How Does Holiday Pay Work? A Contractor’s Guide to Summer Freedom
With the summer holidays in full swing, contractors across the UK are starting to eye up their next break — whether it’s a long weekend in Devon, a week in Spain, or just a few BBQs in the garden. But there’s one question that often crops up this time of year:
“Do I actually get paid when I take time off under my umbrella company?”
The short answer: Yes, you should. But how that happens isn’t always clear — so before you reach for your flip-flops, let’s unpack how holiday pay really works for umbrella employees.
Am I Entitled to Holiday Pay?
Working through an umbrella company means you’re technically an employee, so you’re entitled to 5.6 weeks of paid holiday a year (28 days full-time, including bank holidays). UK employment law guarantees this, and umbrella companies must include it in your pay.
But here’s the twist — you may not get a separate “holiday pay” payment when you take time off.
Why? Because of how it’s paid…
Rolled-Up vs Accrued: Two Ways to Pay Holiday
Umbrella companies usually handle holiday pay in one of two ways. And yes, it’s as fun as it sounds:
- Rolled-Up Holiday Pay
Your holiday pay is already included in your normal weekly or monthly pay. It shows up as a separate line on your payslip. It’s great because you get paid consistently — but it’s up to you to budget if you want paid time off. No extra pay magically appears when you hit the beach.
Top Tip: Check your payslip — if you see “holiday pay” listed, you’re probably on a rolled-up model.
- Accrued Holiday Pay
Your umbrella holds back a portion of your pay and pays it out when you take a break. This is a bit more old-school, but some companies still use it. You’ll see your holiday building up on your payslip over time.
If your umbrella uses this model, don’t forget to claim it before the end of the holiday year or when your contract ends — otherwise, you could lose it.
How Much Is Holiday Pay?
You’ll usually earn holiday pay at 12.07% of your gross taxable pay. That figure comes from the legal holiday entitlement (5.6 weeks) divided by the number of working weeks in a year (around 46.4).
If you earn £1,000 in a week, £120.70 counts as holiday pay—either added to your pay right away or saved to be paid out later.
Want to know your exact breakdown? Use a tailored calculation from one of our recommended umbrella companies to see exactly how your holiday pay stacks up.
Will I Still Get Paid While I’m Away?
It depends how your umbrella pays you.
- With rolled-up pay, your weekly payslips include holiday pay—but you won’t receive a separate payment when you take time off.
- If your umbrella accrues your holiday pay, you’ll need to ask them to release it when you book time off.
Not sure which method your umbrella uses? Ask your umbrella company directly, or check your Key Information Document to see exactly how you’re paid.
Can You Lose Holiday Pay?
Unfortunately, yes, in some cases — but only if your umbrella is using the accrued model and you don’t request it in time.
Some older or non-compliant umbrellas have withheld holiday pay at year-end—hardly the way to keep the summer spirit alive.
If you’re with an FCSA-accredited umbrella, you’re in safer hands. Umbrella companies must pay out any unused holiday pay, so you keep what you’ve earned—even if you miss that August beach trip.
Don’t Let Holiday Pay Catch You Out
Here’s what to do this summer:
- Check your payslip — do you see “holiday pay” listed?
- Check with your umbrella company: Do they roll holiday pay into your wages or save it up to pay later?
- Use our calculator to see how much you should be getting
- Don’t let your umbrella keep your pay — make sure it’s compliant
You work hard — and holiday pay is part of your pay package. If your umbrella can’t explain where it’s going, or it’s missing from your payslip, it might be time to switch to one that does things properly.
Check out our Top 10 Umbrella Companies — they’re transparent, compliant, and won’t leave you guessing.
Get a Free Take-Home Pay Calculation Before You Pack
Want to claim every penny you deserve—including your holiday pay?
Complete our short form and we’ll connect you with one of our Top 10 umbrella companies. They’ll give you a personalised take-home pay calculation, explain your holiday pay entitlements, and answer any questions — so you can head into summer with peace of mind and a clear payslip.
