Employers undercutting wages by keeping staff on agency contracts for years, says TUC

By agency reporter
March 6, 2018

A new Trades Union Congress (TUC) report shows that six in 10 (422,000) agency workers are being employed in the same role at the same workplace for more than a year. And that one in three (300,000) have been in the same role for over two years. One in six (122,000) have been in the same role for more than five years,

The TUC says that many of these workers’ employers are deliberately paying them less than their permanent colleagues.

A loophole – which the TUC has dubbed “the Undercutters’ Charter” – allows employers to pay agency staff less, even when they do identical roles to permanent colleagues.

As a result agency workers are paid £1.50 less an hour, on average, than permanent staff. However, at some workplaces this pay penalty can be as high as £4 an hour or £7 for those working anti-social shifts.

The industries with the highest numbers of ‘long-term’ agency workers are:

  • Banking and finance – over 80,000 agency workers who have been in the same role for over a year.
  • Distribution, hotels and retail –over 70,000 agency workers who have been in the same role for more than a year.
  • Manufacturing – over 65,000 agency workers who have been in the same role for a year or more.

The report shows that young workers are particularly risk of being trapped in insecure agency work. Two-fifths of agency staff employed for more than a year are aged 16-35.

The government announced last month, as part of its response to the Taylor Review, that it will launch a consultation on whether to get rid of this agency worker loophole. But the TUC says ministers should scrap the loophole now.

TUC General Secretary Frances O’Grady said, “Employers are keeping people on agency contracts to drive down wages.

“Two people working next to each other, doing the same job, should get the same wage. But bosses are exploiting a loophole in the law that allows them to pay agency workers less.

“The government must scrap this loophole now – it’s an Undercutters’ Charter.

“The Taylor Review called for agency workers to stop being treated like second-class citizens. Ministers must get on with ending the Undercutters’ Charter.”

The TUC has long called for the abolition of a loophole known as the Swedish Derogation. This loophole allows agency workers placed with companies to be paid less than direct employees, provided the agency agrees to continue paying them for at least four weeks at times when it is unable to find them work.  The UK government could decide to introduce regulations removing this loophole at any time.

Examples of companies using the Swedish Derogation include:

Agency workers account for 97 per cent of British Telecom’s call centre staff. The vast majority are employed on ‘pay between assignment’ contracts, meaning they receive far less pay than their permanent counterparts who are doing the same job. 

CWU – the union representing workers at BT – has found that some agency workers at the company are earning £500 a month less for doing the same work as permanent colleagues.

A large number of Argos’ warehouse staff are employed on agency contracts. They earn £4.36 per hour (63 per cent) less than permanent warehouse staff. 

Agency workers looking for work at Argos have little choice but to accept ‘pay between assignment’ contracts.  If they refuse these terms and conditions they will not be offered work by the agency. 

The TUC’s Great Jobs Agenda is calling on employers to ensure workers have:

  • The ability to have their voice heard at work.
  • Fair pay.
  • Regular hours.
  • Fair treatment – and freedom from discrimination.
  • A safe and healthy workplace.
  • The opportunity to learn and progress.

* Read Ending the Undercutters' Charter: Why agency workers deserve better jobs here

* TUC https://www.tuc.org.uk/


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