Umbrella Holiday Pay

The time for a unified and committed voice for contractors has arrived!

Worked for an FCSA Umbrella?

£000’s in unpaid Holiday Pay could be legally due to you!

Moneybox, the BBC Radio 4 programme, exposed that an umbrella member of the FCSA pocketed the holiday pay of contractors who were legally entitled to it, and they each received a pay out of around £6,000!

Based on insider information it has come to light that the Moneybox discovery is only the tip of a large iceberg. By using a legal loophole, pocketing Holiday Pay has been an unchecked endemic practice of many FCSA umbrellas for many years. This means that 10’s of millions of pounds of Holiday Pay legally due to hard working contractors could have been pocketed to add to the already vast wealth of the FCSA umbrellas.

What is the FCSA doing about this?

Seemingly nothing, so contractors have to fight for what they are legally entitled to and are welcome to join our Holiday Pay Campaign

The practice of not paying Holiday Pay is a flagrant breach of a fundamental part of the FCSA Code of Compliance. That’s the same Code which the FCSA relies upon to demonstrate why its members are apparently the ‘safe’ choice for our sector.

The FCSA has not made any public statement to deny what was exposed, nor has it come clean and named the umbrella member in question and confirmed that it has been removed from its membership.

This is a cover-up that ought to be investigated by HMRC, the Department for Business, Energy & Industrial Environment (BEIS) as well as the Employment Agency Standards Inspectorate (EASI) to reveal the full extent of this morally unacceptable practice, ensuring that those affected are compensated.

If the FCSA truly is the ethical organisation that it professes to be and genuinely has the best interests of umbrella contractors at heart, it must publicly name all the offending umbrellas, remove them from its membership and encourage those contractors affected to contact them so they can coordinate the recovery of the Holiday Pay that has been withheld from them.

Also, an FCSA public apology is not only necessary, but surely owed to contractors, agencies and end-clients that trusted its members as its neglect of candour is palpable. Remaining silent and not publishing the names of the umbrellas suggests FCSA complicity in covering up the practice of not paying Holiday Pay.

We will gladly enter into discussions with the FCSA and post its public response on this website.

What is the government doing about this?

Even though the government may also be losing out on the income tax that they too were entitled to, to date, nothing appears to have been done, leaving contractors out of pocket for what they were legally entitled to – a seemingly daunting task for any number of contractors to contest individually, which is why we have launched our Holiday Pay Campaign.

The cleaning up of the off-payroll sector is a government priority, so surely forcing unscrupulous FCSA umbrellas – and the directors that sanctioned the withholding of Holiday Pay – to voluntarily compensate contractors has to be in its sights and ought to be a  priority.

We will be campaigning for HMRC, the BEIS and EASI as well as other stakeholders in the temporary workforce sector to uncover the rogue umbrellas and agencies that work alongside them who forced FCSA umbrellas upon contractors and possibly also shared in the financial spoils diverted from the Holiday Pay entitlement.

How did the FCSA Umbrellas get away with this until now?

Quite simply, the FCSA enabled this by allowing its umbrella members to insert a clause in the employment contracts for their employees stating that in order to be paid their Holiday Pay entitlement, a contractor must ask for it within 3 months of leaving. Contractors were not made aware of this when starting to work for the FCSA umbrellas, nor were they informed when leaving and going to work elsewhere.

The umbrellas involved in this practice preyed on the fact that many contractors did not know that they were legally entitled to Holiday Pay, even though the umbrellas knew beyond a shadow of a doubt that they were fully entitled.

Unfortunately, even though the offending umbrellas kept quiet over the legal entitlement to be paid Holiday Pay and made no attempt to voluntarily pay it, as the law presently stands, once 3 months have passed an umbrella can refuse to pay the Holiday Pay; it can pocket it as its own money. Let’s be clear about this; the end-hirer; paid the contractor’s Holiday Pay to the agency, who paid it to the FCSA umbrella who, instead of paying it to the contractor, kept it and in some cases split it with the agency!

We believe that the law must be changed to give retrospective entitlement to claim the unpaid Holiday Pay, which is one of the primary objectives of our Holiday Pay Campaign.

Are any other Umbrellas doing the same?

