You work hard. You take contracts seriously. But when it comes to holiday pay, things get messy. If you’re working through an umbrella company, you need to know precisely how holiday pay works. Because if you don’t track it, you might be leaving your money on the table.
What’s the legal holiday pay for umbrella workers?
You’re entitled to 5.6 weeks of paid holiday annually if employed by an umbrella company. This includes contractors working irregular hours or part-year. Umbrellas must treat you the same as if you were a full-time employee under UK law.
This rule comes from the Working Time Regulations. If you work five days a week, your holiday is 28 days yearly. This includes public holidays unless your contract says otherwise. If your hours change every week, your holiday entitlement is based on the average number of days or hours you worked over the last 52 paid weeks.
Umbrella companies are your employer on paper. That means they carry legal responsibilities like any other employer. Holiday pay is not optional. You earn it as you go, just like your wages.
How is holiday pay calculated?
Holiday pay is usually 12.07% of your gross taxable pay. That figure is based on dividing your annual leave (5.6 weeks) by the remaining 46.4 working weeks in a year.
Here’s a quick breakdown:
| Weekly Pay | Holiday Pay (12.07%) |
|---|---|
| £400 | £48.28 |
| £600 | £72.42 |
| £1,000 | £120.70 |
If you work less than a full year, you still earn holiday on a pro-rata basis. Say you work three months and earn £7,000 in total, you’d earn around £844.90 in holiday pay.
If your pay is irregular, the umbrella must look at the average weekly earnings over the last 52 weeks that you actually worked. They must ignore any weeks where you earned nothing. That average then becomes the base for calculating your holiday pay.
You can save time by using our umbrella pay calculator.
What is rolled-up holiday pay?
Rolled-up holiday pay means you’re paid holiday pay weekly along with your wages, rather than when you take time off. This method is legal if clearly stated in your contract and payslips.
It’s simple. You work a week, and your payslip shows a holiday pay line, often listed as “holiday pay included.” It’s not extra money – it’s part of your pay package, split out.
Rolled-up pay is easier to track weekly, but you won’t get a separate payout when you take a break. You’re expected to save that portion yourself.
It’s often used for contractors with short-term or flexible contracts. But the law says it must be clear. If you can’t see it on your payslip, there’s a problem.
What is accrued holiday pay?
Accrued holiday pay means the umbrella company holds your holiday pay and pays it to you when you request time off or leave the company.
This works more like a savings pot. Every time you work, a chunk of your pay is held back. When you book time off, you ask them to release the funds.
If you don’t take time off, you risk losing it. Some umbrellas don’t pay accrued holiday unless you request it. If you leave without asking, it may vanish unless you claim it before your contract ends.
Check your payslip. You should see a running total of your holiday balance if they use the accrual method. If you don’t, ask.
Can I request time off while contracting?
Yes, you can request paid time off, but it needs to go through your umbrella company, not your client or agency. The notice must be double the amount of leave requested, plus one day.
Want a week off? Give at least 15 days’ notice. It doesn’t matter what the client says – it’s the umbrella that approves your leave. They’re the legal employer, so the rules apply to them.
If you’re on an accrual system, they’ll release your holiday pay during that time. If you’re on rolled-up pay, you won’t get extra – because it’s already been included in past wages.
Some umbrellas require holiday to be taken within the same holiday year. If not, it may expire. Make sure you know your company’s cut-off date.
What if I leave the umbrella company?
You’re entitled to any unused accrued holiday pay when you leave. The umbrella must include it in your final payslip.
Let’s say you didn’t take any holiday. If you earned £30,000 while working under the umbrella, that’s £3,621 in holiday pay at 12.07%. If they held it back, they must pay that amount to you.
If you were on rolled-up pay, there’s nothing extra to claim, because you already received it. But if you’re unsure what method they used, go back and look at your payslips. If there’s no mention of holiday pay, it’s likely it was being accrued.
Don’t wait too long. Some umbrellas won’t automatically pay unless you request it. Make that request in writing before or at the end of your last contract.
What can go wrong with umbrella holiday pay?
The most common problems are unclear payslips, hidden deductions, and holiday pay being lost at year-end or never paid at all.
Sometimes you won’t see a line that says “holiday pay.” Or the umbrella may pay your full contract rate and just skip the holiday pay explanation. In that case, you might not even know if it’s included.
Other times, they might quietly keep the money if you don’t request it in time. That’s legal under some contracts, but it doesn’t make it right.
If you’re unsure, ask your umbrella company:
- Do you pay rolled-up or accrued holiday?
- Where is it shown on the payslip?
- How much holiday pay have I earned so far?
Keep records of everything. Payslips. Contracts. Emails. If something looks off, raise it in writing.
How to fix holiday pay issues
Start by reading your contract and checking your payslips. Then ask your umbrella company to confirm how holiday is handled. If that doesn’t fix it, go to ACAS or the Employment Agency Standards Inspectorate.
You can call ACAS for free advice. Or you can file a formal complaint with the EAS if your umbrella breaks the rules.
But first, give them a chance to explain. Most issues come from confusion, not bad intent. Ask for a breakdown of your holiday pay. If you’re still unhappy, get help.
The key is to act early. The longer you wait, the harder it is to recover unpaid amounts.
Final thoughts
You work the hours. You earn the rate. But if you’re not tracking your holiday pay, you could be losing money without even realising it.
Check your contract. Scan your payslips. Know if your holiday pay is being paid out or saved up. If it’s not clear, speak up.
Umbrella holiday pay isn’t a bonus. It’s not a gift. It’s your money – just in a different envelope. Make sure it reaches you. Every pound matters when you’re working contract to contract.
And if you’re ever in doubt, ask. Better to sound picky than to get shortchanged.
