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Ministers criticised for delaying to close exploitative loophole allowing bosses to underpay workers

Labour's Stephanie Peacock said the delay shows ‘we simply can’t take their word for anything, let alone on an issue as important as our fundamental rights at work’

LABOUR MP Stephanie Peacock criticised ministers today for delaying the closing of a loophole that allows bosses to underpay workers on exploitative contracts for two more years.

The delay was revealed in her written question to the government, which contradicts Business Secretary Greg Clark’s promise earlier this month that he would reconsider the timing.

It also undermines Prime Minister Theresa May’s pledge to improve workers’ rights in a failed attempt to get unions and Labour backbenchers behind her Brexit deal.

Agency workers are meant to be treated equally to permanent staff but employers can dodge the rules by using so-called “pay between assignment” contracts.

It is also known as the “Swedish derogation” due to the amendment requested by the Swedish government to rule out equal pay in the EU’s Agency Worker Regulations 2010.

Under these rules the agency itself is considered to be the employer even if the worker is permanently in one workplace.

The British government’s website states that these workers are “not entitled to equal pay” enjoyed by workers directly employed.

The Resolution Foundation found bosses used the loophole to underpay workers by £173 million a year.

Business junior minister Kelly Tolhurst responded to Ms Peacock’s question by admitting that closing the loophole would be deferred to the 2020-21 tax year.

Ms Peacock said: “The Prime Minister keeps asking us to trust us but once again she has shown exactly why we can’t.

“We simply can’t take their word for anything, let alone on an issue as important as our fundamental rights at work.”

Last year telecommunications giant BT was exposed by the Communication Workers Union (CWU) for exploiting the loophole.

BT used it to underpay thousands of call centre staff, including those taking calls for emergency services.

They were paid £8.50 an hour, around £500 a month less than the standard rate, even though they were effectively permanent staff who were not deployed elsewhere by the agency.

Unions also criticised the government’s delay, with CWU general secretary Dave Ward calling it “outrageous.”

He added: “As ever the government is exposing the fact that it does not understand or care about the lives of working people.”

Unite assistant general secretary Howard Beckett said: “The burning injustices the government promises to extinguish will continue burning brighter for longer for agency workers, thanks to ministers over promising and under delivering.”



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