Many people think that being a temp who works for a recruitment agency is precarious and that you don’t get any benefits. But your rights as an agency or umbrella worker might actually be much better than you thought.
Did you know that as an agency or umbrella worker you are entitled to 5.6 weeks paid holiday annually? Or a pro-rated amount if you work part-time hours.
And the same is true if you are employed by an umbrella company, or even if you work through an umbrella that doesn’t actually employ you.
Assuming you are not actually self-employed, then your employment status is either a “worker” or “employed”, and both of these are entitled to 5.6 weeks annual paid holiday.
Explaining holidays for agency workers
We’ve already mentioned that holiday pay can be included when signing up with an umbrella, so there must be some leeway when it comes to holidays, right?
The short answer is yes – a minimum of 5.6 weeks annually, including bank holidays. That is 28 paid days leave if you work 5 days per week. However, you also need to be aware of the Agency Workers Regulations 2010 legislation which you can read about here.
From the first day of their assignment, agency workers have access to worker’s employment rights – that grants them access to shared facilities and services provided by the client to their full-time employees.
That can be from something as simple as using the canteen and vending machines, to using their local pick-up service or attaining a car parking space.
After working for that client for 12 weeks, though, agency workers qualify for equal treatment.
Equal treatment means that agency workers qualify for the same rights as somebody who works for the company on a full-time basis. That can include automatic pension enrolment, equal pay and, yes, paid holiday that is equal to a comparator employee at the client’s business (i.e. the company that you are undertaking work for).
New contracts mean new qualifying periods
So, how should agency workers calculate those 12 weeks? The 12 week qualifying period should start from your first day working for the client, although the qualifying period will pause for sick leave and breaks.
If there is a pause or break of six weeks or less; sick leave up to 28 weeks (except related to pregnancy/maternity/paternity during a protected period); entitled annual leave; when the office is closed for a holiday or industrial action, or if you’re on jury duty for up to 28 weeks, any continuous weeks worked for the client before the break will be treated as continuous on top of any weeks worked for the client after the break.
Calculation of the 12-week period will need to start again if you get a new contract at a different workplace, if you have a break of more than six weeks between jobs at the same workplace, or if you take on a ‘substantively different role at the same workplace.
So, how much holiday are you entitled to? The statutory minimum is 5.6 weeks annually, but this might be higher under equal treatment as part of AWR.
If an employee doing a comparable role at your client receives more than 5.6 weeks leave annually, then you might be entitled to more than the statutory minimum. You should discuss this with your agency in the first instance as they will have already done AWR comparator checks with your client.
How is holiday pay calculated?
Those who work less than full time hours should still receive 5.6 weeks of holiday annually. This is based on 5.6 weeks of the hours that they normally worked during the 12 weeks prior to the date of the first day of annual leave taken. The rate of pay to be paid for holidays is based on an average of the worker’s pay over the previous 52 weeks in which the employee earned remuneration.
A Weeks Pay
At the start of each period of holiday taken, holiday pay of the worker is calculated by taking their average pay over the previous 52 weeks in relation to which they were paid remuneration. If there are any weeks in which they were not paid any remuneration, these weeks are not included in the calculation. If going back 104 weeks does not identify 52 weeks in relation to which the worker was paid any remuneration, the average over the number of weeks that are found is used. This will vary if different assignments attract different pay but will stay the same if the assignment pay is always the same.
A Working Week
This is calculated by taking the average of the length of a working week over the last 12 weeks in which the worker has worked.
Once the average weeks’ pay and the average working week have been calculated, the average pay is then applied to the average week to give a day rate. The number of days taken as annual leave is then multiplied by the day rate to give the holiday pay due.
Workers can be required to take holidays in whole weeks rather than for odd days. For each week, the worker would be paid a week’s pay based on the usual calculation.
The average weeks’ pay and the average working week are calculated at the start of each period of annual leave.
How will I receive my holiday entitlement?
As an agency worker or umbrella employee there are two main options to choose from when considering how you want to receive your holiday entitlement:
- Rolled up
This option allows you to receive a paid amount for your holiday allowance that is in addition to normal pay, and your holiday is paid at the same time as your regular pay for hours worked. You won’t be paid anything when you decide to take time off because you have already been paid for your holiday time. Details of rolled-up payment should be transparent and it should be clear what the payment is, i.e. differentiated on the payslip between what is basic pay, holiday or other pay.
This option allows your agency or umbrella to set aside your holiday pay in a separate “pot” to your usual pay. The amount within this pot accrues alongside the pay that you receive for the hours that you work. When you take holiday, you will receive pay from your accrued holiday “pot”. Payment of holiday pay cannot be replaced by an allowance in lieu, except in the holiday year in which the employment is terminated.
Rolled up holiday pay is beneficial as it ensures you will definitely receive your holiday entitlement, whereas by comparison if you don’t take holiday you might be at risk of forgetting to claim your accrued holiday pay.
However, the downside of rolled up holiday is that you won’t receive any pay when you decide to take time off, which some argue contradicts the fundamental purpose of holiday which is to ensure all workers are able to take a break.
It is worth noting that this argument was central to the decision when the European Court of Justice (ECJ) outlawed the practice. Although rolled up holiday is outlawed at a European level, the UK Government has chosen not to legislate to prohibit rolled-up holiday pay in England and Wales, and indeed the jury is out as to the pros and cons of rolled up holiday.
Whichever mechanism you choose to receive your holiday entitlement, it is important that it is transparent and that you understand how it is calculated. Ideally this will be clear in your contract with your agency or umbrella, but if you are unsure then you should contact the agency or umbrella directly for clarity.