Umbrella company Workwell refutes contractor’s ‘withheld holiday pay’ claim

Past criticism

As previously detailed by Computer Weekly, the accrued holiday model has come in for some criticism in the past, as some umbrella companies take the view that if the money accrued is not claimed by the year end, they are entitled to keep it. Furthermore, not all umbrella companies notify contractors ahead of the cut-off date that if they do not claim it, they will lose it. 

“It is very tempting to do because all the umbrella company has to do is let sleeping dogs lie, because they’re not obliged to pay out any unused holiday pay – they just have to hope the contractor doesn’t remember to request it,” James Poyser, CEO of contractor-focused accountancy firm InniAccounts, told Computer Weekly in May 2021.

“Because if they [the contractor] don’t request it, and it’s the end of the holiday year, then the umbrella company gets to keep that money,” he said. “There is also no statutory legislation that tells umbrella companies that they need to notify contractors that they need to take holiday.”

However, that could be subject to change, in the wake of a court ruling that came to light in February 2022 involving a former employee of Pimlico Plumbers. The court ruled this individual was entitled to make a financial claim against the company to cover the cost of the paid leave he was denied while working there between August 2005 and May 2011.

In a statement to Computer Weekly, a Workwell spokesperson said its contractors are given a choice between following the accrued holiday pay model or having what they are owed dolled out to them every time they are paid.

It also said it has “highly robust” and “proactive” procedures in place to ensure all its contractors receive and are notified of any outstanding holiday pay they are entitled to claim.

“Before a worker joins, they are informed that they can either accrue holiday pay to draw down as and when they take their entitlement to paid holiday, or have it paid each time they receive their pay within their rate, in advance,” said the spokesperson. “Most people choose the latter option and the holiday pay they receive in advance is clearly detailed on each payslip.

“Where the worker chooses to accrue, both the email communication with each payslip and the payslip itself include an up-to-date balance of paid holiday entitlement and a reminder that paid holiday must be taken in the holiday year to which it relates,” the company spokesperson continued.

“In most cases, payment in lieu of untaken holiday leave is not sanctioned by the legislation or by case law and, therefore, it is important that this is handled in the right way on a case-by-case basis in compliance with the relevant rules.”

Workwell has been pursuing a buy and build business strategy in recent years, which has seen it acquire eight umbrella companies since 2018, and undergo a rebrand that resulted in it ditching its JSA Group name in February 2022.

According to the firm’s most up-to-date filing on Companies House, during the 12 months to 25 September 2020, the company reported a gross profit of £14.39m, which was an increase from £13.12m the previous year. Its website also further claims that more than 30,000 contractors rely on its services.

Freelancer and Contractor Services Association

The company is an accredited member of the Freelancer and Contractor Services Association (FCSA), which is a membership body for umbrella companies that want to demonstrate they are operating compliantly.

The FCSA undertook a revamp of its codes of conduct in October 2021, which prohibits its members from adopting a “use it or lose it” approach to contractor holiday payments, and – in a statement to Computer Weekly – it confirmed the alleged incident with Workwell is under investigation.

“The [Workwell] incident recounts the experience of an employee who terminated their employment with Workwell in December 2020. This pre-dates FCSA’s October 2021 revision of our Code, which makes it clear that a ‘use it or lose it’ approach to holiday pay is completely unacceptable. Any member found to be in breach of our Codes will be sanctioned, with the ultimate sanction being withdrawal of their membership,” said FCSA CEO Chris Bryce, in a statement.

“Notwithstanding the difference between the timing of the alleged action on the part of Workwell and the more recent revision of our codes, we are actively pursuing clarification from Workwell on this matter and when that investigation is concluded, FCSA will make a further public statement.”

Computer Weekly understands that Workwell has conducted an investigation of its own into the alleged incident outlined in the document dump, and – in its statement – the company said it “refute[s] any suggestion of wrongdoing”.

“[We] can show that we are proactive on behalf of our workers in ensuring they receive the holiday pay to which they are entitled. Our systems are highly robust in this regard,” the statement continued. “Our holiday pay policy is clearly stated in all of our relevant contract and policy documents and articulated as part of our onboarding process when a contractor joins us, in addition to the regular reminders outlined above.

“We do everything we can to encourage workers to take their annual paid leave entitlement and to ensure they do so in the correct way, in line with regulations and policies in place. We cannot comment on the individual circumstances of any worker. However, in accordance with our standard operating procedure, we proactively highlight holiday pay due and payments are made in line with these policies.”