New umbrella company initiatives go live to help protect contractors, and get them holiday pay

Government inaction on umbrella companies is compelling industry leaders to take steps of their own to try to clean up contractor holiday pay.

Contractor Voice and IWORK are now inviting umbrella companies that “always” pay holiday pay to their staff to tag themselves on social media with #wegiveyouyours.

'Holiday entitlement hasn't always been universal'

Aimed at building awareness, the #fairholiday campaign by the two outfits reflects concerns that many contractors “have no idea” that they are entitled to both a holiday and holiday pay.

Also according to IWORK’s Julia Kermode, umbrellas themselves may be partly to blame for such low awareness as, she says, ‘holiday entitlement hasn’t always been universal.’

Timed to coincide with the school holidays, the campaign began by Kermode posting #doyougetyours, in the hope asking contractors would in turn prompt them to ask their umbrellas.

'Don't know = don't get'

“If they don’t know they should be receiving it, then they won’t be requesting it,” the ex-FCSA CEO says, sounding aware that ‘use it or lose it’ on holiday pay is still how some brollies operate.

Kermode added: “People aren’t receiving their statutory holiday right because they don’t know they should be. [But] not knowing about it doesn’t make it acceptable to not receive it.”

However umbrella workers “can’t have it both ways” according to Paul Chamberlain, head of employment at JMW Solicitors.

'How is that fair?'

Posting online following the FCSA initially banning the retention of holiday pay by its members, but then backtracking when one member, ADVANCE, threatened legal action against the FCSA, Mr Chamberlain explained his ‘can’t have it both ways’ assessment:

“Traditional employees get an annual salary and they take their paid leave entitlement during the year in which they get paid that salary. They don’t get their annual salary plus an additional payment for annual leave.

“Umbrella workers seem to think that they should be in a better position than traditional employees - if they want to work 52 weeks of the year and take no holidays, they still expect to receive an additional payment for the 5.6 weeks’ annual leave they haven’t taken.

“So they -- and those who represent them -- argue that they should get paid for 57.6 weeks instead of the 52 weeks that traditional employees get paid for. How is that fair?

“And, how does it implement the health and safety objectives behind the introduction of the Working Time Directive and the Working Time Regulations?”

'Vital umbrella contractors know they have a statutory right to holiday pay'

Since Mr Chamberlain’s comments, compliance organisation Professional Passport has said that transparency, rather than the strict legal position, is what ought to guide umbrella companies in relation to their policies on holiday pay.

And last night, the organisation’s CEO said he was happy to back the IWORK/Contractor Voice #doyougetyours campaign – which is endorsed by the FCSA too.

“It is vital that workers know their holiday pay rights,” Professional Passport’s Crawford Temple told ContractorUK. “Any campaign that serves to educate and inform workers about their entitlements has to be a good thing.”

Holiday pay abuses by umbrella companies is one area which may be within the remit of the Single Enforcement Body – a government body promised often, but still yet to emerge.

'Concerns about their employment'

With no known timetable given to industry as to when the SEB will operate, JobsAware chairman Keith Rosser is another who is trying to fill the void left by the government.

“We have gone live with a pilot awareness scheme for the umbrella sector, backed by [umbrella company] Workwell and [consultancy] Pendragon,” he says.

“This is not an accreditation scheme but instead offers five agreed principles, one of which is that payment intermediaries who join agree to work proactively to protect contractor rights.”

Another of the agreed principles is to signpost contractors to JobsAware, a charity, in the instance that they need help or advice or have “concerns about their employment.”

'Uncertainty surrounding Single Enforcement Body'

Mr Rosser said: “This is even more necessary in light of no Employment Bill and uncertainty surrounding the Single Enforcement Body.

“To be promoted by the FCSA, Professional Passport and APSCo, the scheme is already live now, as participating brollies are carrying the JobsAware logo on their contractor payslips.”

Last night, Professional Passport confirmed its backing of the scheme, saying despite being at its “very early stages,” the five agreed principles seem “positive and well-intentioned.”

But given ‘badges’ aren’t a panacea, Mr Temple cautioned: “There’s still a lot of work needed to put the meat on the bone however, and to prevent it from being just another logo.” 

'Some distant time in the future'

Yet even rival campaigner Ms Kermode sounds pleased that the umbrella sector clean-up effort is attracting more and more hands.

She told ContractorUK:“There has been a lot of talk about regulation being the answer, but the issues [affecting the users of umbrella companies] cannot wait until some distant time in the future, [such as] when the Single Enforcement Body will be responsible for them. If the SEB is ever actually created, that is.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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