TimeClock 365 works with UK businesses that rely on temporary staff supplied by recruitment agencies — and one question comes up again and again: who actually owes the holiday? When a worker is placed by an agency, and sometimes paid through an umbrella company on top of that, three organisations touch the same shift. This guide explains who is responsible for statutory annual leave, what changes after the 12-week qualifying period under the Agency Workers Regulations 2010, and what the hiring business should track to stay out of disputes.

The three-way relationship: hirer, agency, umbrella

A typical temporary placement involves:

  • The hirer — the business where the worker turns up and does the work.
  • The employment agency — which finds the worker, places them with the hirer, and invoices the hirer for the hours worked.
  • An umbrella company (sometimes) — which employs the worker, runs payroll, and pays them after receiving funds from the agency.

Holiday entitlement follows the party that pays the worker. Where the agency pays the worker directly, the agency is normally responsible for holiday pay. Where an umbrella company employs and pays the worker, the umbrella company is responsible. The hirer rarely pays holiday directly — but, as we'll see, the hirer's timesheet data is what every holiday calculation is built on.

Day-one holiday rights: 5.6 weeks under the Working Time Regulations

Agency workers are "workers" for the purposes of the Working Time Regulations 1998, so they are entitled to the statutory minimum of 5.6 weeks' paid annual leave from their first day. This is not something they earn after 12 weeks — it applies immediately.

Because most agency workers have irregular hours, their leave usually accrues in proportion to hours worked. For leave years starting on or after 1 April 2024, irregular-hours and part-year workers accrue holiday at 12.07% of hours worked in each pay period, and employers of these workers may lawfully use rolled-up holiday pay (paying 12.07% on top of each pay packet) as long as it is shown as a separate line on the payslip. We cover the calculation mechanics in more depth in our guide to holiday entitlement for zero-hours contracts.

What changes after 12 weeks: equal treatment on annual leave

The Agency Workers Regulations 2010 (AWR) add a second layer. Once an agency worker has completed a 12-week qualifying period in the same role with the same hirer, they are entitled to the same basic working and employment conditions as if they had been recruited directly. These "basic conditions" include:

  • pay (including holiday pay),
  • working time, rest breaks and night work,
  • annual leave.

In practice this means that if your directly employed staff in a comparable role receive, say, 28 days plus 3 extra contractual days, the agency worker should receive that enhanced contractual entitlement too once they pass 12 weeks. Equal treatment does not extend to everything — occupational sick pay, company pension schemes and redundancy pay are outside the "basic conditions".

How the 12 weeks are counted

The 12 weeks are calendar weeks in which the worker does at least some work in the same role with the same hirer — they do not need to be full-time weeks. Some breaks (such as short gaps between assignments) pause the clock rather than resetting it, while a substantively different new role or a long enough break can restart the count. Because this depends on the worker's actual attendance history at your site, accurate week-by-week records are the only reliable way to know when equal treatment has kicked in.

The hirer's information duty

The agency cannot apply equal treatment unless it knows what your direct employees receive. Under the AWR, hirers are expected to supply agencies with the relevant information about their basic terms — including holiday entitlement — and a hirer that fails to do so can share liability if a claim is brought. Keeping an up-to-date summary of your leave policy by role is a simple way to meet this.

Umbrella companies: new scrutiny in 2026 and beyond

Umbrella company arrangements have long been a source of holiday pay complaints — for example, where holiday pay is quietly deducted from the worker's rate rather than paid on top. The Employment Rights Act 2025 brings umbrella companies within the scope of the Employment Agencies Act 1973, giving the new Fair Work Agency (established April 2026) a route to act against umbrella providers that fail their obligations. Fuller regulation of umbrella companies is expected to phase in from 2027.

Separately, from 6 April 2026 all employers — agencies and umbrellas included — must keep adequate records of holiday entitlement and holiday pay for six years. For hirers, this raises the stakes on the data you send upstream: if your timesheets are wrong, the agency's and umbrella's holiday records inherit the error.

What the hirer should track

Even when you don't pay holiday directly, your records drive everyone else's compliance. A practical checklist:

  • Accurate clock-in and clock-out data per shift, approved and sent to the agency on time — this is the basis for accrued holiday.
  • Assignment start dates and weeks worked per role, so you can tell the agency when an individual reaches the 12-week point.
  • Leave taken on your site, especially for longer placements where the worker books time off with your supervisors rather than the agency.
  • A current summary of direct-hire holiday terms by role, ready to share with agencies.
  • Rest break and working-time data, since these also fall under equal treatment after 12 weeks.

With TimeClock 365, agency workers can clock in using the same methods as your permanent staff — mobile app with GPS, biometric terminal, NFC badge or browser — so temporary and direct hours sit in one audit trail. Leave requests and balances can be handled through PTO and leave management, and the resulting records feed into HR compliance management reporting, making it straightforward to export approved hours for agency invoicing and to show exactly how many qualifying weeks a worker has completed.

FAQ

Do agency workers get paid holiday in the UK?

Yes. Agency workers are entitled to the statutory minimum of 5.6 weeks' paid annual leave under the Working Time Regulations 1998 from their first day of work. For irregular-hours agency workers, leave usually accrues at 12.07% of hours worked, and rolled-up holiday pay is permitted for leave years starting on or after 1 April 2024.

Who pays holiday pay for an agency worker — the agency or the business where they work?

Holiday pay is normally the responsibility of whoever pays the worker: the employment agency if it pays them directly, or the umbrella company if the worker is employed through one. The hiring business rarely pays holiday directly, but its timesheets determine how much holiday accrues.

What holiday rights does an agency worker gain after 12 weeks?

After a 12-week qualifying period in the same role with the same hirer, the Agency Workers Regulations 2010 entitle the agency worker to the same basic conditions as a comparable direct recruit, including annual leave. If direct employees receive enhanced contractual holiday above 5.6 weeks, the agency worker should receive the same.

Do the 12 weeks have to be continuous for agency workers?

No. The 12-week qualifying period counts calendar weeks in which the agency worker does some work in the same role with the same hirer. Certain breaks pause the count rather than reset it, while a substantively different role or a long enough break can restart it.

Can an umbrella company deduct holiday pay from a worker's rate?

Workers employed by an umbrella company are entitled to statutory paid holiday, and the umbrella company is responsible for paying it. Arrangements that effectively fund holiday pay out of the worker's own agreed rate are a known source of complaints, and the Employment Rights Act 2025 brings umbrella companies within Fair Work Agency oversight via the Employment Agencies Act 1973.

What records should a business using agency workers keep?

A hirer should keep accurate shift-level hours, assignment start dates and weeks worked per role, any leave taken on site, and a summary of direct-hire holiday terms by role. These records let the agency calculate holiday correctly and show when the 12-week equal-treatment point has been reached.

This article is general information, not legal advice. For guidance specific to your business, contact ACAS or a qualified UK employment solicitor.