When I use an umbrella company, will I receive payments such as sick pay and holiday pay?

When you register with an umbrella company, you become an employee and will receive payments such as sick pay (if required) and holiday pay. Please continue reading to learn more about statutory employment rights and payments and how they work when registering with an umbrella company.

Will I receive payments such as sick pay and holiday pay when working via an umbrella company?

The short answer is yes – you will receive payments such as sick pay (if required) and holiday pay when working via an umbrella company. This is because when you register with an umbrella company, they become your employer, and you are their employee (even though the work you complete is for the end client). As an employee, you are entitled to statutory employment rights. Please be aware that some of these rights require a minimum length of continuous employment before you qualify.

Sick pay

If you become unwell and are not able to work, you could be eligible for statutory sick pay. Sick pay is paid by your employer (for example, your umbrella company) for up to 28 weeks, and you could get £116.75 per week. If you are eligible for sick pay, you will be paid for all the days you are off sick that you would typically have worked – except for the first three days – and tax and national insurance will be deducted.

You must tell your umbrella company you’re sick and unable to work before the deadline they set or within seven days if they have not set one. Please get in touch with your umbrella company to find out how to notify them that you would like to claim SSP and the deadline.

If you are off work for more than seven days in a row (including non-working days), you must give your umbrella company a sick note.

Holiday pay

As part of the Working Time Regulations 1998, workers (including most part-time, agency, and zero-hours workers) have the right to at least 5.6 weeks/28 days of paid leave per year. As an umbrella company employee, holiday pay is calculated at 12.07% of your taxable income. Similarly to the Employer’s National Insurance and other employment costs, holiday pay is deducted from the assignment rate and paid out to you each payday or accrued until you request it.

What other employment benefits are available to employees of umbrella companies?

When you become an employee of an umbrella company, you may also be entitled to statutory maternity or paternity pay.

Maternity pay

When you take time off to have a baby, you may be eligible for statutory maternity leave and statutory maternity pay. Statutory maternity leave is 52 weeks. You do not have to take 52 weeks, but you must take two weeks’ leave after your baby is born (rising to four months if you work in a factory). Statutory maternity leave consists of:

• Ordinary maternity leave – first 26 weeks
• Additional maternity leave – last 26 weeks

You can receive statutory maternity pay for up to 38 weeks, starting when you take maternity leave. Statutory maternity pay is paid the same way as your normal salary. For example, monthly or weekly taxes and national insurance are deducted. If eligible, for the first six weeks, you will get 90% of your average weekly earnings (before tax) and then 90% of your average weekly earnings or £184.03 (whichever is lower) for the next 33 weeks.

Paternity pay

If you take time off because your partner is having a baby, you are adopting a child, or you are having a baby through a surrogacy arrangement, you could be eligible for paternity pay, one or two weeks of paternity leave, or shared parental leave and pay. If the baby is due after 6^th April 2024 or on or after 6^th April 2024 for adoption, you can take one or two weeks of paternity leave. You can take them together or separately if you take two weeks’ leave.

Statutory paternity pay is £184.03 per week or 90% of your average weekly earnings (whichever is lower). The money is usually paid while you’re on leave and is paid the same way as your wages, for example, monthly or weekly. Tax and National Insurance will be deducted.

More information is available on the government’s website

The information on this page is intended to provide a brief overview of statutory employment rights available to umbrella company employees. Please visit the government’s website to learn about statutory employment payments such as sick pay and holiday pay.

If you are an employee of Churchill Knight Umbrella and would like more information about statutory employment rights and payments, please call our Umbrella Customer Service team at 01707 669026.

If you are not an employee of Churchill Knight Umbrella, please get in touch with your current employer.

Churchill Knight Umbrella

Churchill Knight Umbrella is a leading umbrella payroll provider for contractors and freelancers in the UK. We have helped thousands of contractors get paid by providing a compliant, transparent, trustworthy payroll service. To request a take-home pay calculation or to learn more about our umbrella service, please call our friendly team on 01707 871622.