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Can umbrella company contractors claim holiday pay?

With summer in full swing and the school holidays fast approaching, many contractors will be preparing to take some well-earned time off and enjoy some rest and relaxation.


However, in the world of contracting where contractors have typically been self-employed, the unfortunate reality is that these contractors are not paid when they take a much needed break. 


The same cannot be said for umbrella company contractors, however. The great news for these contractors is that they receive holiday pay in line with all other UK employees.


To help contractors considering this route understand umbrella company holiday pay, as well as other statutory benefits, Umbrella Search has put together this complete guide. 


 Umbrella Company holiday pay


One of the many benefits to working with an umbrella company when contracting is that the contractor will receive statutory benefits.


Included in these benefits amongst other things is paid holiday leave. 


Contractors that work through an umbrella company are eligible to receive this due to the fact that their chosen umbrella provider becomes their employee and as such must ensure they receive statutory benefits in line with UK law. Included in this is a minimum of 5.6 weeksof paid holiday leave per year for full time workers.


What if I contract part-time?

You will still receive holiday pay if you contract on a part-term basis. Whereas full time contractors will receive the full 28 days of leave per year, those that work 4 days per work will receive 22.4 days and those that work 3 days a week will receive 16.8 days each year and so on. 


If you are a contractor that works on several contractors within one year or has an unpredictable schedule, then you can work out your holiday entitlement by taking the average time you’ve worked over the past 12 weeks prior to the holiday date. 


How will I be paid?


That’s how much paid holiday leave you will receive, so next we will take a look at how this will be paid to you as there a couple of different ways this can be done. 


Firstly, holiday pay can be paid through the accrual method. This is where the umbrella company sets aside the contractor’s holiday pay and then pays this to them when they take their leave.


Or, the umbrella company can utilise the rolled-up method. This means that the contractor receives their holiday pay each time they’re paid their salary. With this method, the contractor is always up to date with how much holiday pay they’re owed.


Whatever method is adopted by the umbrella company, contractors will always be able to keep an eye on how much holiday pay they’ve received as this will be stated on their payslip. 


How much will I be paid?


The last thing you’ll need to know is how much holiday pay you will receive. The great news is that it’s easy to work out. Contractors can simply take their gross taxable pay and multiply this figure by 12.07%


What is an umbrella company?

What other statutory benefits will I receive?


Now you know that umbrella company contractors receive statutory holiday pay, you can take a break and rest assured that you are still being paid even on your time off.


This is considered a great benefit to the umbrella company route, giving contractors that extra piece of mind.


The good news doesn’t stop there. There are additional statutory benefits that contractors receive when they work through an umbrella company. 


Umbrella Company sick pay


If a contractor gets too ill to work, they also benefit from receiving sick pay.


Statutory sick pay means that the contractor will receive £116.75 per week if they cannot work due to illness.


Any contractor working through an umbrella company is eligible to receive this, as long as they earn an average of £123 per week , have been ill for 4 days consecutively (covering days they would have already been working) and aren’t already claiming other benefits such as maternity or paternity leave. 


Umbrella company maternity and paternity leave


This leads us onto the next statutory benefit that umbrella company contractors are eligible to receive, maternity or paternity leave. 

If you are claiming maternity leave, you will receive a total of 39 weeks’ worth of pay. For the first 6 weeks you will receive 90% of your average weekly earnings. For the following 33 weeks you will receive either 90% of your average weekly earnings, or £184.03 depending on which figure is the lowest. 


Paternity leave is similar, however you will be entitled to 1-2 weeks paid leave. This is also set at £184.03 per week or 90% of your earnings depending on the lowest figure. You can find out more about paternity leave here.


Looking to join an umbrella company?


Now you know that umbrella company contractors not only receive holiday pay, but also benefit from sick pay, maternity leave and paternity leave as well, you may be considering making the move to umbrella. 


After all, every contractor knows that to succeed in the contract at hand they need to take well-earned breaks and rests in order to recuperate and to perform well at work. This is made much easier when you know that you will be paid for your time off. What’s more, it’s great to be in the knowledge that you have a safety net should you become too ill to work.


If you’re now looking to find an umbrella company, Umbrella Search is here to help.


Simply get in touch with our friendly team who will take all the energy and hard work out of finding an umbrella company. Our team will really get to know what you’re looking for from an umbrella company, whether it’s the chance to gain more holiday leave, or if it’s for help and advise on things like your pension. We will then find a list of umbrella companies that will be the perfect fit for you. 



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