TL;DR
- CITB’s 2025 workforce research found 33% of the UK construction workforce was self-employed, down from 42% in 2022 but still far above the 13% self-employment rate across the wider UK economy.
- Over the same period, direct employment in construction rose from 48% to 59%, the highest level CITB has recorded since 2012, a genuine structural shift rather than a rounding change.
- Construction workforces move between sites, subcontractors and PAYE/CIS status in ways generic HR software doesn’t model well.
- HR software for construction needs to track site assignment, CIS status and timesheets against specific projects, not just departments.
- This keyword carries the highest buyer-intent signal (very high CPC) in this content plan, with no cached competitor page currently occupying the SERP.
A workforce that’s genuinely different from most HR software’s assumptions
CITB’s most recent workforce mobility research found that self-employment in UK construction dropped from 42% in 2022 to 33% in 2025, while directly employed workers rose from 48% to 59% of the workforce, the highest level of direct employment CITB has recorded since 2012. That’s a meaningful shift, but even at 33%, construction’s self-employment rate remains roughly two and a half times the 13% average across the UK economy as a whole. In practical terms, that means almost any construction business of reasonable size is managing a genuine blend of PAYE employees, CIS subcontractors, and often agency labour, often on the same site, on the same day.
Why generic HR software struggles here
Most HR software assumes an employee belongs to a department and works from one location. Construction workforces don’t fit that shape: the same person might work three different sites in a month, under a mix of PAYE and CIS arrangements, alongside subcontractors who need to be tracked differently again. A system built around the desk-based nine-to-five model simply doesn’t have a natural field for ‘which site was this person actually on today’, which is precisely the data point construction payroll and project costing depend on.
What construction-specific HR software needs to track
Site assignment needs to sit at the centre of the record, since costs, timesheets and even compliance documents (like right-to-work checks) are often tracked per site or per project. CIS status needs to be flagged per worker so deductions are applied correctly, and timesheets need to record hours against the specific project they relate to, not just a generic pay period.
Given that a third of the workforce sits outside direct employment, per CITB’s figures, the system also needs a clean way to manage the compliance documentation that differs between an employee and a subcontractor, since the right-to-work and tax treatment obligations aren’t identical for each group.
A worked example
A contractor running three active sites, each with its own mix of employed staff and subcontractors, reconciling timesheets manually against project budgets, is doing project accounting and payroll admin as two disconnected tasks. If, in line with CITB’s national figures, roughly a third of that workforce is self-employed and being paid under CIS rather than PAYE, the manual reconciliation burden effectively doubles, since CIS deductions and PAYE payroll follow different rules and different reporting cycles. Connect them, and the same timesheet entry that pays the worker also updates the project’s labour cost in real time, regardless of which payment category that worker falls into.
Where this connects to the rest of the ERP
This is really project accounting and HR meeting in the middle, which is why it works best as part of an ERP that already understands construction projects, rather than a standalone HR tool bolted onto separate project management software. As direct employment continues to rise, per CITB’s trend data, businesses that get ahead of managing both categories cleanly in one system are better placed than those still treating PAYE and CIS workers as entirely separate administrative processes.
FAQ
Does this handle CIS deductions?
Yes, when integrated with payroll, CIS status can be flagged per worker so deductions are calculated and reported correctly.
Can subcontractors use the same system as employees?
Typically as a separate access tier, since subcontractors need different documentation and payment handling to direct employees.
How does this differ from generic project management software?
This is HR and payroll specific: records, compliance and pay, rather than just task and schedule tracking, though the two do need to connect at the project level.
How significant is the shift from self-employment to direct employment in construction?
CITB’s 2025 research found it moved from 42% self-employed in 2022 to 33% in 2025, with direct employment rising from 48% to 59%, the highest level since 2012, so it’s a genuine, recent structural trend rather than a stable long-term pattern.
Why does construction still have a much higher self-employment rate than other industries?
The project-based, variable-demand nature of construction work is the main reason CITB’s research cites: businesses need to flex labour up and down between projects in a way that’s less common in most other UK sectors, which sit around 13% self-employment on average.
Does a construction HR system need to handle right-to-work checks differently for subcontractors?
The underlying legal requirement to verify right to work applies broadly, but the documentation and contractual relationship differs between a direct employee and a subcontractor, so the system needs to track each correctly rather than treating them identically.
