Holiday pay and umbrella companies – the facts

You don’t work for the whole year or if you work fewer days,vacation allowance is worked out pro rata.

Usually,an employer is responsible for paying holiday pay. However, when you use an umbrella company,it is you who covers the cost,not the company. Usually the amount of holiday pay works out at 12.07percent,which is 5.6 weeks divided by the rest of the year (46.4 weeks). Since your holiday pay comes out of your own money,umbrella companies usually accrue holiday pay and keep it until you take off time. Other companies might pay you each month or week instead. Some companies will offer both options,but may use one and ask if you want it you to request the other option. Your vacation pay should be shown as a separate item on your payslip,and can not be included in your pay.

When you decide on an umbrella company,look at ways to check on your vacation pay. Umbrella companies have handy online portals that enable you to check several details,including vacation pay you have available. However, if you can not easily see how much has been accrued,you can just work it out by using the percentage above (12.07%). Calculate the hours thatyou have worked and use the percentage.

It’s essential to be careful when you’re looking at umbrella companies in connection with holiday pay. If a company isn’t open about their vacation pay policies and procedures,you may have to be concerned about how they manage things. Some umbrella companies are more compliant than others,so you want to be wary of any that may not make it clear how they pay out vacation pay for contractors. Be certain you look carefully at the employment contract which you are given so thatyou understand you will receive vacation pay from the company.

If you use an umbrella company,you should have holiday pay. Do not forget to check how you will be paid when choosing a company.

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