The TUC has lodged a formal complaint with the European Commission against the UK government for failing to implement a European directive properly.

It says that tens of thousands of agency workers are being paid less than permanent staff (up to £135 per week in some cases), although they are working in the same place and doing the same job.

The Agency Worker Regulations 2010 implement the EU Temporary and Agency Workers Directive. Under the regulations, agency workers are entitled to the same pay and conditions as permanent staff doing the same job after 12 weeks. However, the TUC says the law is being abused by employers who are taking advantage of the so-called ‘Swedish derogation’.

Under these contracts, agencies do not have to pay the worker the same rate of pay, as long as they directly employ the individual and guarantee to pay them for at least four weeks when they are between assignments.

Although the directive said that countries must prevent the misuse of Swedish derogation contracts, the TUC believes it has evidence that the UK government has failed to provide adequate protection. It is now calling for Swedish derogation contracts to be banned.

In Sweden, where these contracts originate, workers still receive equal pay once in post and 90 per cent of normal pay between assignments. However in the UK workers have no equal pay rights and are paid half as much as they received in their last assignment, or minimum wage rates, between assignments.

Gathering of evidence

Evidence gathered by the TUC shows that Swedish derogation contracts are used regularly in call centres, food production, logistics firms (lorry drivers working out of retail warehouses), and parts of manufacturing.

Agency working in the UK has increased by 15 per cent since the recession, faster than any other form of employment. The number of workers on Swedish derogation contracts has grown rapidly since 2011, when the directive was implemented. Around one in six agency workers is now on these contracts, according to a report from the Recruitment and Employment Confederation.

TUC General Secretary Frances O’Grady said: “The recent agency worker regulations have improved working conditions for many agency workers without causing job losses. Yet again business organisations have been proved completely wrong in claiming that decent rights at work cost jobs.

“However, the regulations are being undermined by a growing number of employers who are putting staff on contracts that deny them equal pay. Most people would be appalled if the person working next to them was paid more for doing the same job, and yet agency workers on these contracts can still be treated unfairly.”