Holiday pay for contractor: ask the expert


I work 15 hours a week for a recruitment agency in an ongoing contract. I am paid a set rate per hour and work set hours every week. I recently queried my holiday pay with them as it was less than my normal rate. The explanation they gave me was that the ‘system’ had a problem calculating my pro rata holiday so over a whole years worth of holiday, it would ‘work out’ to be the correct rate. Are they allowed to do this?

Answer by Laura Livingstone


Your holiday pay should be calculated based on the average of the last 12 weeks remuneration. This should be easy in your case, based on your indication that you work at a set rate per hour for a set number of hours every week. If you are not paid the correct holiday pay at the time that this holiday pay is due, you could argue that this was an unlawful deduction from wages. It is not acceptable that over a whole year it will “work out” because for most of the year you will be out of pocket and they will be in breach. The breach arises at the time that they incorrectly pay and it will not be a defence that it will “work out” or that it is a bit of a hassle to work it out on their computer system. I am not clear from your email whether you are a worker or an employee. If you are an employee, then you could raise a formal grievance with them based on their grievance procedure. It is also possible to remain working and make a claim in the employment tribunal for unlawful deduction. However, this is unlikely to be very well received, so the formal grievance route may be worth trying first. If you mention unlawful deduction from wages rather than simply that you are feeling that the pay is less than your normal rate, they might realise that you have received advice and might try and take steps to rectify it.

Whilst every care has been taken in compiling this answer, WorkingMums cannot be held responsible for any errors or omissions. This information is not intended to be a substitute for specific legal advice.

LauraLaura Livingstone is an employment lawyer for Davenport Lyons in London. Her practice focuses on contentious and non-contentious employment work, but she leans towards the non-contentious.  She has advised a wide variety of corporate clients in all areas of employment. Meet our Panel of Experts

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