Agency worker pay, IR35 and the relevance of trade unions in local government

One of the largest changes I witnessed in a quarter century as a UNISON Branch Secretary in inner London has been the emergency of agency employment as a major feature of daily live in local government. Although in the economy as a whole many agency workers form a lower-paid, less secure “super-exploited” sector of the workforce, in London local government, agency employment has grown in large part to carry out higher-paid roles (where local government pay is not competitive).

There is very little research evidence on the use of agency staff in local government, and even wide variations in estimates of the numbers of agency workers, based upon different methodologies used to derive different estimates. Recent research for the Government by the National Institute for Economic and Social Research concluded that;

“The public sector saw a 17 per cent decrease in the use of temporary agency staff, falling from 56,080 in 2007 to 46,336 in 2010. It then demonstrated significant recovery, with 71,272 identified in 2015. This increase in temporary agency staff has been in context of overall decline in non-permanent employment.”

Certainly, however, use of agency workers in London local government is proportionately higher than across the public sector as a whole – and is particularly high at senior levels and among certain hard to recruit professional groups.

Agency workers benefit from most of the conditions of employment which we have negotiated for employees because of the Agency Worker Regulations, but union density among agency workers is very low – and agency workers have no security of employment. This part of the local government workforce largely forms a “wild west” beyond the reach of our collective bargaining (where highly paid “interims” often negotiate their own rates of pay individually in circumstances where they have an advantage over those with whom they negotiate).

It is little consolation that the persistence of high levels of agency working reveals as much about the lack of control which the senior management of employing organisations have over their own organisation as it reveals about the lack of control which trade unions have over an important segment of the workforce.

Now, because of tax changes which will impact almost all agency workers in local government (bringing tax payments into line with those made by employees) a significant chunk of the local government workforce face a reduction in take home pay in April, compared to March, of up to 30%.

Although these changes are – on the face of it – quite reasonable, both because agency workers should pay the same tax and national insurance contributions as employees and because organisations funded from taxation ought not to collude with tax avoidance, they will create pressure (from agency workers) for increases in hourly rates.

Chickens are coming home to roost for the local government employers who lobbied for these changes (correctly in the long term since the tax advantages of agency employment were one of the obstacles to stabilising the workforce in critical areas, including children’s social care).

For the trade unions, who have found ourselves unable to bargain effectively to improve local government pay for more than a decade now, the prospect of large increases in hourly rates for a significant number of agency workers (who form a substantial, and relatively well-paid, minority of the workforce in a number of authorities) may be a last chance for relevance on the question of pay.

There, of course, is no prospect whatsoever that UNISON, under its present leadership, will be willing (never mind able) to mobilise industrial action at national – or even Regional – level in the foreseeable future (and this would have been true even without the Trade Union Act). However, UNISON branches in local government can mobilise political pressure upon employers to match any increases given to high paid agency staff for lower paid employees – and Labour Party members can support such pressure on Labour local authorities in particular.

If any significant number of highly paid “interims” in local government are granted increases in hourly rates to compensate them for having to pay the same rate of tax as employees, and the trade unions remain silent in response, then we will have acknowledged that trade unions no longer have a meaningful role in setting pay in what has for some years been the largest collective bargaining unit in the economy.

Let’s hope that is not what happens.