A contractors guide on dealing with planned and unplanned absences

Tuesday 17th March, 2015
Contractor Info

For many, being a limited company contractor allows you greater flexibility with your working life. However it also means that you have to be more astute when it comes to taking time off.

Here at PayStream, we have created a useful guide on planning for absence.

Planned time off

For the most part contractors will plan holidays around the end of contracts, if there is no opportunity for extension or overlapping with a new contract.

If the contract is no longer than a month it is advisable to wait until the end of a contract before taking time off. We also recommend avoiding taking time off during the first month of a new contract.

When it comes to choosing your annual leave, make sure you take into consideration the eight bank holidays we have each year. This is because, if you take into account the bank holidays plus the average 5 weeks' holiday per year you'll have about 46 weeks left to work each year. You can then use this as a starting point to work out your rates because as a limited company contractor you will only be paid when you are working, so you need to plan your finances to make sure you have enough to cover you when you are taking time off.

Unplanned time off

As a limited company contractor, being your own boss comes with greater responsibility. If you don't work you don't get paid which pushes a lot more individuals to arrange their personal life around contracts. And unfortunately, it's not always possible to plan for absences.

Times will arise whereby due to illness or unplanned circumstances you are unable to work. Because of times like this, you need to ensure you have a financial safety net. Taking out the likes of 'critical illness cover' can protect you if you have to take a long period off work due to illness.

We recommend that you plan for an extra 10 working days unplanned time off per year, on top of the 33 days holiday, meaning that you now have 44 working weeks rather than 46.

If you create your rates on an average of 44 working weeks per year you can calculate, as a limited company contractor, how much salary and dividends you need to pay yourself to cover you in case of an unplanned absence.

As a contractor it is wise for you to have an income protection plan in place in order to guard against any accident or sickness that could result in you being unable to work. Such a plan can ensure that you get a continued income to support your financial commitments should you have to take unexpected time off work due to an accident or sickness. If this sounds like something you would be interested in knowing more about, we have partnered with Haven Global Strategies who are experienced Independent Financial Advisors, and would be happy to talk you through your options. For more information please call them on 0161 923 0009 or email info@havengsl.com.

Booking time off

When you plan to take time off, always ensure you:

  • Give as much notice as you can. Even if the time off you want is very brief, it is always better to let the client know as early as possible that you are planning to take time off so they know when you won't be available to work.
  • Don't ask but tell the client you are taking time off. As a limited company contractor you are in control of your working hours so it is up to you when you plan your holidays, providing you are satisfying your contractual terms.
  • If you are able to be flexible about the time you take off, you can always give the client options as to when you take your leave, for example you could say "I'm planning to take a week off in March, would the 4th or the 20th be more preferable for you?"
  • Make sure you avoid taking time off in your first month or if the contract length is very short.

Remaining proactive rather than reactive when it comes to time-off is always a better solution. It will alleviate pressure should you have to take any unplanned absences and will allow you to plan how much money you need to put away should you have to cover any gaps in-between contracts.


Times will arise whereby due to illness or unplanned circumstances you are unable to work. Because of times like this, you need to ensure you have a financial safety net.