Good news for temporary workers in the UK – there is now no excuse for recruitment agencies and umbrellas to with-hold your holiday pay!
Regular readers will be aware of the legal loophole that allows immoral agencies and umbrella companies to wrongfully profit from your hard earned holiday pay. In addition, at least one ‘reputable’ lawyer who is vociferous in the recruitment sector also profited handsomely from advising umbrellas and agencies on how to exploit the legal loophole.
Shockingly, our research indicates that workers are denied over £97m in holiday pay annually.
How do they get away with it?
One reason given to justify denying workers their holiday is that they have no option because “rolled-up holiday pay” is unlawful, however this excuse no longer stacks up! The law has changed and rolled-up holiday pay is now an official option for irregular hours workers to receive their holiday entitlement.
This means that your agency or umbrella can offer rolled-up holiday for leave years starting on or after 1 April 2024.
What is rolled-up holiday pay?
Rolled-up holiday is simply a mechanism to receive your holiday entitlement as pay on top of your normal pay rate. It was previously unlawful as it contradicts the underlying principle of Working Time Regulations which is that everyone should have paid time off work. For this reason many agencies and umbrellas accrue holiday pay on behalf of their workers, which should then be paid to workers when they take a break.
Why should rolled up holiday be allowed?
The problem with agencies and umbrellas accruing holiday for their workers is the opportunity to unfairly profit from it. Dubious practices emerged which legally (albeit wrongly) prevented workers from receiving the holiday money that had been set aside for them.
Rolled up holiday pay prevents it being wrongly withheld from you because you receive your holiday at the same time as you receive your normal pay. Importantly this means that you are not entitled to receive any pay when you do take holiday.
What if I don’t want rolled up holiday?
The new law does not force you to have rolled up holiday pay, it just allows it to be an option. Your agency or umbrella will advise on how they process your holiday entitlement, and best practice would be for you to choose whether this is rolled up (i.e. paid on top of your normal rate) or accrued (i.e. paid when you take time off).
The new legislation does not dictate that agencies and umbrellas must offer rolled-up holiday pay, but there is no reason for them not to – unless they plan to profit by withholding your money.
