Why It Makes Sense to Pay Holiday Pay When Workers Aren’t on Site

Particularly in construction, work can be unpredictable. Maybe you're between jobs, waiting on materials, or hit with bad weather. When your workers aren’t on site, you might feel reluctant to pay holiday pay. But there are good reasons to pay holiday pay during quiet weeks,  and it could save your business money.

Here’s how:

1. You Could Miss Out on NI Savings and State Benefits

Both employers and workers have National Insurance thresholds to think about.

Let’s break it down:

Employers and Workers

• Primary threshold: If a worker doesn’t earn enough in a week or month, they may miss out on NI contributions towards their state pension and benefits.

• Secondary threshold: If you (the employer) don’t pay enough wages to go over the NI threshold, you pay no employer's NI—but you also don’t use your Employment Allowance.

  
  

If you don’t run payroll during a quiet period:

• Lose that week’s worth of National Insurance allowances.

• Lose a week of NI contributions - If a worker earns under the NI threshold, they may miss a qualifying week for state pension or benefits.

• Employers only pay Employer's NI above a certain wage level.

• Possibly miss out on reducing your Employer NI using the £5,000 UK Employment Allowance.

---

Real Example: How Timing Saved £80

A client had two workers off-site for a week, waiting for a new job to start. Each had holiday pay saved up.  Instead of, as planned, adding HP on top of an earlier week’s wage, the workers and employer processed HP during the week when workers were not on site.

• Payroll still ran that week

• The Employer used the NI allowance (£43)

• Employees used the NI allowance (£19 x2)

• A week of NI contributions in the pot

Multiply that across several years and several workers, and that’s a decent saving.

---

2. Zero-Hours Workers Still Get Holiday Pay

Don’t forget—zero-hours and casual workers still earn holiday pay based on hours worked. Usually around 12.07% of their total hours.

Pay it when workers are not working, which:

• Keeps their records accurate

• Avoids large lump sums later

• Helps them stay financially stable

3. It Smooths Out Cash Flow

Paying holiday during quiet periods is often easier than getting hit with it all at once when work ramps up again or if someone leaves. It also spreads out payroll costs, which helps with planning and keeps your books tidy.

4. It Keeps You Compliant

If you do pay holiday during downtime:

• Show it clearly on the payslip (e.g. “Holiday Pay – 5 Days”)

• Update their holiday balance

• Keep records of what you’ve paid

That way, you're covered if there are ever questions.

In Summary

✔ Workers still earn holiday pay, even on zero-hours

✔ UK employers can save NI using the Employment Allowance

✔ Workers may lose qualifying NI weeks if not paid

✔ Paying holiday during quiet weeks helps with cash flow

✔ Real savings are possible (like our client’s £80 example)

Need Help With Payroll or NI Planning?

We work with businesses to keep payroll simple, compliant, and cost-effective. If you're not sure when to pay holiday, or want to make the most of tax reliefs, get in touch and we’ll help you.