Complete Guide to Holiday Pay for Umbrella Contractors

Guide to Umbrella Holiday Pay


Do Umbrella Company contractors get holiday pay?

As the contractor is an employee of their chosen umbrella company they are entitled to receive statutory benefits including holiday pay.

This is good news for umbrella company contractors who can rest assured that they will still get paid when they take a well-earned break.

This is in contrast to limited company contractors who, as self-employed workers, will not receive paid holiday leave.

Find out more about umbrella vs limited companies in this handy guide.

How much holiday pay do contractors receive?

As an employee, umbrella contractors are legally entitled to a minimum of 28 days’ or 5.6 weeks holiday pay each year. It is decided by the umbrella company whether bank holidays are included within this or not.

If you contract part-time, this is worked out as follows:

  • If you work 4 days per week you will receive 22.4 days holiday
  • If you work 3 days per week you will receive 16.8 days holiday

Many contractors will work varying days and hours on contracts. If this is the case, holiday pay will be worked out by taking the 12 weeks before your holiday and calculated as the average you have worked over this period.

How is Umbrella holiday pay calculated?

To figure out how much holiday pay you are entitled to as an employee of the umbrella company, take your gross taxable pay and multiply it by 12.07%.

To find out more about how to calculate your holiday entitlement, check out this handy tool on the government website.

How do Umbrella contractors receive holiday pay?

There are two main ways that umbrella company contractors can receive their holiday pay.

The first way is the accrual method.

With this method, the umbrella company will keep the contractor’s holiday pay aside until they take the time off.

The other way contractors are paid their holiday pay is through the fixed, advanced payment method.

Here, the contractor receives holiday pay every time they are paid by the company, whether that’s every week or month, meaning they are always up to date with the holiday pay they are owed. This is the most common method used by umbrella companies.

Every umbrella company will include how much holiday pay you have received on your payslip, meaning you can always access a record of how much holiday pay you have been given.

That’s how umbrella company holiday pay works, now let’s look at what other statutory benefits umbrella contractors are entitled to.

Umbrella company sick pay

Another statutory benefit that umbrella company contractors are entitled to is sick pay.

This means that if the contractor falls ill and cannot work, they will still be paid. This is obviously a huge sigh of relief to umbrella company contractors as it is a welcomed safety net.

Currently, statutory sick pay is £95.85 per week which is what contractors will receive if they can’t work due to illness.

Contractors can claim statutory sick pay for up to 28 weeks per year.

To be eligible for statutory sick pay, contractors must meet the following criteria:

  • They must be an employee of the umbrella company
  • They must earn at least £120 a week on average before tax and National Insurance deductions are taken off. For contractors that work different days and hours, this will be calculated using an average of the previous 8 weeks leading up to illness
  • They must have been ill for 4 consecutive days. This does include the weekend, however you will only be eligible to receive pay for the days you would have been working. These are known as qualifying days.
  • They are not already claiming benefits such as statutory maternity or paternity leave
  • They have not already exceeded the maximum of 28 weeks’ worth of pay

In order to get statutory sick pay contractors have to tell the umbrella company within 7 days. If you are sick for longer than this period you will require a sick note from your doctor.

Umbrella company maternity or paternity pay

Another statutory benefit that umbrella company contractors can benefit from is either maternity or paternity paid leave.

Contractors will receive 90% of their average weekly pay for the first 6 weeks of maternity leave.

After this, contractors will receive either 90% of their average weekly pay over £151.97 per week, depending on which is the lowest amount. They will receive this for the next 33 weeks.

In total, this means that contractors will receive 39 week’s worth of paid maternity leave which is seen as a welcomed benefit to many contractors out there.

With paternity leave, contractors can take 1-2 weeks’ paid leave which is also set at either 90% of their average weekly pay or £151.97 per week, depending on whichever is the lower of the two figures.

Ready to join an umbrella company?

After reading about the many benefits offered by an umbrella company, including paid holiday leave, sick pay and maternity and paternity pay, you may have decided that it’s time to join an umbrella company.

If that's the case, Umbrella Supermarket is here to help you.

Our umbrella company calculator is a quick and easy way for contractors to choose best umbrella company for them.

Enter your details as well as your contractor preferences and we will show you a refined list of the best companies out there for you. What’s more, it takes just minutes to find your match.

To see how we can help you why not give it a go for yourself?

Would you like more information on Complete Guide to Holiday Pay for Umbrella Contractors?

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