An unnamed umbrella company was recently accused of withholding thousands of pounds of holiday pay from its contractors on BBC Radio 4’s Moneybox programme. The umbrella company, whilst not named by the programme was identified as a member of the Freelancer and Contractor Services Association (FCSA) and is claimed to have withheld around £6,000 in holiday pay from a contractor.
The programme spoke to an anonymous contractor, referred to as “Steve”, who explained that he alongside multiple colleagues experienced the same treatment. Steve, a software developer, had been working via a limited company but had resumed his engagement using an umbrella company ahead of the Off-Payroll reforms in the private sector. The client offered one option of umbrella company that Steve and his colleagues were obliged to use.
During the 2020 Christmas period, Steve and his contracting colleagues were subject to a period of mandatory enforced leave by their client. Upon their return to work on January 4th the contractors requested holiday pay for their period of leave, but the request was denied. As the holiday pay request was made outside of the calendar year in which the leave was taken, the umbrella company argued that the claims weren’t valid. Steve went on to explain that he and his colleagues had to threaten employment tribunal action before the umbrella company were prepared to pay out.
The FCSA were not available to appear on the programme, however they stated that “if any of their members were in breach of their code, which includes protections for holiday pay, then they risk suspension and expulsion.” Adding that “contractors can refer to the code and complain about any breaches.”
Dave Chaplin from Contractor Calculator also shared his thoughts on the programme. Chaplin asserted that more needed to also be done by the Government to prevent similar situations arising in the future. He noted that current efforts including the impact of the legal requirement for agencies to provide workers with a Key information Document had fallen flat. “This became law in April 2020, and it’s something the agency is supposed to give to the worker. But from a survey of 3,000 contractors that we recently conducted, 86% of respondents said they’d never even seen a Key Information Document.”
As the deadline for IR35 reform approaches, limited company contractors need to take the appropriate steps to ensure they are ready for the changes. ContractingWISE work with a wide range of hassle-free services that can assist you, to talk to a member of our team call: 0203 642 8679