Unite Scotland: Of Course Scottish Government Can Act on Agency Rip Off

Unite Scotland researcher Frank Gray sets out exactly the scale of the problem and what the Scottish Government can and must do.

The Scottish Government makes great play of investment in projects designed to support the development of the Scottish economy. We have witnessed the building of schools, hospitals, roads, bridges all costing billions of pounds involving huge swathes of skilled construction workers. But, the reality is that these projects are being built on the back of exploited building workers in the shadowy supply chain of the construction sector. The Scottish Government annual procurement investment is some £12 billion pounds and Unite is saying it’s high time that investment is matched by ethical responsibility from companies profiting from Scotland’s finances.


On every major construction infrastructure job of significance across Scotland, Unite has discovered that the workforce responsible for building these vital resources are being ruthlessly exploited by a myriad of construction contractors and agencies that utilise Umbrella Companies to absolve companies and agencies from responsibilities to both employees and the state. Unite Scotland has no knowledge whatsoever of workers on major infrastructure projects in Scotland being offered a choice of direct employment with major contractors. One system dominates this entire section of the industry. A recruitment agency approaches the worker with a job offer. If the offer is accepted the worker is then directed to sign up with a specific company – which will be one of the rip-off ‘umbrella’ contractors. The only choice the worker gets in this process is ‘take it or leave it.’


An umbrella company is a business that acts as a third party between a contractor and an employee. The contractor outsources its payroll functions to the umbrella company, which handles the pay of the employee and makes any necessary tax deductions. In short they are a scam, and these sorts of arrangements are being used in sectors such as the construction and hospitality industries where large numbers of temporary workers are required to work on short-term projects.


Unite found that on the Forth Crossing, and the problematic AWPR roads project, umbrella firms were deducting holiday pay from workers’ wages, and deducting both the employer and employee national insurance contributions. While wholly immoral, the use of umbrella companies is completely legal however HMRC has said that it is illegal for workers to pay the national insurance contributions of employers. But, for the projects sponsored by the Scottish Government the Umbrella Company scam remains in place with thousands of workers coerced into this type of engagement. Unite has already taken a major case forward and won, and we will, where we find evidence pursue legal cases on behalf of our members to establish the gross injustice of this type of employment.


But it stands to reason that any government that claims to be progressive has to take political action. So, Unite has set the challenge to the Scottish Government to match its Fair Work aspiration and use the procurement powers at its disposal and prevent any contractors using exploitative Umbrella Companies from delivering projects financed by the public purse. This could be done easily if the Scottish Government showed the political leadership required and ruled that any company tendering for Scottish Government projects had to agree to trade union recognition on every site of the project and the paying of national agreed wage rates and recognition of agreed working conditions.


Unite is arguing that the vehicle to support this is the Construction Charter which is being supported in some progressive local authorities across Scotland, and is a major part of Scottish Labour’s future industrial strategy. The Charter, if implemented, would ensure the development of a positive approach to procurement across the public sector. Features of the Charter include direct employment of all construction workers, the implementation of collectively bargained agreements, trade union recognition, quotas of skilled apprenticeships, and a zero tolerance approach to any form of contemporary blacklisting, a practice that has plagued the construction industry for decades and remains a blight on the construction industry to this day.


So while there is much noise coming for the Scottish Government about support for Scottish workers, it is in its actions that our members will judge their performance and for construction workers it has clearly meant a case of fine words butter no parsnips.

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