The use of umbrella companies to pay construction follows a change in the law in April 2014 when the government introduced new measures requiring employment agencies and payroll companies to pay workers via PAYE. The umbrella company model is seen as an attempt to ensure that neither the contractor, the agency or the payroll company is liable for increased cost.
The construction workers say that it means they end up having to pay both employer and employee national insurance contributions, a total of over 25% of their eligible pay.
They are also having their holiday pay rolled up into their rates, which mean they are unable to take paid holidays.
The demonstration at Gateshead Hospital, where Miller Construction and Balfour Beatty Engineering Services are building a new £22m emergency care centre, comes exactly a week after a similar protest at the Northumbria Specialist Emergency Care Hospital.
The construction union Ucatt says that it has won the support of local MPs in the area against what it describes as “an extreme form of workplace exploitation”.
Ucatt regional secretary Denis Doody said: “Workers are being exploited on public sector projects. Workers are not receiving a fair day’s pay. It is disgusting that taxes which should be used to pay workers a decent wage are being diverted into the employer’s pockets.”
He added: “Ucatt promised to expand our campaign if we discovered more cases of worker exploitation and that is exactly what we have done. The local NHS Trust and the contractors need to take action to stamp out this practice.”