Agencies, what happens to your contractor's holiday pay?
With the summertime in full swing, you’ll probably see an upturn in the number of contractors taking a holiday.
You’ll also be aware that for each of your contractors that works via an umbrella provider, an element of the rate you pay to the umbrella is for holiday pay. When your contractor takes time off, they claim a portion or all of the holiday pay that has been accrued.
What happens when contractors don’t claim accrued holiday pay?
According to Professional Passport, a leading independent assessor of payroll compliance, a recent report stated,
“We’ve observed various reports of certain umbrella providers which have retained contractors’ holiday pay by relying on terms in their contracts which are either unread or misunderstood. These contractual arrangements make it clear that unused allowances will be lost if not taken, which, although it makes the practice legal, in our opinion is definitely not moral.”
So if your contractor doesn’t claim their holiday pay, the umbrella company gets to keep it.
What risks does lost holiday pay pose to agencies?
The risks are undoubtedly high.
Agency reputations rely heavily on the quality of services they provide to their clients and contractors. So, if your contractors are upset and unhappy because they feel they are losing out financially, including unclaimed holiday pay, you’ll often get associated with the blame.
If your contractor decides to take the issue directly to your client, your reputation and relationship with your client are also jeopardised.
Big Fish takes the risk out of Umbrella payroll.
Big Fish is a Professional Passport accredited business, and we do everything possible to ensure that your contractors get the holiday pay they are entitled to.
We remove the risks from umbrella payroll by putting our contractors’ and agency partners’ reputations and welfare at the heart of everything we do.
If you’re concerned that your umbrella providers aren’t paying your contractors their holiday pay, contact us for a confidential chat:
Contractors, it’s time to check your holiday pay
It’s that time of year again when the sun shines brighter and for longer (mostly), and we start to think of grabbing some well-earned rest and relaxation.
However, holidays for contractors are never quite as simple. You’ve got work to complete for a start, and taking time out might not be practical in terms of the timing of the project.
For contractors working via an umbrella company, there’s also the subject of holiday entitlement and holiday pay.
Umbrella contractors get holiday pay rights.
For contractors, holiday entitlement and holiday pay can be an ambiguous issue.
To be clear, if you’re working through an umbrella company and your payment has tax and national insurance deducted via the PAYE scheme, you’re most likely an umbrella company employee.
As an employee, you will qualify for employment rights, including holiday and statutory holiday pay.
Big Fish - Ensuring contractors get their holiday pay entitlement.
Holiday pay is usually accrued as you work and paid when you take a holiday. All of which should be clearly shown on your payslip.
Unfortunately, it’s been reported that some contractors have lost out on accrued holiday pay because they’ve been unaware of holiday pay rules and umbrella processes. This is why Big Fish urges contractors to double-check their employment contracts.