In a dispute that has rumbled on for well over 2 years, Unite has claimed a “legal precedent” in the use of “sham contracts” by payroll companies, umbrella companies and employment agencies. The case centres around Russ Blakely, a pipefitter who carried out work on a hospital redevelopment project, a role he obtained through On-site Recruitment Solutions Ltd. Mr Blakely was paid via payroll/umbrella company, Heritage Solutions City Limited, and it is alleged that he was charged a weekly fee to be paid and that employers NICs were deducted from his pay. The latest stage of the dispute required a fresh tribunal to establish who was Mr Blakely’s employer – the recruitment firm or the payroll/umbrella company. Prior to the case being heard, Mr Blakely has accepted a settlement sum of £2,500 paid by On-site Recruitment Solutions for unfair deduction of wages.
Given that settlement has been reached, it is difficult to understand why Unite believe it sets a “legal precedent” because there has been no judgement. All this case does is illustrate the need for a compliant supply chain and importantly, proper transparency of pay for the individual being engaged. We know that there are a number of similar cases brewing in sectors hit by last year’s IR35 changes where the worker has been paid a different rate to that agreed at the outset. The government is currently considering introducing measures to ensure that there is proper clarity regarding pay rates for all workers, something that FCSA whole-heartedly supports.