Plans to stop contractors undercutting wages to be introduced

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A new law aimed at preventing contractors from hiring EU subcontractors at cheaper rates than national wage is set to be introduced…

The government has announced it will forge ahead with plans to ensure contractors are unable to undercut wages by hiring EU subcontractors at rates less than the national wage.

The proposed changes will come into force from 18 June and would make contractors liable to pay compensation.

The rules will strengthen the existing posted workers directive. This prevents local or national wage agreements from being undercut by importing cheap labour from other parts of Europe. It means that workers posted to the UK from other parts of the EU must be paid UK trade rates if these are higher than rates in their home nation.

Undercutting of local labour pay is a contentious issue within the sector, and it is not a new one. There have been numerous cases in the past of wages being undercut by bringing in cheaper labour forces. One high profile case was seen in 2009, when some 800 local contractors went on strike at the Linsey oil refinery plant after an Italian contractor hired several hundred European workers for cheaper.

In a bid to meet obligations set out in the EU Enforcement Directive, the government suggested contractors could take responsibility for registering all posted workers on their sites.

New laws will also be brought into play to ensure main contractors and their foreign subcontractors are liable for claims from exploited workers.

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