Recently BBC Radio 4’s Moneybox programme, reported that an undisclosed umbrella company withheld roughly £6,000 in holiday pay from a contractor. The programme spoke to an unnamed contractor, referred to as Steve, who was eventually paid the holiday pay he was due after threatening employment tribunal action. 

Steve, a software developer, had been working via a limited company but, ahead of the off-payroll reforms in the private sector, had resumed his engagement using an umbrella company. He, alongside multiple contractor colleagues, had been offered only one option of umbrella company that they were obliged to use. During the 2020 festive period, Steve and his colleagues were given a period of mandatory enforced leave by their client. When they returned to work in the new year, Steve and his colleagues submitted a holiday pay request to their umbrella company. However, as the request was submitted outside of the calendar year that the holiday was taken, the request was refused by the umbrella company. It was only when Steve and his colleagues threatened employment tribunal action that the umbrella company paid out the outstanding monies that the contractors were due.

Whilst the umbrella company itself was not named, it was revealed that the umbrella is a member of the Freelancer and Contractor Services Association (FCSA). The FCSA are a “leading membership body dedicated to raising standards” and are recognized as the industry’s compliance gold standard. They were unavailable to appear on the programme however, they provided a statement. The FCSA expressed that “if any of their members were in breach of their code, which includes protections for holiday pay, then they risk suspension and expulsion.” They also noted that the code is available for contractors to refer to and they are able to complain about any breaches. 

With IR35 reform around the corner, limited company contractors need to take action to ensure they are ready. Umbrella Exchange can assist those who are still unsure of their options. We work with industry leading providers for all your contracting needs including a provider that can facilitate switches and enable you to continue to use your limited company post 6 April 2021. Talk to a member of our team today on 0203 393 3881