Umbrella Holiday Pay - What are my Options?
With the recent changes to Holiday pay for Umbrella employee’s, and rolled up being seen as a acceptable default for umbrella companies to operate, Pay Guardians have chosen the opposite stance and have no plans to change. We operate a ‘saved’ holiday option as default. We recognise the importance of taking holiday days without the stress and financial implications. That rest and recuperation time is important and should be taken without the worry of pay being short. However we do understand this does not work for everyone and you are able to opt to have your Holiday rolled into your payroll each time it is processed. ITS YOUR CHOICE! Hear our Operations Director Bev’s view and how you should take into account all scenarios and make the right choice for you.
One of the advantages of working under umbrella with Pay Guardians is the flexibility to either save up your holiday pay for when you take annual leave, or have it paid out alongside your payroll, both have their benefits, but which is right for you?
The contract/assignment rate you agree with your agency or end client will be inclusive of all the employer’s costs such as Employers NI and Employers Pension contributions. Did you know it is also inclusive of your holiday pay? Holiday is calculated at 12.07% which covers 20 days annual leave plus the 8 Bank holiday, this will be pro-rated down if you work part time or adhoc, the holiday percentage may also change if you are on one assignment or contract for more that 12 weeks in line with AWR.
When registering with Pay Guardians you will have the option to either save your holiday pay for when you take annual leave, or have it paid alongside your weekly or monthly payroll. If you have not had this option before, this can be confusing. Now more than ever it’s important to make your holiday work for you.
Saving your Holiday
For many contractors opting to save your holiday pay comes with the security of creating a ‘financial cushion’ for those everyday unexpected resource draining expenses, having that lump sum available at your request will sure take the sting out of that badly timed Tyre blowout or having that
unexpected time off you need paid are clear advantages. With Pay Guardians it’s easy to track your holiday pay growth in the year-to-date section of your payslip. Whilst your holiday allowance is 20 days per year and the 8 Bank Holidays – the money is yours and will roll and roll up until you ask us to release it. No year end, unlike many other Umbrella companies. We also will release any unused saved Holiday pay alongside your end of employment P45. (check with your current umbrella provider on their end procedures)
Not Saving Holiday
If you are an experienced contractor or have used your own limited company for your assignments outside IR35 – you may be used to not receiving holiday pay. Is now the time to start benefiting from saving this? Having your holiday pay paid each time your payroll is processed will have no impact on the tax you pay within the tax year. The benefits of having your holiday paid out alongside your payroll will provide a lift in the net payment you receive and instant access to the funds, which could relieve potential financial stress. But be aware you will need to prepare and account for any time off from your assignment being unpaid as you would have already received your holiday pay within your payroll payments.
If you are unsure of the impact these options will have on your net pay and want to make a more informed decision speak to Pay Guardians customer care team and ask for a pay comparison for both options. Call 01252 975444.
