More than a million temporary workers could be thousands of pounds better off under plans to tighten up holiday pay rules.
At the moment, many temps are missing out on holiday pay despite being entitled to it, according to campaigners, because they don't know they can get it. The plans have been heralded as "fantastic news", although it is not yet clear what the outcome of the proposals will be - or when new rules could come into effect.
Currently, temporary workers – including umbrella employees – typically receive holiday pay when using their annual leave entitlement. However, low awareness of rights and entitlements among these workers, including the right to claim holiday pay, means that many miss out on money they are owed.
Read more: Clever hack to avoid hefty £4 drop-off fee at Newcastle Airport
There are estimated to be around 1.65 million temporary workers in the UK as of March 2023 compared with just over 1.45 million in January 2020. The number of temporary workers in the UK had generally been climbing since 2019.
The change would mean that these workers automatically receive the holiday pay that they are entitled to on top of their salary - a system called 'rolled-up holiday pay. This would boost their earnings by 12.07% – which experts have hailed as a “life-changing” difference to temps.
Rolled-up holiday pay would see an employer pay its temporary workers the extra money on top of their hourly rate, rather than the worker having to claim for it when taking holiday. This percentage represents a worker’s equivalent annual leave entitlement.
Fred Dures, founder of PayePass, told Contractor Weekly that the reform would “prove life-changing for many of the UK’s temporary workers”. “All too often, temps and contractors have no idea that they have a right to paid holiday”, he said, continuing that this leads to questionable operators “profiting when temps and contractors forget to claim their accrued holiday pay”.
Labelling the move “long overdue”, Dures also called for “an imminent roll-out” that would put an end to these “dodgy practices” and ensure that temp workers are paid what they are owed.
IWORK founder Julia Kermode, who has called for change, said the development was “fantastic news and something we’ve been urging the government to act on”.
“By rolling up holiday pay, temporary workers will receive it on top of their wages, which means they’re guaranteed to receive it. This move could boost the average temp’s pay packet by thousands every year,” she said. “As things stand, hundreds of millions of pounds of holiday pay has been left unclaimed because temps don’t realise they’re entitled to it. These workers aren’t helped by the handful of unscrupulous umbrella companies and recruitment agencies that go out of their way to make sure this statutory right isn’t claimed, before keeping it themselves”.
“At a time when every penny counts, the move to roll up holiday pay will help hundreds of thousands of temps make ends meet. It will also go a long way to stopping dodgy businesses from lining their pockets with it. Needless to say, the sooner this is introduced, the better”.
What is rolled-up holiday pay?
“Rolled-up holiday pay” refers to a practice whereby the employer pays you an additional amount on top of your normal hourly rate of pay, with the additional amount intended to represent your holiday pay, instead of you taking the time off at the time you receive the payment. This is usually calculated at the rate of 12.07% on top of the hourly rate of pay, representing a worker’s statutory entitlement to a legal minimum of 5.6 weeks of holiday each year.
For example, if you receive the national living wage rate of £10.42 per hour (as at April 2023) then you would be paid an additional £1.26 as rolled-up holiday pay for every hour that you work. The practice of paying rolled-up holiday pay is unlawful under European law, because it means that you do not receive any holiday pay at the time holiday is actually taken.
Now read:
- Brits heading to Spain face potential delays as easyJet and Ryanair pilots consider striking
- Make sure you don't get caught out by new passport rules including maximum stay restrictions
- What are your options if your passport doesn't arrive in time?
- The difference between ABTA and ATOL and what you need to know before booking a holiday
- Travellers warned of eight holiday scams you need to watch out for when booking trips
