The Foundation’s analysis compared the hourly wage of agency workers and employees with the same personal characteristics – such as age and ethnicity – doing the same type of work.
In the six years between 2011 and 2017, it said, the average agency worker was paid 23p less an hour than a directly comparable employee, but the “pay penalty varies considerably by occupation”.
Agency-employed managers, for instance, get a bonus “which may be in part compensation for missing out on pension contributions”, the foundation said.
There are also premiums for being an agency worker in less predictable sectors, such as social care where legally required staff ratios allow agencies to command a higher price to fill last minute gaps in staffing schedules, the foundation said.
Agency workers outside those occupations, however, are hit with a “pay penalty across the board” which adds up to £990 a year for the average administrator who works through an agency, £800 a year for the average sales or customer service staff member and £285 a year for the typical worker in an elementary occupation.
“These large impacts are unlikely to be fully explained by people willingly taking a pay hit to avoid unwanted aspects of employee work, being less motivated or lacking specific skills,” the foundation said, pointing out that the disparity exists despite the Agency Worker Regulations 2010 which gives those with 12 weeks-plus of continuous service in the workplace pay parity with comparable employees.
The 2010 Regulations, however, allow agency staff to forgo their right to equal pay with direct employees in return for a contract that offers pay between assignments (a ‘Swedish derogation’ contract).
These contracts, the foundation said, are “widely abused”, as it called for the regulations loophole to be closed and for the current law to be enforced as part of the Government’s forthcoming response to the Taylor Review.
Lindsay Judge, Senior Policy Analyst at the Resolution Foundation, said: “Agency workers deserve to be paid the same as employees if they’re doing the same job, so the government should look to close the loophole that allows agency workers to sign away their right to equal pay. With the government-commissioned Taylor Review noting this abuse, we’re hopeful that 2018 will be the year of action on fair pay for agency workers.
“Many workers prefer the flexibility that agency work can sometimes offer, and are willing to be paid less as a result, but those doing the same job on the same terms as employee colleagues deserve to take home the same day’s pay. “Workers are losing £400 million a year as a result of the agency pay penalty, equivalent to £990 this year for the average agency admin worker.”
Agency pay effect/worker, 2017 Administrative And Secretarial Occupations -£990 Associate Professional And Technical Occupations -£928 Sales And Customer Service Occupations -£803 Professional Occupations -£711 Process, Plant And Machine Operatives -£545 Skilled Trades Occupations -£453 Elementary Occupations -£285 Caring, Leisure And Other Service Occupations £218 Managers, Directors And Senior Officials £2,477
Commenting on the findings, the Trade Union Congress (TUC), said “too often agency workers are treated like second-class citizens” despite doing the same job as their colleagues.
TUC General Secretary Frances O’Grady backed the foundation’s call to close the loophole “that allows bad bosses to deny agency workers equal pay”.
She said: “It’s time to end this Undercutters’ Charter and for the government to scrap this loophole. It’s recent review into modern employment practices called for precisely that.”