You do the hours. You take the contracts. But holiday pay is one of the places umbrella contractors most often get shortchanged, sometimes without even realising it.
Two big things changed recently. First, the Harpur Trust ruling changed how holiday pay is calculated. Second, the Fair Work Agency launched in April 2026. Both affect you as an umbrella contractor.
This guide explains how your umbrella company employer handles holiday pay. It also shows what to do if something doesn’t look right.
What holiday pay are you entitled to as an umbrella contractor?
You’re entitled to 5.6 weeks of paid annual leave each year. For a standard five-day week, that works out to 28 days. If your hours vary, your entitlement is still 5.6 weeks. It’s based on a 52-week average of the weeks you actually worked. This is set by the Working Time Regulations.
Your umbrella company is your legal employer. That means it has the same holiday pay obligations as any other employer. Holiday pay is not a bonus or a perk. It’s a legal right, and you earn it from day one.
Public holidays are usually included in your 28 days. Your contract may give you extra days on top, so check it to be sure.
How is umbrella holiday pay calculated in 2026?
How your holiday pay is calculated depends on which method your umbrella uses. If it’s rolled-up pay, 12.07% of your earnings is added to each payslip. If it’s accrued pay, the calculation uses a 52-week average of actual earnings, not a flat percentage. That changed after the Harpur Trust ruling.
This matters because if your hours vary, using 12.07% for accrued pay can leave you underpaid. The 52-week average is fairer because it’s based on what you actually earned, not a percentage of a moving total.
To estimate your take-home pay including holiday, use our umbrella pay calculator.
What is the Harpur Trust v Brazel ruling?
The Harpur Trust v Brazel case is a 2022 Supreme Court ruling. It changed how holiday pay is calculated for workers with irregular hours. The 12.07% method can’t be used for accrued pay when hours vary. Employers must use the 52-week average earnings method instead.
If your hours vary, your umbrella can’t just take 12.07% of your total pay. That isn’t enough. They must look at your last 52 paid weeks, work out your average weekly pay, and then use that figure to calculate what you’re owed.
The ruling hit the umbrella industry hard. Many providers had used 12.07% for all workers for years. Some had to backpay contractors. Some are still catching up.
Look at your payslip. Is your holiday pay shown as a flat percentage, or is it based on a 52-week average? If you’re on accrued holiday and your hours vary, you want to see the latter.
One important note: rolled-up holiday pay at 12.07% is still legal. The government confirmed this in 2024 for irregular hours workers. But it must be in your contract, and it must appear as a separate line on every payslip. If it’s rolled up, the percentage is added with each payment. If it’s accrued, the 52-week method applies.
What is rolled-up holiday pay?
Rolled-up holiday pay is added to your payslip every time you’re paid. It’s a percentage of your gross earnings, not a bonus. For most umbrella contractors, that rate is 12.07%. You don’t get extra pay when you take time off, because you’ve already received it in earlier payslips.
Every time you’re paid, you’ll see a holiday pay line. It might say holiday pay included or holiday pay (12.07%). That isn’t a mistake. It’s your entitlement, paid out as you go.
You need to budget for time off yourself. When you don’t work, there’s no extra payment. The holiday element was already included in earlier payslips.
For rolled-up holiday pay to be valid, three things must apply. Your contract must state it clearly. It must show as a separate line on every payslip. And it must genuinely reflect 12.07% of your earnings.
If any of those are missing, something is wrong with how your holiday pay is being handled.
What is accrued holiday pay?
Accrued holiday pay means the umbrella holds your pay back. You get it when you take time off or when you leave. The amount is based on a 52-week average of your actual earnings, not a flat percentage. This follows the Harpur Trust ruling.
Think of it as a pot that fills up as you work. When you book time off, you draw from that pot. When you leave, you get whatever is left.
This method suits contractors on longer or more regular contracts. But keep an eye on your pot. Some umbrella companies won’t release accrued pay unless you ask. And some contracts let unused holiday expire at the end of the leave year.
Check your payslip. If your umbrella uses accrual, it should show a running holiday balance. If it doesn’t, ask for a breakdown in writing.
Can you request time off as an umbrella contractor?
Yes, you can request paid leave. But the request goes through your umbrella, not your agency or client. Give at least double the leave you want as notice, plus one extra day. If you want a week off, that means 15 days’ notice. Your client has no say.
If you’re on accrued holiday, they’ll release the funds during your leave. If you’re on rolled-up pay, you won’t receive extra, because you’ve already been paid that portion in earlier payslips.
Some umbrella companies have a holiday year cut-off date. If you don’t claim your holiday by then, you may lose it. Find out the deadline and claim before it passes.
What does the Fair Work Agency mean for umbrella holiday pay?
The Fair Work Agency launched on 7 April 2026. It’s the UK’s single enforcement body for workers’ rights. It covers National Minimum Wage, holiday pay, and employment agency standards. For umbrella contractors, that means a body with real enforcement powers is now watching, not just ACAS.
