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The government has made the decision to simplify holiday pay calculations for irregular hours and part-year workers – this will include umbrella company contractors.

As well as simplifying calculations, ‘rolled-up’ holiday pay has also been allowed, which will enable employers to include an amount for holiday pay on top of the hourly rate in regular pay packets.

This news has been very much welcomed by umbrella companies.

Tania Bowers, Global Public Policy Director at APSCo, said, “This is a significant win for APSCo and its members. We have highlighted for years that rolled-up holiday pay is necessary and will protect agency and umbrella workers. We’re pleased to see that our recommendations have been seriously considered and adopted in this consultation response, including the rate of holiday pay and the simplification of TUPE requirements.

“The plans outlined are, in our view, the only fair way to pay irregular workers and ensure they are no longer at risk of losing accrued holiday pay due to the way they are employed.”

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Tania added, “However, it is now important for recruiters and umbrella companies to assert to workers and end clients that individuals must take the holiday or pay they are owed and the Working Time Regulations.

“This new development is perhaps the first example of the UK Government being able to utilise the increased freedom of decision making that has been afforded following Brexit. What will be key now, though, is the timing of this transformation and whether or not it will be legislated and enacted under the current Parliament.

“How to fairly compensate holiday entitlement for the flexible labour market is a key topic of conversation at the moment, with the Gangmaster and Labour Abuse Authority (GLAA) also issuing a new brief on the treatment of holiday pay following the Supreme Court decision of Harper versus Brazel.”

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