Agency workers are paid £400 million less a year than full-time counterparts

  • Agency workers are missing out on £400 million a year because they are paid less than their employee equivalents, the Resolution Foundation found.
  • Agency workers were paid 23p less per hour than their employee equivalents, the report said.
  • The report called on the government to reform the “loophole” that allows agencies to pay lower rates.

LONDON – The agency workforce is missing out on £400 million a year because they are paid less than their employee equivalents, costing the average agency admin worker £990 a year, the Resolution Foundation has said.

Thursday’s report found 85% of agency workers surveyed had been in their jobs for more than three months, entitling them to equal pay under the law in almost all circumstances. But between 2011 and 2017, these workers were paid 23p less per hour on average than employees in comparable jobs and with comparable characteristics (such as age and ethnicity).

“Many workers prefer the flexibility that agency work can sometimes offer, and are willing to be paid less as a result, but those doing the same job on the same terms as employee colleagues deserve to take home the same day’s pay,” said Lindsay Judge, senior policy analyst at the Resolution Foundation.

“We, in advanced western societies, have allowed situations to develop which prioritise the interests of the consumers over the interests of the workers. Are we happy with this bargain?” said John Hayes, founder of Constantine Law.

The average administrator working through an agency will earn £990 less per year, the average sales or customer service worker will earn £800 less and the average skilled trade worker will earn £453 less, the report found. This is despite the 2010 Agency Worker Regulations, which give those with 12 weeks or more of continuous service in the workplace pay parity with comparable employees.

But agency staff can forgo this right in return for a contract that offers pay between assignments, a loophole which is “widely abused,” this year’s Taylor review of modern working practices found. Reforming this law should be a “key element” of the government’s forthcoming response to the review, said Judge.

Jenn O’Donnell, Founder of domestic cleaning company Jane Jefferson Cleaning, employs her workers directly and pays Living Wage, but says many cleaning firms operate as agencies and pay cash-in-hand to a largely “unregulated” workforce.

“The black market is absolutely huge,” she says. “People think I’m a premium service… it’s a huge challenge to stay in business.”

In November, a report by the Trust for London and Middlesex University estimated unpaid wages in the UK amount to at least £1.3 billion per year, and unpaid holiday to £1.8 billion per year, and affect at least 2 million workers. Sir David Metcalf, the Director of Labour Market Enforcement, called these findings “very important” and “timely,” and pointed out there are only nine inspectors in the UK who oversee 18,000 employment agencies.

Employment agency legislation, he said, “dates back to 1973,” but “the world of work has changed profoundly since then.” Certain apps, said Metcalf, were essentially a modern form of employment agency, but are largely unregulated.

However, the Resolution Foundation found agency-employed managers were paid more than employee equivalents, which could in part be a compensation for missing out on pension contributions. There are also premiums for being an agency worker in less predictable sectors, such as social care where legally required staff rations allow agencies to command a higher price to fill last minute gaps.

The government is due to respond to the Taylor Review’s findings, which Judge branded “abuse,” next year.

“We’re hopeful that 2018 will be the year of action on fair pay for agency workers,” she said.

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