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UK agency workers lose out on £500m a year in missing holiday pay

UK agency workers lose out on £500m a year in missing holiday pay

Agency workers are losing at least £500m a year in missing holiday pay and are being paid an average of 22p an hour less than employees for exactly the same work, an investigation into the fast-growing world of temporary work has revealed. Large parts of the UK economy, including transport, food processing and social care,…

Agency workers are losing at least £500m a year in missing holiday pay and are being paid an average of 22p an hour less than employees for exactly the same work, an investigation into the fast-growing world of temporary work has revealed.

Large parts of the UK economy, including transport, food processing and social care, rely on almost 1 million agency workers, 20% more than at the start of the decade. Trade unions say this temporary employment is being “supercharged” by deregulation.

Despite some better paid workers being given the flexibility they wanted, lower paid workers were losing out, said the Resolution Foundation, which found “poor and sometimes unlawful practice, undermining both the reputation of agencies and the living standards of agency workers”.

The thinktank’s two-year investigation found that agency workers faced an average penalty of around £400 a year compared with direct employees in identical jobs with identical qualifications. Missing holiday pay, the lack of auto-enrolment in pension schemes, firms getting around equal treatment obligations and covert deductions for uniforms and travel costs all contributed to the losses, the report’s authors said.

There were about 138,000 agency workers in the health and social care sectors, 131,000 in manufacturing and 83,000 in transport. Many of the places where agency work was most prevalent had higher than average unemployment, suggesting a lack of alternative employment was creating an imbalance of power between workers and employers.

In Leicester, where nearly 7% of the workforce is in agency work – more than twice the UK average of 2.9% – the unemployment rate is almost double that of the national average. There were 80 temporary employment agencies in Leicester in 2017.

“None of us are getting the hours we need,” said Gordon, who works at a plant in Leicester making tuna sandwich mix and pasta salads for a supermarket chain. “I am making the same money now working five to six days a week as I did in 1997 working three days.

“Some of the agency workers are only getting three days a week and some aren’t getting full shifts, just six hours a day at the national minimum wage. It makes it very painful and it is not like it is easy work.”

Other agency hotspots include Corby and Peterborough, in the East Midlands M1 corridor, where workers are two to three times more likely to work through an agency than in the rest of the UK. All of the top six places for agency work have above average unemployment. Britain was the third least regulated market for temporary work out of all 32 OECD nations, the foundation said.

Agency work hotspots graphic

Kevin Perry, an HGV driver from south-west England, who transports mail and parcels up trunk roads at night, said agency work was precarious, partly because people were not guaranteed a definite amount of work and could be laid off without any recourse. Perry has been an agency driver for the same firm for seven years but recently went three weeks without a shift and therefore no pay.

“We get treated differently to the staff drivers,” he said. “We don’t do it because we decide when we want to work. We do it because there’s no other option,” he said.

Much of the pay deficit resulted from agency workers being kept in the dark about their rights. They were twice as likely to be unaware of their holiday entitlement than non-agency workers, and construction workers employed through agencies for more than three months were earning an average of 76p an hour less than non-agency staff, the foundation said.

Agency work is becoming a structural part of the UK economy and the fastest rising group of agency workers is now “permanent” agency staff. They can work for years in the same job without guaranteed hours and can face sometimes bewildering legal structures which leave them vulnerable to missing out on their rights.

Steve Turner, the assistant general secretary of the trade union Unite, said: “Across most industrial sectors, agency staff are now a permanent fixture. This results in workers being routinely used and abused in order to boost company profits.”

The Resolution Foundation recommended the establishment of enforcement taskforces in areas where agency work was prevalent, such as Barking and Dagenham, Leicester, Sandwell and north-east Lincolnshire.

It also urged the government to repeal contracts that allowed firms to avoid paying agency workers the same as directly employed staff, and called for action to boost awareness of employment rights by requiring agencies to provide a standardised statement outlining workers’ entitlements on their first day of work.

Earlier this year, Acas reported that at least one in four calls from agency workers to its helpline were about not being paid properly. Regular complaints included delays to wage payments from agencies, not being paid correctly, and not being paid at all.

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