Allegations of JSA withholding contractor holiday pay surfaced in December 2020, but was there any truth to them?
To find out, our Chief Legal Officer, Martyn Valentine investigated:
The Allegation: JSA, an umbrella company providing contractor accountancy and payment solutions, withheld and more importantly, kept, the holiday pay of one of their contractors.
Who Are JSA?
This organisation now renamed Workwell, promises to give contractors all the benefits of working for themselves without the worry of compliance and tax.
Furthermore, they also say on their website that they offer everything for IR35 Assessment helping contractors to maximise their pay. The allegation was specifically that as JSA Group, the umbrella company withheld a total of £2,865 from one contractor – no small amount. No matter the total earnings of a contractor, this is a significant sum of money to lose. From a company that say publicly that they help contractors optimise pay, this seems at odds with their public persona.
What JSA Say About Withholding Contractor Holiday Pay
It is unsurprising that in this case JSA maintain there is no truth in the allegations of wrongdoing. Their reputation very much relies on this being true. If they have been taking what belongs to contractors, then they will soon lose the trust of their target group. They explain that they offer contractors two choices relating to holiday pay when they begin work.
Firstly, they can accrue their holiday pay to draw down on when they take their holiday entitlement. Alternatively, the other option which most choose, is to have it paid directly each time they receive pay, in advance. For those who do choose accrual, their current entitlement is displayed on every payslip. They insist there are reminders to take it in the appropriate holiday year. Here is the issue though, it creates a “use it or lose it” situation.
It transpires that there is indeed a loophole of this nature. The Freelancer & Contractor Services Association (FCSA) have since promised to review and fix what they have called ‘woolly wording’ in their member code. It seems to be this that led to their co-founder JSA being able to keep this sum from the contractor.
The FSCA have an ongoing investigation into this action. They also claim to have already closed the potential holiday pay gap in their code. A question remaining is just how many contractors does it actually affect? Surely it cannot be just one, and how will they rectify things? Finally, are they the only organisation to find a way to ‘legally’ do this?
Of course, JSA continue to protest innocence of wrongdoing, but the evidence of fact is clear to see. The contractor did not take their holiday entitlement at the appropriate time and JSA withholding contractor holiday pay and keeping it happened. Just because something is not illegal, does not mean it is right or fair.
Hopefully measures now set out will avoid this kind of dubious practice in the future. One thing is clear though, contractors need to be careful about their terms and conditions. Reading through the information businesses supply and ensuring they fully understand it, is a must. Whether relying on their own knowledge or getting some expert advice, this is a good step for all contractors to take.
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