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Site Visit Reveals Undercutting

Monday, August 24, 2015

GMB Site Visit Reveals ‘Exploitative’ Employment Practices And Undercutting At Teesside Energy-From-Waste-Plant

SITA are treating migrant workers deplorably and not paying anywhere near our nationally agreed rates, less than half in most cases says GMB

Construction unions GMB, Unite, and UCATT today (Monday 24 August) called on Sita and Semcorp to intervene and stop contractors building the energy-from-waste plant at Wilton on Teesside undercutting pay rates and using ‘exploitative’ employment practices.

The call follows an onsite visit by the three unions with independent interpreters, which revealed migrant workers being paid barely above the minimum wage and having to pay employee and employer national insurance contributions because they were employed through umbrella companies. See notes to editors for definition of umbrella company.

Conditions on the site rode a ‘coach and horses’ through national agreements covering the construction industry said the unions which warned of a culture of fear taking root on the site.

Michael Blench GMB Regional Officer said: "After visiting the SITA site I was appalled to find the treatment of the migrant labour. I have given a full account to SITA on these matters.

The site visit took place on Monday 17th August 2015 with 3 interpreters: one Croatian, one Punjabi and one Polish. Each of the interpreters is also fluent in a number of other languages.

The mechanical fitters are paid 9 to 10 Euros - all differently. The highest paid were a couple of welders who were paid 13 Euro an hour. They were lodging in Stockton. Most of them said that the lodgings were paid for by the company Bilfinger Duro Jackewiz. A few said there were deductions for lodgings which were taken off their wages. There was no holiday pay for anybody spoken to. After 3 months some were paid leave to return home and some not.

Croatian and Bosnian are treated differently. Bosnians have to pay 20% off wages to an agent when they returned home. There was multiple and excessive use of umbrella companies with everyone on different rates.

SITA are treating these workers deplorably and not paying anywhere near our national rates, less than half in most cases.

As usual the small amount of local labour on site has been paid off and more migrant labour is being brought in, with little attention paid to their safety or their welfare.

SITA are a prime example of a company abusing local communities making excessive extortionate profit on the back of their employees’ misery.

Andy Stokes, SITA Project Director has again ignored our pleas for national rates to apply and whitewashed any investigations into our findings. It is now for the client and the political parties on Merseyside to conduct a full audit and stop exploitation on site.

GMB will fight vigorously to maintain the national pay standards and our member's dignity in the face of unscrupulous employers like SITA."

Commenting Unite regional officer Steve Cason said: “We have suspected all along that the undercutting of pay and the exploitative use of umbrella companies is taking place on the site.

Now we know it’s true and that a coach and horses is being ridden through national agreements established to maintain standards and ensure workers are paid a fair days pay for a fair days.

This race to the bottom and exploitation of workers has got to stop with Sita and Semcorp intervening to ensure people are paid in line with national agreements.”

Denis Doody, Regional Secretary for construction union UCATT's Northern Region, said: "The level of exploitation being suffered by workers at Wilton is disgusting. The employers undertaking this exploitation have no shame or morality. They are just interested in making large profits as quickly as possible.

SITA and Semcorp can no longer turn a blind eye and most intervene to end this workplace misery."


For more information please contact:

Unite press office on 020 3371 2065 or Steve Cason on 07815 704387.

For the GMB contact Michael Blench 07870 176748 or Phil Whitehurst 07968 338810 or the GMB press office on 07921 289880.

For UCATT contact Barckley Sumner on 07802 329235.

Notes to editors

What is an umbrella company?

Phil Whitehurst, GMB National Officer for construction, said “An umbrella company is a company that acts as an employer to agency workers like construction and other workers. So instead of their being two parties the contractor and the worker, umbrella arrangements usually involve four parties – the worker, the contractor, the agency and the umbrella company.

On construction sites there will be a main contractor, and often multiple layers of subcontractors, employment agencies but the worker’s employment contract is with the umbrella company, not the agency. 

Normally the agency will agree a job and pay rate with a contractor and then contact the worker about the job.  The umbrella company receives the payment from the contractor for the work done by the worker.  It processes the payment, deducting PAYE income tax, employee’s and employer’s National Insurance contributions and the umbrella company’s fee. 

The residual sum is then paid to the worker as net pay. Often workers are officially paid at the national minimum wage, despite having negotiated a pay rate far in excess of this figure. Pay is then partially re-boosted through scams using expenses, performance related pay and other methods.

Payslips are often so complex that workers tell us that they do not understand how their pay is being calculated.

Many umbrella companies also withhold an amount of money that should be paid to the worker at a later date in the form of holiday pay but is not paid.

The benefit to construction companies and agencies of using umbrella companies is that of reducing tax and national insurance liabilities.  These  liabilities and other costs, including the cost of the employer’s NI contributions and the umbrella company fee for providing payroll services,  are passed on to the construction workers. This is an abuse.

We have construction companies negating their responsibilities of direct employment by using these parasitic umbrella companies and forcing workers into accepting the terms offered or they quite simply don't get the work.

These spurious tax avoidance contracts leave staff with no employment or financial stability. They are very often put on zero hours contracts with holiday and other payments rolled up into one composite rate of pay. Workers are then forced by the very nature of the contracts to pay both the employees and the employers National Insurance contributions. This can cost them up to £120 per week. These parasitic companies then have the brass neck to charge between £20 - £30 admin fees per week for their troubles.

The practice of using umbrella companies is spreading to other sectors of the economy. The Government must step in to deal with these four party tax avoidance abuses and scams which are costing workers income and the Exchequer much needed revenues.”

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