CONSTRUCTION firms are being accused of ripping off workers’ pay by thousands of pounds in a dodgy practice highlighted in a new report published yesterday.

Builders union Ucatt said that companies are getting around new government regulations forbidding them to treat workers as self-employed.

They set up “umbrella companies” so that the workers are not directly employed by the construction firms.

These umbrella companies charge the workers fees for the privilege of getting their wages. The workers have to pay both their own national insurance and the employer’s, amounting to 25 per cent of eligible earnings.

Holiday pay is included in the basic wage, so when workers do take a holiday they do not get paid.

The umbrella firms pay the minimum wage, topping this up with expenses, “performance-related pay” and other wangles.

Ucatt described umbrella companies as a “scourge” that has “become endemic” in the industry since April, following a government decision to prevent employment agencies and payroll companies classifying construction workers who were under “direction or control” as being self-employed. 

Rather than pay workers in a standard PAYE manner, there has been a mass switch to paying workers via umbrella companies, the union points out.

The report also found that the government is substantially losing out on tax and NI revenues through the use of umbrella companies. For a worker earning £500 a week via an umbrella company the annual loss to the Treasury is £3,800 per worker.

Ucatt general secretary Steve Murphy said: “Workers are left feeling robbed when they realise how little they are being paid by umbrella companies.”

A parliamentary launch of the damning report takes place on Wednesday.

Speakers include shadow Exchequer secretary Shabana Mahmood MP and Mr Murphy.

Mr Murphy said: “The government must take urgent action to end the exploitation of workers by employers who are forcing them to be paid via umbrella companies.”

Workers have staged protests at major construction sites and more are planned.

A copy of the report, The Umbrella Company Con-Trick, is available at www.ucatt.org.uk/umbrella-company-con-trick