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Hi all,

Hope you all had a good Christmas!

I have a client who is in recruitment. He pays temp workers and they accrue holiday pay as per standard practice. At the end of the year he pays them the balance of their holiday pay that they have not taken. I said I thought that the holidays would be written off and not paid but my client insists that because they are temporary workers he has to pay them.

I'm not entirely convinced, I always assumed that it was a "take them or lose them" situation. It certainly was for me in employment!

Can anyone clarify the situation for me? I guess that if it's in their contract it must be done but I'm looking to future employees etc.


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27th Dec 2012 13:21

No payment

The only circumstance in which an employee can be paid for accrued, but untaken, holiday is on leaving the employment.

Perhaps, your client terminates all his temp workers at the end of the year.


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27th Dec 2012 15:40


In the case of temporary workers surely paying them for holiday accrued and paying them for taking holiday is essentially the same thing? That is easy to claim in the case they are not on an active engagement through the agency at the end of the year.

In general though the employer has a responsibility to ensure that employees take their statutory holiday entitlement during the year, and I suspect the logic of paying the accrued holiday is to retrospectively say that the employees unengaged periods were holiday.

Personally, I'd say it's better to ensure employees "book" holiday days during the year when they don't have engagements, so that there is minimal amount accrued at the end of the year.

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28th Dec 2012 19:33

Thanks both for your comments. I understand the point starbanana & this would indeed be the best way to mitigate the problem. The job in question is shift work so the employees are able to manage the holiday situation and most have a large amount accrued. To me the client is therefore paying them twice! Ordinarily my reaction would be almost word for word Euan's response but the fact that these are temporary workers & my client's insistence made me question myself.

Think I might need to do a little more research before I can advise appropriately!

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By EveB
29th Dec 2012 00:36

holiday pay

Temporary workers engaged via agencies are paid an hourly rate + % of that as holiday pay.

The holiday entitlement accrues throught the year as the engagement progresses. If a temp takes, lets say one week holiday , an amount proportionate to this time accrued as holiday pay is paid out. 

A temp may work through the year without taking holiday. Many decide to finish the contract, terminate it and then go on holiday. So booking holiday by a temp when he/she does not have engagements does not make sense, because in majority of cases a temp is only a temp is he/she has engagements (is working). It is difficult to predict how long a temp will spend in a job - it may be an ongoing role stretching into a year or more (in which case they are likely to take some holiday), or a short term two week assignment. Also you cannot tell a temp worker when he /she should go on holiday, just so that from an accounting point of view you can accrue the smallest amount possible at the end of the year. This is also driven very much by the business need of the end client.

Apparently the law is that once a temp terminates a temp contract and at that point has accrued holidays not taken, the accrued amount is paid out by the agency (some weired take on the so called health and safety).

However in practice, if we waited until the assignment is terminated (the temp decides to leave the job and not return) a potentially huge amount would be withheld by the agency for a very long time - 2 / 3 years? Not sure I would agree to this if I was a temp. 

I dont know the exact legal paragraph but whilst some agencies insist on withholding the payment until the temp's contract is terminated, if a significant amount is accrued, the agency would terminate the engagement to pay the accrued amounts, and then would reinstate the records of the temp. So this is only a book entry kind of change. 

Other agencies would periodically pay the holiday pay when requested by the temp once a larger amount accrues.

Most however would pay at the end of the year to put matters in order before their reporting year end. This is possibly the example of your agency client.

I am not sure where the conclusion that a client is paying someone twice came from. The rate agreed with the temp is 100%, lets say only 85% is being paid out weekly as they work, 15% is then accrued as holiday pay and paid out either when temp assignment is terminated, or a larger amount accrued and the temp requests the payout or at the end of the financial year. In any of the scenarios, this is legally the temp's money, so the client should pay it at some point.



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