Every umbrella company contractor is entitled to paid holiday leave. This is due to the fact that they are an employee of their chosen umbrella company, meaning they are entitled to statutory holiday pay like every other employee in the UK.
Therefore, whether you are considering contracting through an umbrella company, or are already doing so, it's important that you know exactly how much umbrella holiday pay you should receive.
Why do umbrella company contractors receive holiday pay?
As we have mentioned, umbrella company contractors are entitled to receive holiday pay because they are employed by the umbrella company.
This is unlike self-employed contractors, such as sole traders or limited company contractors, who are not entitled to holiday pay. As self-employed workers, these contractors have to pay out of their pockets should they wish to take a break or a well-earned holiday.
This is great news for umbrella contractors and one of the many benefits to operating through an umbrella company.
But how much are umbrella contractors entitled to?
How much holiday pay should umbrella contractors receive?
Just like any other employee in the UK, umbrella company contractors are legally entitled to a minimum of 28 days, or 5.6 weeks holiday each year. The umbrella company can decide whether this includes bank holidays or not.
For part-time contractors, this works out as:
- 22.4 days holiday per year if you work 4 days per week
- 16.8 days holiday a year if you work 3 days per week
We know that many contractors work varying hours and days on their project work. If this is the case, your holiday entitlement will be worked out using the 12 weeks prior to your holiday and calculated as the average you have worked over this time period.
That's how much holiday entitlement every umbrella contractor can claim, so how much will the contractor receive?
How is umbrella holiday pay worked out?
To work out how much holiday pay contractors are entitled to contractors can simply take their gross taxable pay and multiply it by 12.07%.
The end figure is how much you will be paid when you take your annual leave.
How is umbrella holiday pay paid to the contractor?
Now you know how much you are entitled to receive in holiday pay as an umbrella company contractor, the next step is to understand how the holiday pay will be paid to you.
For umbrella contractors, there are two main ways this can occur.
Firstly, the contractor can be paid through the fixed, advanced payment method.
With this route, the contractor will receive their holiday pay entitlement every time they are paid by the umbrella company. This could be weekly, fortnightly or monthly. This method of paying holiday pay means that the contractor is always up to date with the holiday pay they are owed. This is usually the preferred method by contractors and is the most common payment method used by umbrella companies.
The other way that contractors can be paid their holiday pay entitlement is through the accrual method.
Here, the umbrella company sets the contractor's umbrella holiday pay aside and only pays the contractor when they take time off.
However you receive your umbrella holiday pay, you will always be able to see how much holiday pay you have received on your payslip which you will receive from the umbrella company every time you are paid. This means contractors will always have a record of how much holiday pay they have received to ensure they are receiving their full entitlement.
Do umbrella contractors receive any other benefits?
That's how umbrella company holiday pay works for contractors. However, it is worth noting that umbrella contractors are also entitled to a range of other statutory benefits.
Firstly, umbrella company contractors can receive statutory sick pay like any other employee in the UK when they fall ill and cannot work.
Should this happen, this means that contractors can rest assured that they will still get paid, taking a weight off their shoulders.
Statutory sick pay is set at a rate of £99.35 per week, meaning this is what contractors will receive if they can't do the contract at hand due to illness.
Contractors can claim this amount for up to 28 weeks each year.
Any umbrella contractor can claim statutory sick pay, as long as they:
- Are an employee of the umbrella company
- Earn an average of £123 or more each week before tax and National Insurance. If you, like many other contractors, work varying days and hours, this will be worked out using the average of the previous 8 weeks to the illness.
- Have been ill for 4 days consecutively. This only includes days you would have been working.
- Are not already claiming other benefits such as maternity or paternity leave.
This takes us on to another statutory benefit that umbrella contractors can claim – maternity and paternity leave.
Contractors claiming maternity leave will get a total of 39 weeks' worth of paid maternity leave which is considered a great benefit to many umbrella company contractors.
Similarly, when it comes to paternity leave, contractors are entitled to take 1-2 weeks' paid leave which is set at either 90% of their weekly average pay of £156.66 each week, depending on which amount is lowest.
If the range of benefits offered by the umbrella company sounds like a good fit for you, the next step is to find an umbrella company that's just right for you.
Find your perfect provider with the help of Umbrella Search
To take the next steps to finding your perfect umbrella company, simply head over to Umbrella Search and get in touch today.
We will work closely with you to find an umbrella company geared towards your contracting needs, so you can rest assured you are finding the best umbrella company for you.
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