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Agency workers are being paid less for doing the same jobs – ministers must act now

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It’s a simple principle: two people working alongside each other doing the same job should get the same pay rate.

But too often agency workers are getting paid much less than directly employed staff for doing the exact same work.

This is because of a legal loophole known as the ‘Swedish derogation’, which lets agencies and employers avoid paying agency workers the going rate. It’s an Undercutters’ Charter, which allows bad bosses to use agency workers to reduce their wage bill and undercut the pay and conditions of directly employed staff.

Workers suffering under the derogation suffer a significant pay penalty. The TUC has evidence of agency workers earning up to £4 less per hour than directly employed staff, and the gap can be as wide as £7 for those working anti-social shifts.

And these agency workers don’t just lose out on pay. They often receive fewer rights and fewer paid holidays than co-workers on regular contracts.

And bosses are keeping people on these contracts for years. A new TUC report, published today, shows agency workers getting trapped in insecure, underpaid jobs long term. Six in ten agency workers have been in their jobs for more than a year. And one in six – more than 100,000 people – are agency workers who say they have been in their jobs for more than five years.

Agency work no longer seems to be a stepping stone into secure employment. Instead, agency workers are getting trapped in low paid, insecure work which provides them with few rights. And our report shows that young workers are especially at risk of getting trapped in insecure agency work. Two-fifths of agency staff employed for more than a year are aged under 35

This situation is unfair and demoralising, and leaves too many agency workers struggling to make ends meet. Those we’ve spoken to describe feeling like second-class citizens in their workplaces.

We know that unions have been effective in negotiating better pay and access to permanent employment for agency workers. So we want better rights for unions to access workplaces, negotiate pay rates across sector and stop undercutting.

But government has a vital role to play. Its own review into modern employment practices, carried out by Matthew Taylor, recommended that the Swedish derogation loophole be closed. In response, the government opened a consultation.

But as far as we’re concerned, there’s nothing to consult on ‒ the Undercutters’ Charter should be ditched now. Ministers must act now.

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