Union Unite has called on the UK Government to outlaw "highly immoral" umbrella companies.

A recent BBC Look North report revealed how workers operating under umbrellas companies in construction and other sectors are seeing large amounts of deductions from their pay.

The Government has previously estimated that 430,000 workers are paid via umbrella companies. However, Unite said this figure is an underestimate as "unscrupulous employers" in various sectors such as logistics, supply teaching and pharmaceuticals are increasingly using this form of employment.


Umbrella company workers have to pay employers' and employees' national insurance contributions as well as income tax, a tax rate of 45.8p in the pound on eligible earnings.

Unite said: "Workers often have their holiday pay rolled into the rate, meaning they are unpaid when taking leave. If they pay into an auto-enrolment pension they have to pay both employee and employer contributions. Umbrella company workers have to pay a fee of around £20 a week to be paid in this manner."

Acting general secretary, Gail Cartmail, said the Government needs to "end the misery" by outlawing the practice "and all forms of bogus self-employment".

"Unite has already succeeded in outlawing umbrella companies for example on Hinkley Point," she said.

"The Scottish and Welsh governments and several local authorities have introduced measures outlawing umbrella companies on public sector contracts. If the government fails to act we will step up pressure on all public and private sector organisations to ban these sinister organisations."

(LM)