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In recent years there has been a huge increase in the number of workers forced to operate via payroll companies. Well in excess of 100,000 construction workers are employed via payroll companies. The largest construction payroll company Hudson Contract Services claims to have in excess of 93,000 construction workers on its books. Increasingly, payroll companies are operating in other industrial sectors apart from construction.
Payroll companies force workers to sign contracts, which certify that they are self-employed. This results in them being denied even the most basic employment rights such as holiday pay, sick pay and redundancy pay. As workers are officially self-employed they can be dismissed without warning.
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By forcing workers to operate via payroll companies the true employer is able to avoid paying employers national insurance contributions of 13.8 per cent per worker. A massive hidden subsidy costing the Exchequer hundreds of millions of pounds every year.
In a perverse twist it is the workers themselves who pay for the payroll company. They pay directly from their wages for the cost of the payroll company's operations. Charges can either be a percentage of a workers earnings or a flat rate weekly fee of between £15 -£25.
In moving the motion George Guy, Acting General Secretary of UCATT, said: "Payroll companies have absolutely nothing to do with construction. They put nothing into the industry yet they make a tidy living from those working within it. They are what you would call parasites."
"At a time when the Government is imposing massive cuts in public spending it seems inconceivable that the money being lost to the Treasury in this manner goes unchallenged."
In passing the motion TUC Congress has committed the TUC General Council to "campaign actively for a change in the law to prevent payroll companies being able to classify workers as self-employed".
(CD/GK)
