Controversial changes to tax legislation that have been worrying some in the recruitment industry are today the subject of a protest by hundreds of construction workers across the UK.

A statement from construction union UCATT said tens of thousands of workers in the industry have been forced to work via umbrella companies after the government introduced news rules, effective as of April this year, requiring them to be paid under PAYE.

In the statement, UCATT general secretary Steve Murphy said: “Construction workers are being exploited by construction companies who are prepared to use every trick in the book to boost their profits at the expense of workers.”

In the same statement, Unite union assistant general secretary Gail Cartmail said umbrella companies were ripping off workers by making them pay more than their fair share.

Information on Unite’s webpage says construction firms do not want to employ workers directly, therefore forcing them to go through umbrella companies.

Others though have defended umbrella companies, saying they should not all be tarred with the same brush.

Freelancer and Contractor Services Association (FCSA) chief executive Julia Kermode said in a statement that criticism of umbrella companies was unfounded and had possibly arisen due to misunderstandings.

She said the problem was the workers’ expectations of a particular pay rate as set by their agency. 

“Agencies should take responsibility for ensuring that the rate they agree with an umbrella is sufficient to maintain hourly rates previously paid to the worker, or to explain any difference to the worker.”

Umbrella company Parasol said in a statement that the union-led protests risk damaging compliant providers by association.

Parasol founder and chief executive Rob Crossland said: “We fully support the government’s efforts to eradicate the scourge of false self-employment in construction and other sectors.”

He said while the unions played an important part in ensuring the new legislation did not result in exploitation of workers, there was a lack of balance in the campaign.

“There has been no attempt to distinguish between unethical payroll companies that use dubious methods, and professional employment providers offering contractors and freelancers genuine support,” Crossland said.

As Recruiter previously reported, Recruitment & Employment Confederation (REC) chief executive Kevin Green said concerning trends had emerged since the introduction of the rules as workers tried to avoid being paid under PAYE.

For example, one REC member agency lost 65% of its workers when it told them it was going to move them from a CIS [Construction Industry Scheme] tax system to PAYE.

That would have effectively cut their take-home pay, but given them benefits such as access to welfare should they suddenly find themselves jobless.

They decided ‘money in the hand’ was more important though and the recruiter’s client directly employed those workers.

REC head of policy Kate Shoesmith told Recruiter in another case, workers moved to another agency to avoid being put onto a PAYE system.

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