New figures suggest that dodgy umbrella companies could be costing thousands of temporary workers through lost holiday pay. 

Freelance support group IWORK calculated that at an average salary of £26,000 per year, umbrella workers would be missing out on more than £3,000 of holiday pay.

They estimate that if just 2% of the UK’s 1.6 million temps are affected, they would be shortchanged by a collective £97 million per year.

IWORK founder Julia Kermode says that around a third of temporary workers are ‘simply unaware’ of their statutory right to paid holiday.

She also said that the problem was “exacerbated by unscrupulous recruitment agencies and umbrella companies that hide the fact that temps have a right to paid holiday.”

“Whilst this could be a simple omission by the agency and/or umbrella, some deliberately exploit their temps by implementing specific processes which make it difficult to claim. Surprisingly, such practices are not usually illegal, especially when outlined within the contractual small print which the temp has agreed to.”

Miles Grady, Director of Umbrella.co.uk said: “Contractors shouldn’t have to judge whether an umbrella company or recruitment agency will rip them off. Unfortunately, that’s where we find ourselves with no regulation.

“Contractors and recruiters need to make sure they’re doing due diligence when choosing an umbrella company. If you’re not sure what’s happening with your holiday pay, speak to your umbrella company or someone you trust so you don’t get fleeced.”

How do umbrella companies pay holiday pay?

Many contractors choose to receive holiday pay as part of their agency pay rate. This is calculated at 12.07% of your hourly rate.

For every payment, the holiday pay is calculated and added to your pay as a portion of the total wage.

If you prefer, you can choose to retain holiday pay and use it when you want to take some time off. For many contractors, this will depend on the assignment.

For more information about holiday pay, speak to a member of the team today. Call: 01625 544 460.