Yes, most definitely. We understand that not paying Holiday Pay correctly is widespread amongst unscrupulous umbrellas. The same rules for paying Holiday Pay also apply to them as they do to FCSA umbrellas, so they too should be forced to pay to contractors what they should have paid as standard practice.

How do I know if my Holiday Pay was withheld?

Under the Working Time Regulations, Holiday Pay is a legal entitlement when working for an umbrella. The foundation for this is that although you were contracting on temporary assignments, you are legally classified as an employee. Every employee is entitled to at least 28-days Holiday Pay per year. That means, when an end-hirer is agreeing a rate for the placement with an agency, the end-client will have factored in the Holiday Pay entitlement.

If you were paid it, it will have been clearly detailed on your payslips. If it was not, it is highly likely that your holiday pay has been withheld from you.

If you are not sure, submit your payslips here and we will review it for you.

How much Holiday Pay should I have been paid?

Every contractor working through an umbrella is legally entitled to be paid 12.07% of their annual wage as Holiday Pay for 28-days leave entitlement.

It can be legally paid in a number of ways –

  • As what is termed “rolled-up”, which means you are pre-emptively paid your Holiday Pay as part of the payment for the days you actually undertake work on behalf of your umbrella company. As such, you do not need to notify your umbrella when you are taking holidays. For obvious reasons, this is the easiest option for most contractors and umbrellas. It should also be shown clearly and separately on your payslip.
  • When you actually take time off on holiday, up to the number of days you are entitled to Holiday Pay, during your umbrella company’s holiday year – typically from 1st January to 31st December.
  • When you terminate your employment with your umbrella company you are entitled to be automatically paid Holiday Pay for the total number of days of unused holiday entitlement during the umbrella company’s holiday year.

Based upon an annual contract value of £50,000 your Holiday Pay entitlement is £6,035 (12.07% of the contract value). So, if your holiday pay was not ‘rolled-up’ and you hadn’t therefore already received it, and no day’s holiday were taken during your umbrella company’s holiday year, you are entitled to £6,035.

For every £10,000 of salary your Holiday Pay entitlement is £1,207. So, if no day’s holiday were taken during your umbrella company’s holiday year, you are entitled to £1.207.

Holiday Pay Campaign

All morally minded people with society’s best interests at heart will accept that Holiday Pay that has been earned should be paid voluntarily and proactively by any employer. We cannot think of any legitimate reason why a right-minded person would say otherwise, so we believe that the government, the sector’s regulators and the FCSA will agree with us.

So, our campaign’s primary objectives include –

  • A change in the law to remove the 3-month time limit to make a claim for Holiday Pay.
  • A change in the law to make it a mandatory requirement for an employer to pay any Holiday Pay entitlement so that an employee does not have to request it.
  • The regulators enforce that it is a mandatory requirement for an employer to pay any Holiday Pay entitlement so that an employee does not have to request it.
  • The regulators compel and enforce that unpaid Holiday Pay must be paid even when 3-months have passed and financially sanction those umbrellas who have misappropriated these funds.

The FCSA –

  • Makes an immediate public apology for passively encouraging its members to not pay Holiday Pay.
  • Publicly confirms that it has already commenced a full independent investigation across its entire current and former membership to establish the full extent of the practice of not paying Holiday Pay, with a commitment to complete it within 3 months.
  • Publicly confirms that it will publish its report in full and that it will include the names of members that have been involved in the practice of withholding Holiday Pay.
  • Publicly confirms that it will expel any member that does not voluntarily pay all Holiday Pay that has been withheld, plus interest at 8% per year.

How do I join the Holiday Pay Campaign?

It’s really easy. Just provide us with some basic information by downloading, completing and submitting our simple form to provide us with the information we need. You can find the form here.

You will then be added to our campaign supporters list. We expect the list to grow very quickly into the 10’s of thousands, so we are confident that Contractor Voice will be loudly heard and will achieve the Holiday Pay Campaign objectives.

We will keep you informed of the campaign’s progress and successes along the journey we will have together.

Holiday Pay Media Coverage

Listen to the 5 minute discussion pulled from the Moneybox programme below.

This is what the media has said –

Contractor Calculator
Contractor Uk
Contracting Wise
The Global Recruiter
Staffing Industry Analysts 
Umbrella Companies