Umbrella Companies are now expected to act as employer to their contractors and, as an employee of ContractorUmbrella, it means you are entitled to 28 days holiday per financial year.

Under the Working Time Regulations, holiday pay must be shown as a separate entry on the employee’s payslip when they take annual leave rather than included within their pay rate. The practice of including holiday pay within the pay rate is also known as 'rolled-up holiday pay' and is unlawful. An Umbrella Company that is operating rolled-up holiday pay is therefore not acting compliantly as your employer.

Umbrella Companies could not possibly pay out holiday at your actual assignmentt rate, as the margin they retain would simply not permit this. As an example of this, a contractor earning £600 per day would be entitled to £ 16,800 per year in holiday pay. Our margin of £ 26.50 per week would barely cover a fraction of this!

Holiday pay is therefore taken as a deduction from your weekly or monthly payments and paid back when you take time off.

As an employee of ContractorUmbrella, you are entitled to a salary made up of two parts. You are guaranteed a minimum wage payment for the hours/days invoiced for, regardless of whether we have received payment or not. Anything you earn above the minimum wage rate is paid to you as a bonus. This pay structure allows us to base your holiday deductions on the minimum wage.

Holiday will be calculated as follows:

Weekly invoices:

28 days per year x 7 hours per day @ £6.08 per hour (NMW) / 52 weeks = £22.92 holiday pay

Monthly invoices:

28 days per year x 7 hours per day @ £6.08 per hour (NMW) / 12 months = £99.31 holiday pay.

By basing holiday pay on the minimum wage, we are ensuring that we are taking as little as we possibly can, whilst still offering you a fully compliant service. Some Umbrella Companies will base holiday deductions on a percentage, but we have ensured that everyone who uses ContractorUmbrella has the same amount deducted each week/month, regardless of earnings.

Any days taken as holiday are paid out at minimum wage i.e. 1 day holiday = 7 hours @ £6.08 = £42.56. If we were to pay out holiday pay at your actual contract rate, it would mean that we would have to deduct an awful lot more. Following on from the example above, to pay out holiday pay at £600 per day we would have to deduct either £323.08 as a weekly amount or a monthly amount of £1,400 to achieve 28 days holiday per year.

Please be reassured that although holiday pay is deducted, this remains your money. You can enter holiday days on our system for any days you are contracted to work, but didn’t. You can select ‘Full’ view in the timesheet section and this will allow you to submit holiday days to us.

Once you have submitted a holiday timesheet, your holiday pay will be included with your next invoice payment following that period. If you have not accrued enough holiday pay to refund the total number of days entered as holiday, we will pay out as many full days as possible.

Any unused holiday pay will be refunded to you either when you leave or before the end of the financial year, whichever comes first.