How Does Umbrella Holiday Pay Work?

When you’re employed by a UK umbrella company like Exceed Contracting, you’re legally entitled to 28 days paid annual leave (pro rata) – so a break from working doesn’t have to mean a break in your income.

In this article we explain the differences between accrued holiday pay and advanced holiday pay, so you can chose the right option for you.

If you’re still unsure about which kind of umbrella holiday pay is best for you, please call 0800 612 8787 and we’ll be happy to help.

Umbrella holiday pay from Exceed Contracting enables temps, contractors and locums to take time off without jeopardising their finances.

All umbrella contractors employed by Exceed Contracting are entitled to 28 days paid annual leave pro rata. This is calculated as 12.0689% of your basic pay rate and additional pay each time you’re paid, and is subject to all usual deductions.

We provide our fully compliant umbrella holiday pay in two different ways, and you can choose whichever method suits you best:

Option 1: Accrued Holiday Pay

• Each time you’re paid by Exceed Contracting, your holiday pay entitlement (12.0689% of your basic pay rate and additional pay, per payslip) will be set aside in your ‘accrued annual paid leave reserve fund’, and paid out to you – subject to your usual deductions for tax, national insurance etc – when you ask to receive it.
• To check the amount that’s accrued for an individual pay period, see the ‘Accrued Holiday Pay Deduction’ in the ‘Company Income received’ table above your payslip (or payslip illustration).
• We also set aside ‘Accrued Employment Costs’ from our Company Income received, equivalent to 17.3% of your ‘Accrued Holiday Pay Deduction’. This is used to pay the employment costs that Exceed Contracting is obliged to distribute when your holiday pay is paid out.
• You decide how much of your accrued holiday pay fund you would like to receive, as and when you require it – eg to go on holiday, to receive extra income (in addition to statutory sick pay) if you’re off sick, or to get paid between assignments. This may be beneficial if you’re not disciplined enough to save money for when you’re not working.
• You can only receive money that has been built up in your annual paid leave reserve fund. If you ask for all your accrued holiday pay to be paid out, you will need to work more and build up more reserves to get paid when you next take annual leave.
• Your holiday year ends on 5^th April, and accrued holiday pay cannot be carried forward. Any money that remains in your annual paid leave reserve fund will automatically be paid out to you (subject to relevant deductions) in your last payment before or on 5th April.
• To check the current monetary value of your accrued annual paid leave reserve fund, see in the “Messages” section of your most recent payslip. Remember, this is always subject to relevant deductions when it’s paid out.

Option 2: Advanced Holiday Pay

• As an alternative to us accruing your holiday pay, you can chose to receive your holiday pay from Exceed Contracting in advance.
• This means we make advance payments of your annual leave entitlement each time you’re paid (calculated as 12.0689% of your basic pay rate and additional pay, per payslip).
• This means your weekly/monthly income is slightly higher than it otherwise would be; but as you will already have received your paid leave entitlement in advance, you will not build up an annual leave reserve fund. You will not have a fund to draw money from when you take annual leave or have a gap in your assignments.
• Advanced holiday pay might be attractive if you’d prefer more short term income, or if you don’t intend to take any leave during your current assignment.
• Nevertheless, since you’ll not have an accrued annual paid leave reserve fund, we recommend that you save your advanced holiday pay so that’s available if/when you have time off from work.

Want to make your holiday pay go even further?

• Exceed can also help you spend less on your holiday activities.
• Our FREE employee discount platform Exceed Perks at Work, has hundreds of offers to help you get more for your money – when booking holidays, flights, days out, hotels and more!
• Exceed contractors can login to perksatwork.com/exceed to view current discounts (please sign up via your invitation email first).

Which type of umbrella holiday pay is right for you?

If you’re still unsure whether to chose accrued or advanced holiday pay, our friendly team are here to talk you through your options.

You also have the right to change your selection at any point after you’ve signed up.

Call 0800 612 8787 or request a pay illustration today!