As an employer, Compass has a legal obligation to pay its employees holiday pay alongside their normal wages. All elements of an umbrella worker’s wage are included in the assignment rate that is sent to Compass by the worker’s agency or client. Therefore, Compass does not pay holiday pay on top of a worker’s predetermined rate, but instead splits a portion of the rate off as holiday pay. Once holiday pay has been split off, the worker can choose from one of the two options below:
Rolled-up holiday pay:
The holiday portion of the employee’s wages is added back into their gross wage, subject to tax and National Insurance, and paid out in their regular net payments.
Accrued holiday pay:
The holiday pay is deducted from the employee’s gross wage, before tax and National Insurance, and put into a separate pot. The worker can then choose to withdraw funds from their holiday pot at any time, at which point it will be treated with the necessary tax and National Insurance and paid to the worker.