Contractor Holiday Pay

The issue of contractor holiday pay has always been a controversial topic in employment law, with many cases referred to the Employment Appeals Tribunal.

The main case in recent years concerning contractors is Plastering Contractors Stanmore Limited v Holden.

In this case, Mr Holden worked as a general labourer for PCS from 1997.

From 2001 onwards, he became a sub-contractor who was self-employed and was subsequently paid under the construction industry scheme.

Mr Holden brought a claim against his employer on the basis that he was entitled to holiday pay as he was a worker.

definition of contractor

The judge subsequently found that there was no obligation on PCS to offer Mr Holden work, nor was he obliged to accept it.

PCS did, however, provide all of his health and safety equipment and the use of a vehicle when necessary.

Mr Holden has worked exclusively for PCS for 16 years and was clearly integrated into their workforce, as such the judge decided that he was a worker, and entitled to holiday pay.

PCS appealed the decision and the appeal was subsequently dismissed.

Employment Appeal Tribunal

Contractors discussing Holiday Pay

With cases that concern employment status, the Employment Appeal Tribunal will look at the individual facts of the case.

In this case, despite Mr Holden becoming a contractor, the nature of his relationship with PCS had not actually changed.

Whilst working on site, he was under the direct supervision of the Site Manager, so PCS had a degree of control over him.

Although this case may appear disheartening to those that use subcontractors, it could be argued that the circumstances of this case are unique.

If it can be shown that a subcontractor is genuinely self-employed and not a worker, then you will not be liable to pay holiday pay.

Sub-Contractor Or Worker?

a contractor image for Contractor Holiday Pay

Unfortunately, there is no specific test to determine if an individual is a worker or a subcontractor.

The Tribunal will have to consider all the facts available to them in order to appropriately establish the nature of the relationship.

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About the author 

James Rowland

James is the Commercial Director at Neathouse Partners and regularly writes articles surrounding issues in HR & Employment Law. Outside of the office, James is a keen Cricketer, playing in the Cheshire League for Nantwich CC. He also loves going to watch his football team, Crewe Alexandra. Feel free to connect with James on LinkedIn.