MSPs urged to help end the scandal of exploitative umb...

MSPs urged to help end the scandal of exploitative umbrella companies

03 February 2015

Britain’s biggest union, Unite is urging MSPs to help end the scandal of umbrella companies in the construction industry by backing  MSP Neil Findlay’s motion in a debate in the Scottish parliament tomorrow (Wednesday 4 February).

Ahead of the debate, Unite condemned the increasing number of employment agencies and payroll companies involved in what it branded a ‘legalised wages con-trick’. 

Since the Westminster government’s finance bill ushered in changes to legislation on self-employment in 2014, umbrella companies have emerged as a way of circumventing tax laws. Rather than using PAYE there has been a mass move to pay workers via these companies which charge for their services. 

This has left construction workers badly out of pocket; forced to stump up for the cost of processing wages, and paying employers’ national insurance contributions as well as their own (often totalling as much as 25 per cent of their wages).

The motion titled: ‘The umbrella company contract scam’, (see notes for text) will be debated at 17:00 – there will be a lobby by construction workers at the Scottish parliament an hour earlier at 16:00.

Pat Rafferty, Unite Scottish secretary, commented: “Umbrella companies exploit construction workers pure and simple and that must be stopped. The Westminster government has left these workers in an intolerable situation forced to operate via umbrella companies and no longer considered self-employed. 

“In some cases workers now earn less than the minimum wage as a result of these practices. Many have found themselves on zero hour contracts, with no guaranteed employment but unable to work elsewhere because of exclusivity clauses.

“Let’s be clear these arrangements hit morale and productivity and have a negative impact on tax revenues – something the Treasury needs to wake up to.

“I congratulate Neil Findlay for bringing this debate before the Scottish parliament. We call on ministers at Holyrood and Westminster alike to use their powers to put an end to this scandal and give construction workers the fair deal they deserve.”   


For further information please contact Unite head of media and campaigns Alex Flynn on 020 3371 2066 or 07967 665869. 

Notes to editors:

  • Unite is Britain and Ireland’s largest trade union with over 1.4 million members working across all sectors of the economy. The general secretary is Len McCluskey.

The text of Neil Findlay’s motion:  The umbrella company contract scam 

That the parliament welcomes the demonstration, which was organised by the unions, Ucatt and Unite, and held at the UK parliament on 26 October 2014, to highlight what it considers the scandal of so-called umbrella company contracts; condemns what it believes is the increasing number of employment agencies that are involved in this legal tax scam; understands that such contracts allow the cost of processing wages, employers’ national insurance and holiday pay to be passed on to workers, and impacts on people working in Lothian and across Scotland; recognises what it sees as the exploitative nature of these contracts; understands that, in some cases, they have allowed employers to pay workers less than the minimum wage; notes the negative effect that it considers such arrangements have on workers’ morale and productivity, as well as a loss of tax revenues to the Treasury, and further notes the calls on the UK and Scottish governments to use their procurement strategies and their powers and influence to end bogus self-employment and to ensure that this scandal is not allowed to continue.