If you’re a small business owner, chances are you’ve hired someone on a casual, part-time, or freelance basis. But are you confident you’re paying holiday correctly, and that your team is properly classified?
Holiday pay is one of the most misunderstood areas of employment law. Recent legal cases, including Main v SpaDental (2024), show that the cost of getting it wrong can be significant, not just in unpaid wages, but in additional compensation for delays.
In this article, we break down what you need to know to protect your business, and do right by your team.
Why Holiday Pay Matters
Everyone classed as a worker or employee is entitled to paid holiday. It doesn’t matter if they:
Work irregular hours
Only do weekend shifts
Are on a zero-hours agreement
If someone qualifies as a “worker,” they should receive paid annual leave, currently 5.6 weeks per year (pro-rated for part-time staff).
But What If They’re Self-Employed?
That’s where it gets tricky.
True self-employed contractors, people running their own business and invoicing you for services, don’t get holiday pay.
But if you:
Set their working hours
Give them instructions on how to do the job
Require them to personally do the work (no substitutes)
…they may be a worker in the eyes of the law, even if their contract says “self-employed.”
Case Study: When Holiday Pay Goes Unnoticed
I recently worked with two business owners who were unknowingly underpaying holiday one had staff going back over two years without any leave or pay. When I explained what was potentially owed, they were shocked at the financial risk, they even though they may have to close the business.
It’s easy to overlook, especially in sectors like cleaning, construction, and hospitality, where roles are casual or project-based. But if a claim is brought, it could go back up to two years, or even more if there’s evidence the worker was discouraged from taking holiday.
Can Tribunals Award Extra Compensation?
In Main v SpaDental, the tribunal was asked whether a worker could receive interest-like compensation on top of unpaid holiday. While not technically “interest,” the court agreed that financial loss from delayed payment could be compensated.
The message is clear: not paying holiday on time may now cost more than just the missed pay.
What You Can Do Now
Review your workforce
Are your staff genuinely self-employed? Or do they meet the test for worker status?
Check your holiday calculations
Especially for staff with irregular hours, are you averaging pay over the correct period?
Correct and document
If you’ve underpaid, it’s better to fix it voluntarily than wait for a tribunal claim.
✅ Need Help?
If you’re unsure whether your workers are correctly classified, or if holiday pay is being calculated properly, I can help. I offer flexible HR support on a pay-as-you-go basis, no retainers or long-term tie-ins.
It’s a simple check that could save your business thousands in the long run.
