Skip to main content

Temporary Workers and Paid Holidays

Published 9th January 2024
In this article
Share this article with others

Temporary Workers and Paid Holidays

Published 9th January 2024

Understanding temporary workers' holiday pay rights is crucial for UK employers. This introduction paves the way for exploring the legal obligations and calculations of providing holiday pay to temporary workers. As a complex area of employment law, grasping these rights is essential for compliance and fair treatment. The article aims to demystify these complexities. We offer practical advice and examples to empower employers in meeting legal obligations and fostering positive relationships with their temporary workforce.

Key Takeaways
  • Agency Workers' Regulations (2010): Ensures equal rights for temporary and permanent workers.
  • 12.07% Rule: Key formula for calculating temporary workers' holiday pay.
  • Twelve-Week Threshold: Temp workers gain equal pay and benefits after 12 weeks.
  • Exclusions Exist: Some workers, like self-employed contractors, aren't covered.
  • Employer Responsibilities: Must understand and comply with holiday pay regulations.

The Current State of Temporary Employment in the UK

Temporary employment in the UK is characterised by dynamic and evolving labour trends. As employers cope with fluctuating demands, there's a rising reliance on temporary workers in the gig economy and seasonal industries. This shift emphasises the need to grasp the holiday pay rights for this workforce. With an increasing number engaging in temporary work, understanding the legal nuances of holiday pay is crucial. 

Legal Framework: The Agency Workers’ Regulations (2010)

These regulations provide a foundation for understanding the entitlements and rights of temporary workers. This ensures they receive equal treatment compared to their permanent counterparts. The regulations specify the criteria triggering entitlements, including the duration of the assignment and the nature of the work. 

Employers must navigate these regulations to calculate and provide accurate holiday pay. The Agency Workers' Regulations aim to establish fairness and equal treatment. It aims to mitigate disparities in pay and conditions between temporary and permanent employees.

Calculating Holiday Pay for Temporary Workers

The 12.07% Rule

Calculating holiday pay for temporary workers involves applying the 12.07% rule. This is a method derived from the Working Time Regulations. This rule ensures that temporary workers receive a percentage of their pay as holiday pay. It factors in both basic pay and certain types of overtime. 

Employers must understand this formula to accurately calculate and remunerate holiday pay. Practical examples illustrate how to implement the 12.07% rule in different scenarios, providing clarity for employers navigating this complex process. Ensuring accurate calculations guarantees compliance with legal obligations.

Practical Examples

Let's take an illustrative scenario to understand the application of the 12.07% rule. Suppose a temporary worker earns a basic salary of £8 per hour and has worked 40 hours, earning an additional £2 per hour for overtime. The total pay for the week is £360. Applying the 12.07% rule, the holiday pay calculation involves multiplying the total pay (£360) by 12.07%. 

This results in a holiday pay entitlement of £43.45. This example highlights the importance of considering various elements of pay. Including overtime, when determining the accurate holiday pay for temporary workers. Employers can use such practical examples to ensure compliance with regulations and fair compensation.

The Twelve-Week Threshold

Equal Treatment in Pay and Working Conditions

Ensuring equal treatment in pay and working conditions for temporary workers is mandated by the Agency Workers’ Regulations (2010). After the qualifying period, temporary workers are entitled to the same basic conditions as permanent staff. 

This includes pay rates and contractual benefits. Employers must align these conditions for parity, fostering fairness and inclusivity. Failure to comply may lead to legal consequences and affect the well-being of temporary workers. Compliance is essential for ethical employment practices.

Exceptions and Exclusions

Certain exceptions and exclusions impact the entitlement of temporary workers to holiday pay. For instance, self-employed contractors and those genuinely in business on their account are excluded. Additionally, those employed under managed service contracts, where another employer is responsible for pay, aren't covered. Exceptions aim to define specific employment relationships. 

Employers must carefully assess the nature of the employment arrangement for applicability. Comprehending these exceptions ensures compliance and fair treatment. Misinterpretation may lead to legal issues. Employers should seek clarity on exceptions, promoting transparency and adherence to employment laws.

Employer Responsibilities and Benefits

Employers bear crucial responsibilities regarding temporary workers' holiday pay. Complying with the Agency Workers’ Regulations (2010) ensures equal treatment. Accurate calculation and timely provision of holiday pay demonstrate fair treatment and legal adherence. 

Transparent communication on holiday pay entitlements fosters positive employee relations. Regular updates on accrued leave and usage maintain clarity. Employers benefit from improved workforce satisfaction and loyalty. Effective handling of holiday pay contributes to a harmonious work environment. 

Employers should leverage clear policies and communication to navigate the legal landscape, promoting a positive employer-employee relationship.

Seeking Help and Advice

Employers navigating the complexities of temporary workers' holiday pay should seek reliable guidance and advice. Recruitment agencies play a crucial role in providing insights into legal obligations. ACAS (Advisory, Conciliation, and Arbitration Service) serves as a valuable resource for interpreting regulations. 

Clear communication with employees and consultation with HR professionals enhance understanding. Employers can access online resources and helplines for additional support. Seeking expert advice ensures legal compliance and fair treatment of temporary workers, fostering positive workplace relationships. 

Accessing various channels of assistance empowers employers to address challenges effectively and maintain legal adherence.

Role of Recruitment Agencies

Recruitment agencies guide employers on holiday pay obligations, ensuring compliance. They aid in clear communication with temporary workers, fostering positive relationships. Agencies contribute to fair and compliant practices, keeping employers updated on standards. Leveraging their expertise is crucial in navigating the complexities of holiday pay in temporary employment.

ACAS and Other Resources

ACAS (Advisory, Conciliation and Arbitration Service) offers invaluable resources on holiday pay regulations. Employers can access guidance, helplines, and online tools. ACAS promotes understanding and compliance, providing clarity on legal requirements. Utilising ACAS resources ensures accurate holiday pay practices for temporary workers, mitigating legal risks.

Common Misconceptions about Temporary Workers’ Holiday Pay

Common misconceptions abound regarding holiday pay for temporary workers. Some erroneously believe these staff members are exempt from holiday pay entitlements. However, the Agency Workers' Regulations ensure parity in this regard. Another common error is neglecting the 12.07% rule. 

Employers may miscalculate and fail to employ the required percentage-based approach. Addressing these misconceptions through clear communication and education on holiday pay rights is crucial. It prevents legal complications and ensures fair treatment.


In conclusion, it's crucial for employers to grasp and apply the holiday pay rights of temporary workers. Understanding the Agency Workers' Regulations and employing fair calculation methods is vital to ensure compliance and equitable treatment. 

Key takeaways stress the importance of proactive calculations, compliance, and seeking expert guidance when necessary. Employers must consider holiday pay as a pivotal responsibility, fostering a positive work environment for temporary workers and maintaining legal integrity.


Do temporary workers have holiday entitlement?

Yes, under the Agency Workers' Regulations (2010). Temporary workers are entitled to the same holiday rights as permanent employees.

How is holiday pay calculated for temporary workers?

The standard method is the 12.07% rule, which equates to 12.07% of the hours worked. 

Are there exceptions to holiday pay entitlement for temporary workers?

Certain exclusions apply. Particularly for those classified as genuinely self-employed or working through their own limited company.

What resources can employers use for guidance on holiday pay for temporary workers?

Recruitment agencies play a role, and resources like ACAS provide valuable information. Seeking professional advice ensures accurate compliance.

Navigating Temp and Interim Recruitment Challenges
If you're seeking expert assistance in filling temporary or interim positions, we've got you covered. Our dedicated team at Macildowie specialises in sourcing the right talent swiftly and efficiently. Explore our comprehensive services tailored to meet your unique recruitment needs.