We get asked a lot by our recruitment clients when their PAYE workers can have their accrued holiday pay released, so we’ve outlined a few useful bits of information on HP below:
Firstly it is important to consider your margins when setting up a PAYE assignment on the dashboard as forgetting about the holiday pay and employers NI costs on top of the workers basic rate can really impact your margin!
If the worker is paid PAYE, holiday is accrued at 12.07% on top of the workers weekly wage. For example if the worker worked (40hrs at £10.00 = £400.00), 12.07 % of the £400.00 would be added onto that amount and put aside as holiday pay (£48.28).This, along with employers national insurance would need to be factored in when working out your charge rate to guarantee you’re making a profit.
The standard process for holiday pay through and Umbrella company is that HP is accrued each and every week at 12.07% of the workers weekly gross wage. For example if the workers gross pay was £400.00, £48.28 would be taken from that amount and put aside as holiday pay.
A lot of temporary workers who are paid through Umbrella companies request that their weekly accrual of holiday pay is released along with their wages each and every week. Many companies can do this, however if you are paying the worker PAYE, we would not allow you to release the holiday on a weekly basis as it would deem we are encouraging them not to take any annual leave. Holiday pay is for exactly what it says; if the worker takes some time off from work, money is there to cover them whilst they’re not being paid, not just for some extra cash in their weekly wage.
If you have any queries, please feel free to contact us on 01305 233178 or email us firstname.lastname@example.org