Principal contractors may be paying up to 20% more for agency labour because of the over-allocation of basic and overtime hours and the huge administrative burden of collating timesheets and managing payroll. With agency labour representing on average 10% of the total workforce, this is an area that needs better controls. Fortunately, a new technology solution is on the horizon.
The cost of labour is on the rise in the UK and with the ongoing skills shortage in construction, this is unlikely to change anytime soon for the industry. Agency labour represents circa 10% of the total construction workforce and in most instances, contractors have limited visibility and control of this enormous overhead.
Main contractors are plagued by fraudulent claims, incorrect payments and substantial manual intervention leading to enormous financial and administrative burdens, while risk is elevated due to non-compliance with tax and modern slavery legislation. Subcontractors face similar challenges due to payable hours being difficult to ascertain and a similarly time-consuming and admin-heavy payroll process.
The Construction Industry Joint Council (CIJC) Working Rule Agreement governs the terms and conditions of employment for certain construction workers. It was created and is maintained through collaboration between the CIJC and various trade unions. To ensure compliance, contractors must pay careful attention to labour hours. However, the industry is not currently where it needs to be on this practice.
