The shift towards fair Holiday Pay practices for temp & contract workers

Recent reforms in the Working Time Regulations, effective April 1st, signal a positive change for umbrella and agency workers, aiming to minimise the risk of holiday pay being unjustly withheld by unethical operators. These reforms introduce the concept of rolled-up holiday pay, ensuring that flexible and irregular-hours workers receive their entitled holiday pay, a provision that was not always guaranteed.

Under this method, holiday pay is calculated at 12.07% of hours worked in a given pay period and paid on top of the assignment fee. This streamlined approach not only benefits workers but also simplifies holiday pay calculations for businesses, many of which were already employing this method due to its efficiency.

The benefits of rolled-up holiday pay

One of the key advantages of rolled-up holiday pay is that it aligns the paid holiday entitlement for irregular-hours workers with that of full-time, permanent employees. By ensuring that holiday entitlement is paid alongside the assignment fee, this change offers a significant pay boost for workers who may not have previously claimed or received their entitled holiday pay.

Furthermore, rolled-up holiday pay addresses the issue of holiday pay going unclaimed or being withheld by some umbrella companies and employment agencies. By incorporating holiday pay into the assignment fee, the opportunities for providers to withhold or misuse holiday pay are significantly reduced.

What our Director of Compliance had to say:

"The government's decision to legalise rolled-up holiday pay marks a significant milestone in our commitment to equitable treatment for contractors and temporary workers," affirmed Chris Bloor, Director of Compliance at Parasol and FCSA Board Member.

Bloor noted the persistent challenges contractors face in accessing their entitled holiday pay from unregulated vendors, underscoring the necessity of this legislative change.
"By formalising rolled-up holiday pay, it allows Parasol to continue to demonstrate transparency in our practices, even at the risk of losing business to vendors who may appear more financially appealing on the surface," Bloor explained.

He further emphasised the benefits of rolled-up holiday pay, particularly in providing clarity and ensuring contractors receive their rightful earnings. "This approach streamlines processes for contractors and serves as a deterrent against potential exploitation by unscrupulous operators."

Bloor added:
"At Parasol, we are unwavering in our commitment to maintaining the highest standards of fairness and transparency in all our operations," Bloor concluded. "With rolled-up holiday pay now officially recognised, contractors can trust that they will receive their hard-earned wages promptly and lawfully, as they always have with Parasol."

FAQ's

To provide further clarity, here are some frequently asked questions regarding rolled-up holiday pay: