Nearly 1 Million UK Workers Miss Out on Holiday Pay Each Year, Worth Over £2 Billion

Understanding your rights as a temporary or agency worker is important, especially when it comes to holiday pay. From time to time, media coverage has highlighted confusion across the sector about how holiday pay is calculated and paid, and where policies aren’t always clearly explained, some workers may not have received their full entitlements.

Research from the Resolution Foundation shows that nearly 1 million UK workers each year miss out on holiday pay, amounting to over £2 billion in lost wages. This makes it even more important to understand your rights and ensure you receive everything you’ve earned.

At Arc, we like to keep things simple and transparent, which is why our holiday pay is paid at the time you earn it. On each payslip, you will see the details of you shift along with the corresponding holiday pay. This way we ensure you have all the money you are due without having to ask for holiday pay, worrying about how much you are owed if you decide to leave or if you are at risk of losing any money having not requested holiday in a certain timeframe.

Ginny Verdon, Head of Payroll & Compliance at Arc

However, we’ve received feedback from our team members who have had difficulties in receiving holiday pay from similar companies within our industry.

If you work through an agency as a temporary or casual worker, you are legally entitled to paid holiday, just like full-time employees. This applies whether you’re a UK resident or an international student working on a visa - your entitlement does not change. The law states you’re entitled to 5.6 weeks (28 days) of paid holiday per year based on a full-time working pattern.

For agency and temporary workers paid hourly, this is usually calculated as 12.07% of your total hours worked. In practice, this means that for every hour you work, you earn holiday pay on top. Some employers allow you to ‘bank’ these hours and pay holiday pay when you book time off.

You are legally entitled to be paid in full for 12.07% of your hourly earnings for the entire time you are employed, even if you haven’t claimed it yet. It is not legal for an agency to refuse payment by saying you haven’t claimed in a certain period or because you have left and received your P45.

If you’re unsure how to access any accrued holiday pay, check your contract or key information document. If you don’t have these, your employer can provide them and explain their holiday policy. If you still cannot access this information, contact ACAS for guidance. From April 2026, the Fair Work Agency (FWA) will make this a key priority, helping ensure all workers receive the pay they’re legally entitled to - a move we fully support.

We’re encouraged that these changes are on the horizon, helping ensure all workers receive the pay they’re legally entitled to.