limit how far back you can go. Don't sit on it.

What happens to the employer

Companies that have been denying holiday pay to workers they've misclassified as self-employed face:

• Backdated holiday pay claims -- 5.6 weeks per year, for potentially two years back, per worker. On a workforce of even ten misclassified workers over two years, the liability adds up fast.

• Tribunal claims -- for unlawful deduction from wages, breach of the Working Time Regulations, or both.

• Compensatory awards -- on top of the backdated pay.

• HMRC interest -- if the misclassification also affects tax and NI (which it will -- see 3.1 and 3.2).

The Employment Rights Act 2025 is tightening the environment further. The new Fair Work Agency (launching 7 April 2026) will have enforcement powers, and employment status scrutiny is increasing across the board. Companies that have relied on calling everyone "self-employed" to avoid holiday pay obligations are running out of road.

What to do if you think you're owed holiday pay

• Work out your actual status. Use the tests in 3.1. If you're a worker or employee in reality, holiday pay applies to you regardless of what the paperwork says.

• Check your payslips or payment records. Is there a separate, itemised line for holiday pay? If not, it hasn't been paid -- whatever the company claims.

• Calculate what you're owed. Work out your average weekly pay over the last 52 weeks. Multiply by 5.6. That's one year's holiday pay entitlement. Now think about how many years you've been working without it (up to the two-year backstop for backdated claims).

• Talk to ACAS. Free, confidential, and they handle holiday pay disputes regularly. Call 0300 123 1100. They can help with early conciliation before you need to go to a tribunal.

• Consider your union. Unite and other unions have specific campaigns on holiday pay in construction. They know the arguments and the case law.

• Don't wait. The three-month time limit for WTR claims runs from the most recent failure to pay. If you leave it too long, you may lose the ability to claim. Start the conversation now.

What to do next

• Check your employment status using the tests in guide 3.1 -- if you're a worker or employee, holiday pay applies to you.
• Look at your payslips or payment records for a separate, itemised line showing holiday pay. If there isn't one, it hasn't been paid.
• Calculate what you're owed: average weekly pay over the last 52 weeks, multiplied by 5.6 weeks.
• Call ACAS on 0300 123 1100 for free advice before raising anything with your employer.
• Don't wait -- the three-month time limit for Working Time Regulations claims runs from the most recent failure to pay.

Sources

• Working Time Regulations 1998, regulations 13, 13A, 14, 16
• Employment Rights Act 1996, Part II (unlawful deduction from wages)
• Pimlico Plumbers Ltd v Smith [2018] UKSC 29 (worker status)
• Smith v Pimlico Plumbers Ltd [2022] EWCA Civ 70 (holiday pay -- carry-over and backdated claims)
• Chief Constable of the Police Service of Northern Ireland v Agnew [2023] UKSC 33 (series of deductions)
• Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 -- rolled-up holiday pay and 12.07% accrual for irregular hours workers (from 1 April 2024)
• ACAS guidance on holiday entitlement and holiday pay
• GOV.UK: Holiday entitlement rights

This guide is for information only. It is not legal advice. If you need advice on your specific situation, speak to ACAS, a union, or a solicitor who deals with employment law. Do not use this page as a legal defence.

Frequently asked questions

Do self-employed builders get holiday pay?

Genuinely self-employed builders do not get holiday pay -- it's an employment right under the Working Time Regulations 1998, and it only applies to workers and employees. If you're properly self-employed (you control your work, provide your own tools, invoice for jobs, and can turn work down), you're responsible for building holiday time into your rates.

However, if you're called "self-employed" but actually work like an employee -- set hours, one client, can't send a substitute -- you may legally be a "worker" with the right to 5.6 weeks of paid annual leave. Many construction workers are misclassified. If you think this might be you, check your status using HMRC's CEST tool or get advice from ACAS on 0300 123 1100.

How do I calculate holiday pay in construction?

