Trade unions have condemned the use of umbrella companies in construction and other sectors. The problem of umbrella companies in construction emerged earlier this year, following changes introduced by the government in April which prevented employment …
The problem of umbrella companies in construction emerged earlier this year, following changes introduced by the government in April which prevented employment agencies and payroll companies registering construction workers as self-employed.
Rather than employ workers on a standard PAYE basis, agencies are now forcing thousands of construction workers to be employed via umbrella companies.
Under the umbrella company rules the worker has to pay both the employer’s and employee’s national insurance contributions, which is 25% of their eligible pay. Highly skilled workers are officially paid the minimum wage and pay is then topped up through expenses and “performance related pay”. In many cases holiday pay is rolled up into the rate, which means that when workers actually take annual leave they are unpaid.
In many cases workers are employed under zero hours contracts, which mean workers are not guaranteed any work. In several cases the zero hours contract includes exclusivity clauses meaning that workers can’t work for anyone else.
To add insult to injury workers have to pay up to £30 a week to the umbrella company to be paid in this manner.
Workers report they are losing hundreds of pounds a month due to having to work under an umbrella company.
Andy Jones, UCATT member for Yorkshire, said: “This is an attack on wages and a further move towards casualisation in construction and other sectors. While umbrella companies might be legal they are certainly totally immoral.”
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