Ending the Undercutters' Charter

Report type
Policy proposal
Issue date
05 Mar 2018
Key findings

Two people working alongside each other doing the same job should get the same pay rate.

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

This is due to a legal loophole - known as the 'Swedish derogation' - which allows agencies and employers to avoid paying agency workers the going rate for the job.

This Undercutters' Charter means bosses can use agency workers to reduce their wages' bill and undercut the pay and conditions of their staff on a long-term basis.

  • More than 300,000 agency workers have been in their jobs for more than a year, and shockingly, over 120,000 have worked for an agency for over five years.
  • Agency workers employed under the Swedish derogation suffer a significant pay penalty. The TUC has evidence of workers earning up to £4 less per hour than directly employed staff even though they do the same work.
  • Evidence from trade unions also shows that agency workers often receive fewer rights and fewer paid holidays than workers on a regular contract doing the same job.

Agency work no longer appears to be a stepping stone into secure employment in many sectors and workplaces. Instead, agency workers can remain trapped in low paid, insecure work, with few rights in the workplace. Younger agency workers are particularly missing out on career progression. And while some have claimed that the workers have a choice about the form of agency contract they accept, at best this is a 'Hobson's Choice', with workers told they can either sign the contract, or miss out on the chance to work.

This report sets out why ending the Undercutter’s Charter is a key part of the TUC’s Great Jobs Agenda, and why government must end this unfair practice now.