Before the FWA, enforcement was spread across several bodies. In practice, many complaints went nowhere. The FWA changes that.
Once its holiday pay powers are fully active, which is expected in 2027, the FWA can investigate without waiting for a worker complaint, demand repayment of underpaid holiday going back up to six years, and apply penalties of up to 200% of the underpaid amount, reduced to 100% for early repayment.
For now, raise holiday pay issues through ACAS or the Employment Agency Standards Inspectorate. But the FWA’s arrival means umbrella companies face a new level of scrutiny.
For DASA Umbrella clients, this changes nothing. DASA is FCSA and Professional Passport accredited. Both bodies audit payroll practices independently, including holiday pay. You won’t be caught out.
To understand your full rights, read our guide to umbrella contractor rights.
What new record-keeping rules apply in 2026?
The Employment Rights Act 2025 adds new record-keeping duties. Umbrella companies must log holiday pay entitlement and payments for every worker. The records must prove each worker got what they’re owed. This applies whether or not a complaint is made. Inspections can happen at any time.
That matters for contractors too. Poor records make disputes harder to resolve, and harder for you to win.
Keep your own records. Save every payslip. Note any holiday pay lines. If you take time off, write down the dates and what you received. If you leave an umbrella, ask for a full holiday pay breakdown before your final payslip arrives.
What can go wrong with umbrella holiday pay?
Three problems come up most often with umbrella holiday pay. First, payslips don’t show holiday pay as a separate line. Second, accrued pay expires at year-end before you claim it. Third, 12.07% gets applied when only the 52-week average is correct.
Here’s what to watch for:
No holiday pay line on your payslip. If you can’t see it, ask. It’s either included as rolled-up pay or held back as accrued pay. Both can be fine, but you need to know which one you’re on.
12.07% used on accrued pay. If your hours vary and you’re not on rolled-up pay, that’s a red flag. Your umbrella should be using a 52-week average.
Holiday balance not shown. If you’re on accrual, your payslip should show a running total. If it doesn’t, ask for one.
Holiday pay lost at year-end. Check your leave year cut-off date. Claim before it expires.
Underpaid on leaving. Always ask for a final holiday pay statement before your last payslip.
What to do if your umbrella company underpays holiday pay
Email your umbrella and ask for a full breakdown of how your holiday pay was calculated. Put it in writing. If that doesn’t fix it, call ACAS for free advice. You can also raise a formal complaint with the Employment Agency Standards Inspectorate. From 2027, you’ll also be able to go directly to the Fair Work Agency.
Don’t leave it too long. Holiday pay tribunal claims have time limits. Acting early gives you more options.
If you’re not sure whether you’re being paid correctly, ask your umbrella three questions:
Are we using rolled-up or accrued holiday pay?
If it’s accrued, what 52-week average weekly pay is being used as the basis?
How much holiday pay have I accrued so far?
Get the answers in writing. That paper trail matters.
Summary
Holiday pay is a legal right, not an optional extra. The Harpur Trust ruling changed how it’s calculated for accrued arrangements. The Fair Work Agency adds real enforcement behind the rules. The Employment Rights Act 2025 brings new record-keeping duties for all umbrella companies.
Know whether your holiday pay is rolled up or accrued. Check your payslips. Track your balance. And if something looks off, raise it.
Want an umbrella that handles holiday pay correctly? DASA Umbrella is FCSA and Professional Passport accredited, with full payslip transparency.
Frequently Asked Questions
How much holiday pay am I entitled to as an umbrella contractor?
You’re entitled to 5.6 weeks of paid annual leave per year. For a standard five-day week, that’s 28 days. If your hours vary, your entitlement is still 5.6 weeks, calculated using a 52-week average of the weeks you actually worked.
What did the Harpur Trust v Brazel ruling change for umbrella contractors?
The ruling confirmed that umbrella companies cannot use the 12.07% flat percentage method to calculate accrued holiday pay for irregular hours workers. Instead, they must use a 52-week reference period average. Rolled-up holiday pay at 12.07% is still legal if clearly stated in the contract and shown on every payslip.
What is rolled-up holiday pay?
Rolled-up holiday pay means your holiday entitlement is paid as an additional percentage (12.07%) on top of your regular pay each period. You don’t receive extra pay when you take time off. It’s legal for irregular hours workers if shown separately on your payslip and stated in your contract.
What is the Fair Work Agency and how does it affect my holiday pay?
The Fair Work Agency launched on 7 April 2026 as the UK’s single enforcement body for workers’ rights. It will have powers to enforce holiday pay compliance, including investigating without a worker complaint and demanding repayment going back six years. Full holiday pay enforcement is expected from 2027.
What should I do if my umbrella company hasn’t paid my holiday pay?
Raise it in writing with your umbrella company first and ask for a full calculation breakdown. If that doesn’t resolve it, contact ACAS for free advice or raise a formal complaint with the Employment Agency Standards Inspectorate. From 2027, you can also refer to the Fair Work Agency directly.