If you're a worker or employee, you're entitled to 5.6 weeks of paid annual leave per year (28 days for someone working 5 days a week). For workers with irregular hours -- which is common in construction -- holiday pay is calculated based on an average of your earnings over the previous 52 weeks in which you were paid (ignoring weeks with no pay).

This 52-week reference period was introduced by the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018, effective from April 2020. For variable pay workers, include overtime, regular bonuses and commission in the calculation -- not just basic pay. The Supreme Court confirmed this in Bear Scotland v Fulton.

What is rolled-up holiday pay?

Rolled-up holiday pay is where an employer adds a percentage to your hourly or daily rate instead of paying you separately when you take time off. For example, instead of paying £200/day plus separate holiday pay, they pay £224.60/day (which includes the 12.07% holiday element) and expect you to fund your own time off.

From 1 January 2024, rolled-up holiday pay became explicitly lawful for irregular hours and part-year workers under the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023. The rate is 12.07% of total pay. It must be shown as a separate line on your payslip. For regular hours workers, the law still technically requires payment when leave is taken -- though rolled-up pay was common in construction long before it was legalised.

How many days holiday am I entitled to?

Workers and employees are entitled to 5.6 weeks of paid annual leave per year under the Working Time Regulations 1998. For someone working 5 days a week, that's 28 days including bank holidays. For someone working 6 days a week, it's 33.6 days. It's pro-rated for part-time workers.

In construction, many employers include bank holidays within the 28-day entitlement. The JIB (electrical) and BATJIC (building trades) agreements set specific holiday periods. If you're a genuine subbie, none of this applies -- you set your own time off and build it into your price. But if you're on the tools five days a week for one company and they're calling you self-employed, you might actually be entitled to this.

Frequently asked questions

Do self-employed builders get holiday pay?

Genuinely self-employed builders do not get holiday pay -- it's an employment right under the Working Time Regulations 1998, and it only applies to workers and employees. If you're properly self-employed (you control your work, provide your own tools, invoice for jobs, and can turn work down), you're responsible for building holiday time into your rates.

However, if you're called "self-employed" but actually work like an employee -- set hours, one client, can't send a substitute -- you may legally be a "worker" with the right to 5.6 weeks of paid annual leave. Many construction workers are misclassified. If you think this might be you, check your status using HMRC's CEST tool or get advice from ACAS on 0300 123 1100.

How do I calculate holiday pay in construction?

If you're a worker or employee, you're entitled to 5.6 weeks of paid annual leave per year (28 days for someone working 5 days a week). For workers with irregular hours -- which is common in construction -- holiday pay is calculated based on an average of your earnings over the previous 52 weeks in which you were paid (ignoring weeks with no pay).

This 52-week reference period was introduced by the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018, effective from April 2020. For variable pay workers, include overtime, regular bonuses and commission in the calculation -- not just basic pay. The Supreme Court confirmed this in Bear Scotland v Fulton.

What is rolled-up holiday pay?

Rolled-up holiday pay is where an employer adds a percentage to your hourly or daily rate instead of paying you separately when you take time off. For example, instead of paying £200/day plus separate holiday pay, they pay £224.60/day (which includes the 12.07% holiday element) and expect you to fund your own time off.

From 1 January 2024, rolled-up holiday pay became explicitly lawful for irregular hours and part-year workers under the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023. The rate is 12.07% of total pay. It must be shown as a separate line on your payslip. For regular hours workers, the law still technically requires payment when leave is taken -- though rolled-up pay was common in construction long before it was legalised.

How many days holiday am I entitled to?

Workers and employees are entitled to 5.6 weeks of paid annual leave per year under the Working Time Regulations 1998. For someone working 5 days a week, that's 28 days including bank holidays. For someone working 6 days a week, it's 33.6 days. It's pro-rated for part-time workers.

In construction, many employers include bank holidays within the 28-day entitlement. The JIB (electrical) and BATJIC (building trades) agreements set specific holiday periods. If you're a genuine subbie, none of this applies -- you set your own time off and build it into your price. But if you're on the tools five days a week for one company and they're calling you self-employed, you might actually be entitled to this.

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