How Does Umbrella Holiday Pay Work?

When your temps/contractors are employed and paid by an umbrella company like Exceed Contracting, they’re legally entitled to 28 days paid annual leave (pro rata) – so a break from working doesn’t have to mean a break in their income.

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

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 the basic pay rate and additional pay each time they’re paid, and is subject to all usual deductions.

We provide umbrella holiday pay in two different ways, and our contractors can choose whichever method suits them best:

Option 1: Accrued Holiday Pay

• Each time a worker is paid by Exceed Contracting, their holiday pay entitlement (12.0689% of their basic pay rate and additional pay, per payslip) will be set aside in their ‘accrued annual paid leave reserve fund’, and paid out to them – subject to the individual’s usual deductions for tax, national insurance etc – when they 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 our payslips (or payslip illustration).
• We also set aside ‘Accrued Employment Costs’ from our Company Income received, equivalent to 17.3% of the worker’s ‘Accrued Holiday Pay Deduction’. This is used to pay the employment costs that Exceed Contracting is obliged to distribute when accrued holiday pay is paid out.
• The worker decides how much of their accrued holiday pay fund they would like to receive, as and when they require it – eg to go on holiday, to receive extra income (in addition to statutory sick pay) if they’re off sick, or to get paid between assignments. This may be beneficial if they’re not disciplined enough to save money for when they’re not working.
• An individual can only receive money that has been built up in their annual paid leave reserve fund. If they ask for their your accrued holiday pay to be paid out, they will need to work more and build up more reserves to get paid when they next take annual leave.
• Our holiday year ends on 5^th April, and accrued holiday pay cannot be carried forward. Any money that remains in an individual’s annual paid leave reserve fund will automatically be paid out to them by Exceed (subject to relevant deductions) in their last payment before or on 5th April.
• The current monetary value of a worker’s accrued annual paid leave reserve fund is shown in the “Messages” section of their 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 holiday pay, our Umbrella employees can chose to receive their holiday pay from Exceed Contracting in advance.
• This means we make advance payments of their annual leave entitlement each time they’re paid (calculated as 12.0689% of their basic pay rate and additional pay, per payslip).
• This means their weekly/monthly income is slightly higher than it otherwise would be; but as they will already have received their paid leave entitlement in advance, they will not build up an annual leave reserve fund. They will not have a fund to draw money from when they take annual leave or have a gap in assignments.
• Advanced holiday pay might be attractive if a person prefers more short term income, or if they don’t intend to take any leave during their current assignment.
• Nevertheless, since they’ll not have an accrued annual paid leave reserve fund, we recommend that they save their advanced holiday pay so that’s available if/when they have time off from work.

We help make holiday pay go even further!

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

Which type of umbrella holiday pay is right for your candidate?

If your candidate is still unsure whether to chose accrued or advanced holiday pay from Exceed Contracting, our friendly team are here to talk you them through their options.

They also have the right to change their selection at any point after they’ve signed up.

Call 0800 612 8787 or Refer to Exceed today!